Australian Real Property Law [7 ed.] 9780455241784, 0455241783, 9780455243764, 045524376X

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AUSTRALIAN REAL PROPERTY LAW

Thomson Reuters (Professional) Australia Limited 19 Harris Street Pyrmont NSW 2009 Tel: (02) 8587 7000 [email protected] http://legal.thomsonreuters.com.au/ For all customer inquiries please ring 1300 304 195 (for calls within Australia only) INTERNATIONAL AGENTS & DISTRIBUTORS NORTH AMERICA Thomson Reuters Eagan United States of America

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AUSTRALIAN REAL PROPERTY LAW ANTHONY MOORE JD (Chicago), LLM (Melb) Adjunct Associate Professor of Law, University of Adelaide

SCOTT GRATTAN BA LLB (Hons) (Macquarie), LLM (British Columbia), PhD (UNSW) Senior Lecturer, University of Sydney

LYNDEN GRIGGS PhD (Bond) Fellow, Higher Education Research and Development Society of Australasia Adjunct, Faculty of Law, University of Tasmania

SEVENTH EDITION

LAWBOOK CO. 2020

Published in Sydney by Thomson Reuters (Professional) Australia Limited ABN 64 058 914 668 19 Harris Street, Pyrmont, NSW 2009 First edition................................ 1991   2nd impression.................... 1991   3rd impression..................... 1993 Second edition........................... 1997 Third edition............................... 2002 Fourth edition............................. 2007 Fifth edition................................ 2011 Sixth edition............................... 2015 ISBN: 9780455243764

© 2020 Thomson Reuters (Professional) Australia Limited This publication is copyright. Other than for the purposes of and subject to the conditions prescribed under the Copyright Act, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Inquiries should be addressed to the publishers. All legislative material herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permits certain reproduction and publication of Commonwealth legislation. In particular, s 182A of the Act enables a complete copy to be made by or on behalf of a particular person. For reproduction or publication beyond that permitted by the Act, permission should be sought in writing. Requests should be submitted online at www.ag.gov.au/​cca, faxed to (02) 6250 5989 or mailed to Commonwealth Copyright Administration, Attorney-​General’s Department, Robert Garran Offices, National Circuit, Barton ACT 2600. Thomson Reuters (Professional) Australia Limited is grateful to the authors, publishers, agents and government departments who have allowed the reproduction of extracts of their work in this book. Every effort has been made to contact copyright holders and/or their agents. While every care has been taken to establish and acknowledge copyright, the publisher tenders its apology for any accidental infringement. The publisher would be pleased to come to a suitable agreement with the rightful owners in each case. Product Developer: Elizabeth Gandy Edited and typeset by Newgen Digitalworks Printed by Ligare Pty Ltd, Riverwood, NSW This book has been printed on paper certified by the Programme for the Endorsement of Forest Certification (PEFC). PEFC is committed to sustainable forest management through third party forest certification of responsibly managed forests. For more info: http://​www.pefc.org

PREFACE Since the first publication of this work in 1991, a regular pattern of revised editions on a four to five year basis has emerged. This time pattern reflects changes to applicable statutes and regulations and significant new cases. In this edition, the three authors of the previous edition have continued in their roles, and the chapters and their substance have not changed. The authors acknowledge the support of the publishers and the editorial staff. All authors also have personal support in differing ways. The passage of time has meant that the support for the founding co-​author of his chihuahuas has now reached a fourth generation. From the beginning, the writing of the text was divided equally between the three authors who shared an individual and joint responsibility for the whole. The current authors acknowledge the contributions to earlier editions of Adrian Bradbrook and Susan MacCallum who did much to instil wisdom, to analyse masses of complex material accurately and simply and to set out that analysis in a readily comprehensible form. In part the changes to statutes, regulations and development of case-​law reflect changes to the physical form of the Australian landscape and to Australian society. Australian cities, particularly the major cities of Melbourne and Sydney, have become much more intensive in the nature of their buildings and population within their boundaries. That intensity has required a change from a reliance on individual building allotments to multiple occupation of land and buildings. Real property law has had to allow for such building arrangements. So strata or community titles allow different persons to own parts of buildings and share common areas. The changes in society have also been associated with a decline in individual ownership and greater reliance on occupation by persons holding premises for defined periods of time. More intense land usage also leads to access to neighbouring land for work on land at the boundaries. Australian society has become more mixed in the countries of origin of residents. Ready access of all persons to ownership of land has been brought into question. In today’s macro-​economic terms, the initial publication would qualify as innovation as it marked a first attempt to describe Australian real property law as a distinct and non-​derivative body of ideas. The authors set out to cover the law of all eight jurisdictions if not with equal status at least with some recognition on each point for all. The authors contended that this body of law was individual in itself and was not merely an adaptation derivative from that of England. The major source for difference was the basis of the Torrens system as not a mere form of land holding but a source of title. Torrens title was one of title by registration, not one of registration of title. This individuality was to some extent modified because the system did not of itself define the interests it allowed for but accepted a range of interests otherwise defined. Nonetheless, no interest in land could exist unless the Torrens statute allowed for it. In setting out a body of law for eight jurisdictions, the authors had assumed that gradually differences between the eight jurisdictions would reduce. The text shows that this assumption was badly misplaced. Not only have existing differences not been reduced but even new property statutes vary from one jurisdiction to another seemingly without any underlying principle. These differences contrast with the uniformity of regulation of commercial conduct governing trade practices and the supply of credit and registration of security interests in personal property. Computerisation of land title records and land transactions and the increasing movement between jurisdictions would seem to provide an overwhelming case for a uniform law relating to land. v

Australian Real Property Law

Property as an expression of the social relationships concerning the holding of land, goods and ideas has been forced to adapt to new situations and thus led to changes to the narrative describing those developments. In this edition, laws have changed to respond to computerisation of land title and land transactions, allow discontinuation of shared tenancy rights where violence has destroyed the domestic partnership between tenants, alter the alienability of interests to allow individual land holdings in an area set aside for retirees and allow for the redesign of developments with multiple ownership in cases of building decline. New laws to govern new forms of relationships continue to be matched by the continuing evolution of statute and case law on matters such as the division of co-​ownership, priorities between unregistered Torrens system interests and native title claims. As a subject matter, property as a statement of legal relationships concerning land, goods or ideas lacks the immediacy of a bashing or running down or supply of a tin of diseased meat. But for this text, ready comprehension of the text has been as significant a goal as the identification of a distinct body of Australian law. The authors have, for example, rejected the view that the language of the constantly repeated though obscure characteristics of an easement should blind readers to the social function of such interests and the balance of each characteristic. The basic aim of the text remains the production of a succinct, comprehensible and comprehensive statement of real property law applying throughout Australia. Today, authors are reliant on electronic sources of statute and case law, and those sources mean that developments are rapidly available. It is a far cry from the paper sources of almost 30 years ago when statutory amendments had to be traced by pen against previous versions. Today, the availability of legislative material as it happens means that authors have to allow for the short time lag between finalisation of the text and availability to readers. Judgement as to likely completion of the legislative process rather than strict rejection of incomplete material means that authors’ priority is to attempt to assist readers for the life of the book but also to make clear where such judgements have been exercised. With those qualifications, the law stated is at November 16, 2019. ANTHONY MOORE SCOTT GRATTAN LYNDEN GRIGGS

vi

TABLE OF CONTENTS Preface...............................................................................................................................................v Table of Cases.................................................................................................................................. xix Table of Statutes............................................................................................................................xcvii

PART 1 THE CONTEXT OF REAL PROPERTY LAW Chapter 1.  Concept of Real Property Law................................................................ 3 [1.05]

NATURE OF REAL PROPERTY LAW IN AUSTRALIA................................................ 3

[1.55]

DEVELOPMENT OF REAL PROPERTY LAW IN AUSTRALIA.................................... 9

[1.145] SOCIAL PURPOSE OF REAL PROPERTY LAW...................................................... 20 [1.185] NATURE OF PROPERTY RIGHTS........................................................................ 25 [1.235] CLASSIFICATION OF PROPERTY RIGHTS........................................................... 30 [1.250] REMEDIES........................................................................................................ 31 [1.280] LAND RIGHTS AND LAND USE......................................................................... 33 [1.310] ARRANGEMENT OF THE TEXT.......................................................................... 36 PART 2 TITLE TO LAND Chapter 2. Foundational Concepts: Tenure, Possession, Estates, Trusts and General Law Priorities.......................................... 41 [2.05] INTRODUCTION.............................................................................................. 42 [2.10]

DOCTRINE OF TENURE.................................................................................... 42 [2.10] Overview...................................................................................................... 42 [2.15] Development of the doctrine of tenure......................................................... 43 [2.25] Doctrine of tenure in Australia...................................................................... 46

[2.45]

POSSESSION AND SEISIN................................................................................ 52

[2.85]

THE DOCTRINE OF ESTATES............................................................................. 57 [2.85] Introduction................................................................................................. 57 [2.95] Estates of freehold........................................................................................ 58 [2.150] Leasehold estates.......................................................................................... 63 [2.175] Words of limitation....................................................................................... 65 [2.220] Determinable and conditional interests......................................................... 70 [2.265] Remainders and reversions........................................................................... 78

[2.280] THE DEVELOPMENT OF THE USE AND THE TRUST: FRAGMENTATION BETWEEN LEGAL AND BENEFICIAL OWNERSHIP................. 79 [2.280] Introduction................................................................................................. 79 [2.285] Disadvantages of the common law............................................................... 80 [2.300] Origin and development of the use.............................................................. 80 [2.325] The Statute of Uses....................................................................................... 83 [2.350] Re-​emergence of equitable interest............................................................... 84 [2.355] Statute of Wills 1540.................................................................................... 84

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[2.360] [2.365] [2.370]

Repeal of the Statute of Uses........................................................................ 85 Judicature Acts.............................................................................................. 85 The trust today............................................................................................. 86

[2.375] GENERAL LAW PRIORITIES................................................................................ 88 [2.375] Introduction................................................................................................. 88 [2.400] Legal estate and legal estate......................................................................... 90 [2.410] Legal estate and subsequent equitable estate................................................ 90 [2.450] Equitable estate and subsequent legal estate................................................ 96 [2.565] Equitable estate and equitable estate.......................................................... 110 [2.600] Registration of deeds system: effect on priorities......................................... 115

Chapter 3.  Adverse Possession............................................................................... 123 [3.05] INTRODUCTION............................................................................................ 124 [3.40]

LENGTH OF LIMITATION PERIOD................................................................... 130

[3.45]

ADVERSE POSSESSION AND THE CROWN..................................................... 131

[3.60]

COMMENCEMENT OF THE LIMITATION PERIOD........................................... 134 [3.60] [3.185] [3.200] [3.230] [3.260] [3.270] [3.275]

Present interests......................................................................................... 134 Future interests........................................................................................... 151 Land held on trust...................................................................................... 152 Limitation and leasehold estates................................................................. 157 Limitation and mortgages........................................................................... 161 Limitation and co-​ownership...................................................................... 163 Limitation and Aboriginal claims................................................................. 164

[3.280] POSTPONEMENT OF COMMENCEMENT OF LIMITATION PERIOD AND EXTENSION OR SUSPENSION OF IT...................................................... 165 [3.290] RUNNING OF THE LIMITATION PERIOD......................................................... 167 [3.295] [3.305] [3.310]

Alienation by adverse possessor.................................................................. 168 Successive adverse possessors..................................................................... 168 Abandonment by the adverse possessor..................................................... 169

[3.320] THE EFFECT OF TIME LAPSING....................................................................... 171 [3.320] [3.325] [3.350]

Person dispossessed.................................................................................... 171 Title of the adverse possessor...................................................................... 172 Proof of title............................................................................................... 176

[3.355] METHODS BY WHICH TIME IS STOPPED FROM RUNNING............................ 176 [3.360] Asserting right............................................................................................ 176 [3.365] Admission................................................................................................... 177

[3.380] ADVERSE POSSESSION AND THE TORRENS SYSTEM...................................... 179 [3.380] Background................................................................................................ 179 [3.385] Current law................................................................................................ 180

[3.410] OTHER RELEVANT LEGISLATION..................................................................... 187 [3.415] MERGER AND EXTINGUISHMENT.................................................................. 187 Chapter 4.  The Torrens System and Indefeasibility............................................ 191 [4.05] INTRODUCTION............................................................................................ 191 [4.05] Background................................................................................................ 191 [4.45] The Torrens system in outline..................................................................... 201

[4.100] INDEFEASIBILITY OF TITLE.............................................................................. 211 [4.100] [4.125]

Introduction and statutory provisions......................................................... 211 The meaning and extent of indefeasibility.................................................. 214 viii

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[4.180] EXCEPTIONS TO INDEFEASIBILITY................................................................. 228 [4.180] Overview.................................................................................................... 228 [4.190] Express exceptions...................................................................................... 229 [4.315] Other possible exceptions to indefeasibility of title...................................... 251

[4.420] MISCELLANEOUS IMPORTANT PROVISIONS.................................................. 274 [4.420] [4.490] [4.545]

State guarantee of title............................................................................... 274 Conversion of title...................................................................................... 285 Interrelationship of general property statutes with Torrens statutes............. 290

Chapter 5.  Torrens Priorities.................................................................................. 293 [5.05] GENERAL....................................................................................................... 293 [5.25] CAVEATS........................................................................................................ 296 [5.25] General...................................................................................................... 296 [5.30] Caveat against dealings lodged by person claiming an estate or interest in the land....................................................................... 297

[5.105] PRIORITY BETWEEN UNREGISTERED INTERESTS............................................. 316 [5.105] [5.245]

Equitable interest and equitable interest..................................................... 316 Equity and subsequent equitable interest.................................................... 340

Chapter 6.  Public Lands and Land Rights of Indigenous Peoples..................... 349 [6.05]

THE ROLE OF THE STATE IN LAND DEALINGS................................................ 349

[6.15]

LEASES BY PUBLIC AUTHORITIES.................................................................... 350 [6.15] [6.35] [6.95]

Leases of urban land................................................................................... 350 Leases of rural land..................................................................................... 352 Comparison of freehold and leasehold tenure............................................. 357

[6.140] PRINCIPLES APPLICABLE TO CROWN TENURE............................................... 360 [6.140] [6.150] [6.165] [6.170]

Nature of the interests................................................................................ 360 Rights dependent on statute....................................................................... 361 Scope of an established relationship........................................................... 363 Registration and alienation......................................................................... 365

[6.185] LAND HELD FOR PUBLIC PURPOSES.............................................................. 366 [6.185] [6.200] [6.205]

Nature of the public interest in public land................................................. 366 Dedication of public land............................................................................ 367 Trusts for public purposes........................................................................... 369

[6.210] INDIGENOUS PEOPLE AND PROPERTY LAW................................................... 369 [6.210] [6.245] [6.270]

Original settlement..................................................................................... 369 Relations between indigenous peoples and land......................................... 372 Limited statutory land rights....................................................................... 376

[6.315] RECOGNITION OF NATIVE LAND RIGHTS...................................................... 380 [6.340] NATIVE TITLE LEGISLATION............................................................................ 383 [6.390] VALIDATION OF GOVERNMENT ACTIONS..................................................... 386 [6.415] EXTINGUISHMENT OF NATIVE TITLE............................................................. 388 [6.430] INDIGENOUS LAND CLAIMS UNDER THE NATIVE TITLE ACT......................... 390 [6.430] Procedures.................................................................................................. 390 [6.450] Nature of rights of enjoyment..................................................................... 391 [6.470] Identity of title holders................................................................................ 393 [6.485] Continuity of use........................................................................................ 394

[6.495] CONCLUSIONS............................................................................................. 395 ix

Australian Real Property Law

Chapter 7.  Mortgages.............................................................................................. 399 [7.05]

THE PURPOSE AND NATURE OF SECURITY INTERESTS................................... 400 [7.05] [7.10] [7.20] [7.25] [7.30] [7.35]

[7.40]

THE NATURE OF A MORTGAGE...................................................................... 404 [7.40] [7.60] [7.80] [7.85] [7.86]

[7.90]

Use of property as security.......................................................................... 400 Forms of security interests........................................................................... 401 Charges and liens....................................................................................... 402 Credit for purchasers.................................................................................. 402 Security and goods..................................................................................... 403 Remedies and secured interests.................................................................. 404 The general law.......................................................................................... 404 The Torrens system..................................................................................... 407 Formalities for the creation of a mortgage.................................................. 410 Mortgages and interests less than a fee simple............................................ 411 Reverse mortgages..................................................................................... 411

PRIORITIES BETWEEN MORTGAGEES.............................................................. 412 [7.90] Conflicting mortgages................................................................................ 412 [7.95] Tacking....................................................................................................... 413

[7.120] CONSUMER CREDIT LEGISLATION................................................................. 416 [7.160] REDEEMABILITY............................................................................................. 419 [7.160] [7.180]

Clogs on the equity of redemption............................................................. 419 Restraint of trade........................................................................................ 422

[7.195] UNCONSCIONABILITY AND PENALTIES......................................................... 423 [7.195] Unconscionable conduct............................................................................ 423 [7.215] Penalties..................................................................................................... 425

[7.225] RIGHTS, OBLIGATIONS AND REMEDIES......................................................... 426 [7.225] Source of obligations.................................................................................. 426 [7.250] Promise to pay............................................................................................ 428 [7.255] Possession................................................................................................... 429 [7.285] Leasing....................................................................................................... 432 [7.305] Receivers.................................................................................................... 433 [7.320] Sale............................................................................................................ 434 [7.335] Foreclosure................................................................................................. 435 [7.355] Discharge................................................................................................... 438

[7.385] POWER OF SALE............................................................................................ 440 [7.385] [7.390] [7.405] [7.415] [7.425] [7.430] [7.445] [7.465]

Nature of power......................................................................................... 440 Prerequisites to exercise.............................................................................. 441 Requirement of notice................................................................................ 442 Erroneous notice......................................................................................... 443 Nature of the sale....................................................................................... 444 Title free from encumbrances..................................................................... 445 Mortgagee’s duties..................................................................................... 446 Protection of the purchaser......................................................................... 448

PART 3 DEALINGS IN LAND Chapter 8.  Dispositions............................................................................................ 453 [8.05]

ORIGINAL ACQUISITION AND ACQUISITION BY SUCCESSION...................... 453

[8.25]

GIFTS AND WILLS.......................................................................................... 456 [8.25]

Proprietary effect of gifts............................................................................. 456 x

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[8.30] [8.45]

[8.65]

Proprietary effect of wills............................................................................ 456 Gifts and equitable intervention.................................................................. 457

CONTRACTS AND TRANSFERS....................................................................... 460 [8.65] The land transfer process............................................................................ 460 [8.105] Formalities.................................................................................................. 465 [8.125] Proprietary effects of contracts.................................................................... 468

[8.150] INFORMALITY AND INEQUITY....................................................................... 471 [8.150] [8.155]

Statute of Frauds........................................................................................ 471 Doctrine of part performance..................................................................... 472

[8.175] INCOMPLETENESS AND INEQUITY................................................................ 474 [8.175] [8.190] [8.195]

Types of trusts............................................................................................ 474 Incomplete arrangements........................................................................... 474 Doctrine of estoppel................................................................................... 475

[8.240] AUCTIONS..................................................................................................... 480 [8.275] STATUTORY REGULATION OF LAND SALES.................................................... 483 [8.275] [8.285] [8.300] [8.310] [8.325]

Basis of regulation...................................................................................... 483 Disclosure by the vendor............................................................................ 485 Cooling-​off rights....................................................................................... 486 Passing of risk............................................................................................. 487 Terms contracts.......................................................................................... 488

[8.340] PROPERTY DEALINGS BETWEEN DOMESTIC PARTNERS................................. 489 [8.340] [8.365] [8.385]

Recognition of relationships........................................................................ 489 Financial agreements.................................................................................. 491 Adjustments on relationship breakdown..................................................... 493

Chapter 9.  Defeasible Transactions....................................................................... 495 [9.05]

STATUTORY AND EQUITABLE INTERVENTION................................................ 495

[9.25]

STATUTORY CONSUMER LAW........................................................................ 496

[9.30]

RESTRAINT OF TRADE.................................................................................... 498

[9.55]

DISPROPORTIONATE CONTRIBUTIONS TO PURCHASE PRICE........................ 500 [9.55] [9.60] [9.75]

Nature of a resulting trust........................................................................... 500 Transfer to a volunteer................................................................................ 500 Purchase in the name of another................................................................ 502

[9.100] FAILURE OF AN UNDERTAKING...................................................................... 504 [9.135] TAKING ADVANTAGE OF ANOTHER............................................................... 507 [9.155] MISLEADING OR DECEPTIVE CONDUCT........................................................ 509 [9.175] UNCONSCIONABLE OR UNFAIR CONDUCT.................................................. 511 [9.195] UNCONSCIENTIOUS EXERCISE OF RIGHTS.................................................... 514 PART 4 DIVIDED OWNERSHIP OF LAND Chapter 10.  Future Interests................................................................................... 519 [10.05] INTRODUCTION............................................................................................ 519 [10.10] POSSESSION, REVERSION AND REMAINDER.................................................. 520 [10.15] Possession................................................................................................... 520 [10.20] Reversion.................................................................................................... 520 [10.25] Remainder.................................................................................................. 520 xi

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[10.30] VESTED AND CONTINGENT INTERESTS......................................................... 521 [10.50] REMAINDERS AT COMMON LAW.................................................................. 524 [10.50] [10.55] [10.65]

Legal remainder rules................................................................................. 524 The rule in Shelley’s Case............................................................................ 525 Destructibility of legal contingent remainders............................................. 526

[10.75] THE ROLE OF EQUITY.................................................................................... 528 [10.75] [10.80] [10.90]

The law prior to 1535................................................................................. 528 The Statute of Uses 1535............................................................................ 529 The Statute of Wills 1540............................................................................ 530

[10.95] THE CURRENT AUSTRALIAN LAW................................................................... 531 [10.95] Overview.................................................................................................... 531 [10.100] Relevance of Torrens legislation to future interests...................................... 531 [10.110] General statutory reforms........................................................................... 532

Chapter 11.  The Rule Against Perpetuities.......................................................... 537 [11.05] BACKGROUND.............................................................................................. 538 [11.25] THE RULE ITSELF............................................................................................ 541 [11.30] The common law position.......................................................................... 541 [11.90] Examples of the application of the common law rule.................................. 547 [11.95] Australian Capital Territory and New South Wales....................................... 548 [11.110] Northern Territory...................................................................................... 550 [11.120] Queensland................................................................................................ 551 [11.130] South Australia........................................................................................... 551 [11.135] Tasmania.................................................................................................... 552 [11.145] Victoria....................................................................................................... 552 [11.155] Western Australia........................................................................................ 554

[11.165] CLASS GIFTS.................................................................................................. 554 [11.165] The common law position.......................................................................... 554 [11.170] Class-​closing rules....................................................................................... 555 [11.180] New South Wales and the Australian Capital Territory................................. 557 [11.185] Victoria....................................................................................................... 558 [11.190] Western Australia........................................................................................ 558 [11.195] Queensland................................................................................................ 558 [11.200] Tasmania.................................................................................................... 558 [11.205] Northern Territory...................................................................................... 559 [11.210] South Australia........................................................................................... 559

[11.215] THE EFFECT OF INFRINGING THE RULE AGAINST PERPETUITIES.................... 559 [11.215] The common law position.......................................................................... 559 [11.225] The statutory position (all jurisdictions except South Australia)................... 561

[11.230] EXCEPTIONS TO THE RULE AGAINST PERPETUITIES....................................... 561 [11.230] The common law position.......................................................................... 561 [11.255] The statutory position (except South Australia)........................................... 564 [11.265] Miscellaneous statutory exceptions............................................................. 565

Chapter  12.  Co-​ownership....................................................................................... 567 [12.05] NATURE AND TYPES OF CO-​OWNERSHIP...................................................... 567 [12.40] JOINT TENANCY............................................................................................ 571 [12.95] TENANCY IN COMMON................................................................................ 577

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[12.100] CREATION OF CO-​OWNERSHIP..................................................................... 577 [12.100] General...................................................................................................... 577 [12.105] Common law............................................................................................. 578 [12.140] In equity..................................................................................................... 581 [12.175] Under statute............................................................................................. 585 [12.195] Statutory provisions and equitable interests................................................ 588 [12.205] Under the Torrens system........................................................................... 590

[12.235] RIGHTS OF ENJOYMENT BETWEEN CO-​OWNERS.......................................... 593 [12.235] General...................................................................................................... 593 [12.245] Processes.................................................................................................... 593 [12.265] Common law principles.............................................................................. 595 [12.290] Calculation of the occupation rent.............................................................. 597 [12.300] Victorian provisions..................................................................................... 598 [12.310] Issues other than occupation rent............................................................... 601

[12.320] REIMBURSEMENT OF EXPENDITURE.............................................................. 602 [12.330] CONVERSION OF A JOINT TENANCY TO A TENANCY IN COMMON............ 604 [12.330] [12.340] [12.360] [12.370] [12.390] [12.405] [12.425] [12.430]

Meaning of severance................................................................................. 604 Severance by agreement............................................................................ 605 Severance by conduct of the parties........................................................... 607 Alienation by a joint tenant......................................................................... 608 Alienation by gift by a joint tenant.............................................................. 611 Dealings less than total alienation by a joint tenant.................................... 614 Severance by acquisition of a greater interest............................................. 617 Severance by killing of one joint tenant by another joint tenant.................. 618

[12.440] TERMINATION OF CO-​OWNERSHIP............................................................... 620 [12.440] General...................................................................................................... 620 [12.445] Partition or sale........................................................................................... 621 [12.450] General discretion....................................................................................... 621 [12.455] Statutory trusts........................................................................................... 621 [12.460] Dealings by a co-​owner.............................................................................. 622

Chapter 13.  Management Where Ownership Is Divided.................................... 625 [13.05]

MULTIPLE DECISION-​MAKERS........................................................................ 625

[13.20] SETTLEMENTS AND TRUSTS FOR SALE........................................................... 627 [13.45] DOCTRINE OF WASTE.................................................................................... 629 [13.70] DEVELOPMENT OF STRATA AND COMMUNITY TITLES.................................. 632 [13.70] Overview.................................................................................................... 632 [13.85] Scope of current legislation........................................................................ 633

[13.110] MANAGEMENT AND SETTLED ESTATES......................................................... 636 [13.110] [13.115] [13.125] [13.150] [13.165] [13.175]

Scope of the settled land legislation............................................................ 636 Key terms under the settled land acts......................................................... 637 Role of life tenant and trustees.................................................................... 638 Repairs, maintenance and improvements.................................................... 641 Exploitation of the land.............................................................................. 642 Sales and other dispositions........................................................................ 643

[13.185] MANAGEMENT AND TRUSTS AND TRUSTS FOR SALE................................... 644 [13.185] Impact of settled land legislation................................................................ 644 [13.195] General powers of trustees......................................................................... 645 [13.215] Repairs, maintenance and improvements.................................................... 647

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[13.230] Exploitation of the land.............................................................................. 649 [13.235] Sales and other dispositions........................................................................ 649

[13.265] MANAGEMENT AND STRATA AND COMMUNITY TITLES............................... 652 [13.265] [13.285] [13.310] [13.350] [13.365] [13.385] [13.395]

The corporation.......................................................................................... 652 Property rights............................................................................................ 655 Property management................................................................................ 659 Financial obligations................................................................................... 662 Community rules........................................................................................ 664 Building decline.......................................................................................... 665 Dispute resolution and winding up............................................................. 666

Chapter 14.  Leases.................................................................................................... 669 [14.05] LEASES AS A PROPRIETARY INTEREST............................................................. 670 [14.05] Scope of the general law............................................................................ 670 [14.20] Terminology............................................................................................... 672

[14.25] CHARACTERISTICS OF A LEASE...................................................................... 673 [14.25] [14.30] [14.45] [14.50]

Certainty of duration.................................................................................. 673 Exclusive possession.................................................................................... 674 Commencement of the lease...................................................................... 676 Specification of details................................................................................ 677

[14.55] TYPES OF LEASES........................................................................................... 677 [14.55] [14.60] [14.70] [14.75] [14.80] [14.85] [14.90]

Fixed-​term leases........................................................................................ 677 Periodic leases............................................................................................ 678 Tenancy at will............................................................................................ 681 Tenancy at sufferance................................................................................. 682 Tenancy by estoppel................................................................................... 682 Concurrent leases....................................................................................... 683 Retail tenancies........................................................................................... 684

[14.105] CREATION AND ENFORCEABILITY OF LEASES................................................ 685 [14.105] Legal and equitable leases.......................................................................... 685 [14.120] Leases and the Torrens system.................................................................... 691 [14.160] Leases falling outside the statutory exception to indefeasibility of title........ 695

[14.165] RENT AND BONDS........................................................................................ 696 [14.165] Covenant by tenant to pay rent, rates and taxes......................................... 696 [14.170] The landlord’s right of re-​entry for non-​payment of rent............................. 696

[14.190] CONDITION OF PREMISES............................................................................. 697 [14.190] [14.195] [14.200] [14.205]

The obligation of the landlord as to fitness of habitation............................. 697 Covenant by tenant to repair...................................................................... 698 Implied duty by the tenant not to commit waste........................................ 699 The landlord’s right of entry for inspection................................................. 700

[14.210] THE RIGHTS AND DUTIES OF LANDLORDS AND TENANTS............................ 701 [14.210] Express terms............................................................................................. 701 [14.215] Implied terms............................................................................................. 702

[14.245] ASSIGNMENTS AND SUBLEASES.................................................................... 709 [14.245] Nature of assignments and subleases.......................................................... 709 [14.250] Covenants prohibiting assignments and subleases...................................... 710 [14.260] Consent to assignments and subleases....................................................... 714

[14.270] THE ENFORCEABILITY OF COVENANTS BY AND AGAINST ASSIGNEES OR SUBTENANTS......................................................................... 716 [14.270] Relationships after assignment or sub-​letting.............................................. 716 xiv

Table of Contents

[14.275] The covenant must touch and concern the demised land........................... 717 [14.280] Ability to sue and liability to be sued........................................................... 720

[14.310] DETERMINATION OF LEASES BY FORFEITURE................................................. 725 [14.310] The nature of the right of forfeiture............................................................ 725

[14.360] DETERMINATION OTHER THAN BY FORFEITURE............................................ 741 [14.360] Natural expiration of the term.................................................................... 741 [14.365] Notice to quit............................................................................................. 742 [14.380] Surrender................................................................................................... 743 [14.385] Merger....................................................................................................... 746 [14.390] Frustration.................................................................................................. 747

[14.395] LANDLORD’S REMEDIES OTHER THAN DETERMINATION.............................. 748 [14.395] Damages and/​or injunction........................................................................ 748 [14.400] Action for arrears of rent............................................................................. 749 [14.405] Repudiation and damages for prospective loss............................................ 749

[14.445] TENANT’S REMEDIES..................................................................................... 756 [14.445] Overview.................................................................................................... 756 [14.450] The right of set-​off...................................................................................... 756

Chapter 15.  Housing................................................................................................ 759 [15.05] NEED FOR SHELTER........................................................................................ 759 [15.25] RESIDENTIAL TENANCIES............................................................................... 762 [15.25] [15.35]

Scope of the legislation............................................................................... 762 Creation of a residential tenancy relationship.............................................. 765

[15.43] TENANT DATABASES...................................................................................... 766 [15.45] [15.65] [15.95] [15.110]

Financial matters........................................................................................ 766 Rights and obligations................................................................................ 768 Termination of a tenancy............................................................................ 772 Administration and dispute resolution........................................................ 774

[15.115] ROOMING HOUSE RESIDENTS....................................................................... 775 [15.115] Scope of the legislation............................................................................... 775 [15.135] Rights and obligations................................................................................ 777

[15.155] RESIDENTIAL PARK DWELLERS........................................................................ 778 [15.155] Scope of the legislation............................................................................... 778

[15.180] RETIREMENT VILLAGES.................................................................................. 780 [15.180] [15.210] [15.230] [15.240] [15.250] [15.260] [15.315] [15.340]

Scope of legislative protection.................................................................... 780 Establishment and disclosure...................................................................... 783 Retirement village management................................................................. 785 Ongoing financial matters.......................................................................... 787 Property responsibilities.............................................................................. 788 Protection of residence............................................................................... 789 Recovery of entry fees................................................................................. 792 Administration and dispute resolution........................................................ 794

PART 5 RELATIONS BETWEEN NEIGHBOURING LANDHOLDERS Chapter 16.  The Scope and Meaning of Real Property....................................... 799 [16.05] INTRODUCTION............................................................................................ 800 [16.10] FIXTURES....................................................................................................... 800 [16.10] Introduction............................................................................................... 800 xv

Australian Real Property Law

[16.15] [16.50] [16.55] [16.75]

The relevant tests........................................................................................ 801 Recent cases............................................................................................... 805 The effect of the doctrine of fixtures on various relationships...................... 808 Modified rules affecting landlords and tenants............................................ 809

[16.120] OWNERSHIP OF AIRSPACE............................................................................. 814 [16.145] OWNERSHIP OF MINERALS............................................................................ 819 [16.145] Overview.................................................................................................... 819 [16.150] The common law position.......................................................................... 819 [16.155] Statutory reservation of minerals................................................................. 820 [16.200] Petroleum and helium................................................................................ 824 [16.205] Atomic substances...................................................................................... 825

[16.210] LAND BOUNDARIES....................................................................................... 826 [16.210] [16.240] [16.245] [16.260] [16.265] [16.270] [16.275]

Land adjoining the seashore....................................................................... 826 Land adjoining tidal navigable rivers........................................................... 829 Land adjoining non-​tidal rivers................................................................... 829 Land adjoining lakes and pools................................................................... 831 Land adjoining artificial watercourses.......................................................... 832 Land adjoining public roads........................................................................ 832 Incorrect description of boundaries............................................................. 833

[16.280] ENCROACHMENTS........................................................................................ 833 [16.280] Buildings erected under mistake of title...................................................... 833 [16.295] Encroachment by buildings onto adjoining land......................................... 835 [16.315] Other encroachments................................................................................. 837

[16.320] FENCING OBLIGATIONS................................................................................ 838 [16.320] [16.325] [16.350] [16.365]

Common law............................................................................................. 838 Dividing fences legislation –​construction................................................... 839 Dividing fences legislation –​repair.............................................................. 841 Miscellaneous fencing legislation................................................................ 842

Chapter 17.  Easements and Related Interests..................................................... 843 [17.05] FUNCTION OF EASEMENTS........................................................................... 844 [17.35] CHARACTERISTICS OF EASEMENTS................................................................ 846 [17.35] [17.40] [17.50] [17.75] [17.80]

The four essential characteristics of easements............................................ 846 There must be a dominant and a servient tenement................................... 847 An easement must accommodate the dominant tenement......................... 848 The dominant and servient owners must be different persons..................... 851 The right must be capable of forming the subject matter of a grant: precision of definition....................................................................... 851 [17.85] The right must be capable of forming the subject matter of a grant: rights of utility.................................................................................. 853 [17.90] The right must be capable of forming the subject matter of a grant: undue interference with the enjoyment of the burdened land.......... 853 [17.105] General approach to claimed easements..................................................... 855

[17.125] CREATION AND ENFORCEMENT OF EASEMENTS.......................................... 858 [17.125] [17.140] [17.165] [17.205] [17.240]

Formalities for creation............................................................................... 858 Creation by implied reservation.................................................................. 859 Creation by implied grant........................................................................... 862 Creation by prescription............................................................................. 867 Easements and Indefeasibility..................................................................... 872

[17.275] STATUTORY EASEMENTS................................................................................ 874 [17.320] TYPES OF EASEMENTS................................................................................... 877 xvi

Table of Contents

[17.320] Rights of way.............................................................................................. 877 [17.350] Rights in relation to watercourses............................................................... 881 [17.355] Rights to support........................................................................................ 881

[17.370] FINANCIAL OBLIGATIONS............................................................................. 883 [17.395] EXTINGUISHMENT OR MODIFICATION OF EASEMENTS................................ 884 [17.395] [17.410] [17.415] [17.435] [17.445]

By statute................................................................................................... 884 By agreement............................................................................................. 885 By abandonment........................................................................................ 886 By alterations to the dominant tenement.................................................... 888 By unity of seisin......................................................................................... 890

[17.450] PROFITS AND RENTCHARGES........................................................................ 890 [17.450] [17.465] [17.470] [17.480] [17.500]

Nature of profits......................................................................................... 890 Creation of profits....................................................................................... 892 Profits and the Torrens system.................................................................... 893 Nature and creation of rentcharges............................................................ 894 Remedies and extinguishment with respect to profits and rentcharges....... 895

Chapter 18.  Land-​Use Agreements: Restrictive and Positive Covenants......... 899 [18.05] URBAN DEVELOPMENT AND LEGAL CONTROLS........................................... 899 [18.10] CHARACTERISTICS OF RESTRICTIVE COVENANTS.......................................... 900 [18.10] [18.25] [18.45]

Equitable requirements............................................................................... 900 Position under the Torrens system.............................................................. 902 Covenants in favour of public authorities.................................................... 904

[18.50] PASSING OF BENEFIT AND BURDEN OF RESTRICTIVE COVENANTS............... 905 [18.50] General principles....................................................................................... 905 [18.65] Annexation................................................................................................. 906 [18.85] Express assignment..................................................................................... 909 [18.125] Annexation and express assignment in the Torrens system......................... 911 [18.130] Schemes of development............................................................................ 911 [18.190] General words legislation............................................................................ 917

[18.195] DISCHARGE AND MODIFICATION OF RESTRICTIVE COVENANTS.................. 917 [18.195] By agreement............................................................................................. 917 [18.200] By unity of ownership................................................................................. 918 [18.230] Grounds for discharge or modification........................................................ 921

[18.245] REMEDIES FOR BREACH OF RESTRICTIVE COVENANTS.................................. 923 [18.245] Damages.................................................................................................... 923 [18.250] Equitable remedies..................................................................................... 924

[18.260] STATUTORY PLANNING IMPACTS.................................................................. 925 [18.265] POSITIVE COVENANTS................................................................................... 927 [18.265] Privity of contract....................................................................................... 927 [18.280] Passing of the benefit at common law........................................................ 928 [18.320] Mutual benefit and burden......................................................................... 930

Index............................................................................................................................................. 933

xvii

TABLE OF CASES 117 York St Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; 98 LGERA 171; 8 BPR 15,917; [1998] NSW ConvR 55-​859 ...............................[17.285], [17.305] 195 Crown Street Pty Ltd v Hoare [1969] 1 NSWR 193 ..........................................[14.120], [14.270] 409 Lonsdale Pty Ltd v Carra [1974] VR 887 ......................................................................... [14.245]

A A Calkos Pty Ltd v Taylors Farms (Aust) Pty Ltd [1998] NSW ConvR 55-​867 .......................... [14.270] A F Textile Printers Pty Ltd v Thalut Nominees Pty Ltd [2007] VSC 73 ................................... [14.225] AAT Case 10,709 (1996) 31 ATR 1379 .................................................................................... [16.50] ABC Developmental Learning Centres Pty Ltd v BM Childrens Services Pty Ltd [2010] VSC 262 ................................................................................................... [14.335] ACCC v Mobil Oil Australia Ltd (1997) ATPR 41-​568 ................................................................. [9.45] ACCC v Universal Sports Challenge Ltd [2002] FCA 1276 ....................................................... [9.165] ACN 006 530 132 (in liq) v Freeman [1999] VSC 441 ........................................................... [14.110] AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2010] QCA 83 .......................... [5.110], [5.115], [5.200] AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1 Qd R 306 ..................................[2.440], [2.575] AGC (NZ) Ltd v CFC Commercial Finance Ltd [1995] 1 NZLR 129 .......................................... [5.115] ANZ Banking Group Ltd v Alirezai [2004] QCA 6; (2004) Q ConvR 54-​601 ................[4.375], [9.152] ANZ Banking Group Ltd v Barns (1994) 13 ACSR 592 ............................................................. [4.150] ANZ Banking Group Ltd v Dzienciol [2001] WASC 305 ........................................................... [4.375] ANZ Banking Group Ltd v Widin (1990) 26 FCR 1; 102 ALR 289 ................................[8.120], [8.170] AON Pensions Trustee Ltd v MCP Pensions Trustees Ltd [2010] EWCA Civ 377 ....................... [2.495] Aarons v Lewis (1877) 3 VLR (E) 234 ....................................................................................... [14.50] Abbatangelo v Whittlesea City Council [2008] V ConvR 54-​750 ........ [3.30], [3.125], [3.130], [3.360] Abbey National Building Society v Cann [1991] 1 AC 56 ...........................................[2.515], [2.590] Abbiss v Burney (1881) 17 Ch D 211 ...................................................................................... [11.50] Abbott, Re [1893] 1 Ch 54 ................................................................................................... [11.220] Abbott v Lance (1860) Legge 1283 ........................................................................................ [8.190] Abela v Public Trustee [1983] 1 NSWLR 308 .......................................... [12.340], [12.345], [12.365] Abigail v Lapin [1934] AC 491 ...................................................................... [2.570], [4.75], [5.110], [5.155], [5.160], [5.165], [5.170], [5.175], [5.185] Abika v Commonwealth of Australia (2013) 250 CLR 209 ....................................................... [6.465] Abingdon Rural DC v O'Gorman [1968] 2 QB 811 ................................................................ [14.425] Accordent Pty Ltd & Portellos v Breismark Nominees Pty Ltd (2008) 101 SASR 286 .............. [14.275] Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55 .................... [14.250], [14.320], [14.350] Ackland v Lutley (1839) 9 Ad & El 879; 112 ER 1446 ............................................................ [14.360] Ackroyd v Smith (1850) 10 CB 164; 138 ER 68 ....................................................................... [17.50] Adami v Lincoln Grange Management Ltd [1997] EWCA 4760 ............................................. [14.190] Adams v Trustees of Michael Batt Charitable Trust (2001) 82 P & CR 406 ............................... [3.140] Adamstoun Holdings Pty Ltd v Brogue Tableau Pty Ltd [2007] WASCA 43 .............................. [3.415] Addis v Burrows [1948] 1 KB 444 ......................................................................................... [14.365] Addison v Billion [1983] 1 NSWLR 586 ................................................................................... [3.260] Adele Holdings Ltd v Westpac Finance Ltd [1988] ANZ ConvR 20 ..............................[16.40], [16.60] Adeyinka Qyeckan v Musendiku Adele [1957] 1 WLR 876 ....................................................... [2.180] Adler v Blackman [1953] 1 QB 146 ......................................................................................... [14.65] Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174; [2013] NSWCA 393 ................................................................................................[2.570], [5.35] Aglionby v Cohen [1955] 1 All ER 785 .................................................................................. [14.315] xix

Australian Real Property Law

Agra Bank v Barry (1874) LR 7 HL 135 .................................................................................... [2.640] AgripowerBarraba Pty Ltd v Blomfield (2015) 317 ALR 202 .......................... [16.10], [16.25], [16.50] Ahern v L A Wilkinson (Northern) Ltd [1929] St R Qd 66 .......................................[14.115], [14.380] Air Jamaica Ltd v Charlton [1999] 1 WLR 1399 ....................................................................... [11.30] Akiba v Commonwealth (2013) 250 CLR 209; [2013] HCA 33 ...................................[6.425], [6.495] Akiba on behalf of the Torres Strait Islanders of the Regional Seas Claim Group v Queensland [2010] FCA 643 .............................................................................................. [6.460] Al-​Kateb v Godwin (2004) 219 CLR 562 ................................................................................... [3.30] Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2004] NSWSC 487 ....................................................................................................................... [14.20] Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; NSW ConvR 55-​866; NSW ConvR 56,495 .......................................................................... [14.195], [14.215], [14.220] Aldin v Latimer, Clark, Muirhead& Co [1894] 2 Ch 437 ........................................................ [14.220] Alfred F Beckett Ltd v Lyons [1967] Ch 449 ...........................................................[17.450], [17.455] Ali v Tower Hamlets LBC [1996] EGCS 193 ............................................................................. [3.250] Alison, Re (1879) 11 Ch D 284 ............................................................................................... [3.375] Allan v Jackson (1875) 1 Ch D 399 ......................................................................................... [2.240] Allcard v Skinner (1887) 36 Ch D 145 .................................................................................... [3.225] Allen v Greenwood [1980] Ch 119; [1979] 2 WLR 187; [1979] 1 All ER 819 ............[17.25], [17.110] Allen v Proprietors of Strata Plan No 2110 [1970] 3 NSWR 339 ............................................ [13.330] Allen v Roughley (1955) 94 CLR 98 ..................................................... [2.70], [2.75], [2.80], [3.295], [3.305], [3.310], [3.315], [3.350] Allen v Snyder [1977] 2 NSWLR 685 ....................................................................................... [4.320] Allen's Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202 ....................................[5.35], [5.75] Alliance Acceptance Co Ltd v Ellison (1986) 5 NSWLR 102 ....................................................... [7.60] Allingham, Re; Allingham v Allingham [1932] VLR 469 ......................................................... [12.375] Alms Corn Charity, Re The [1901] 2 Ch 750 ......................................................................... [17.495] Amad v Grant (1947) 74 CLR 327 ......................................................................................... [14.365] Amatek Ltd v Googoorewon Pty Ltd (1993) 176 CLR 471 ..................................................... [16.300] Amber (Eastern Suburbs) Pty Ltd v Herman (1986) 5 BPR 97,355 ............................[4.170], [14.120] Ambrose v Hodgson (1781) 3 Bro PC 416; 1 ER 1405 ............................................................. [10.55] American Cyanamid Co v Eticon Ltd [1975] AC 396 ................................................................. [5.90] American Dairy Queen (Qld) Pty Ltd v Blue Rio Pty Ltd (1981) 37 ALR 613 ............................. [6.167] Anagnostou v Vinicio (1995) 87 LGERA 232 ...........................................................[16.300], [16.305] Anascot Pty Ltd v Alcoa of Australia Ltd [2017] WASCA 228 ...................................[18.125], [18.215] Anderson v Anderson [2016] NSWSC 1204 ...............................................................[4.205], [4.225] Anderson v Anderson [2017] NSWCA 131 .................................................................[4.225], [4.355] Anchor Brewhouse Developments Ltd v Berkley House (Docklands Development) Ltd (1987) 284 EG 625 .....................................................................................[16.135], [16.140] Andel Pty Ltd v Century Car Care Pty Ltd (1989) Q ConvR 54-​315 ..............................[5.35], [5.255] Anderson v Bostock [1976] Ch 312 ....................................................................................... [17.455] Anderson v Bowles (1951) 84 CLR 310 ................................................................................... [14.75] Anderson v O'Donnell (2000) 10 BPR 18,501 ....................................................................... [12.355] Andrew v Bridgman [1908] 1 KB 596 ................................................................................... [14.265] Andrew v Morgan (1923) 19 Tas LR 36 ................................................................................... [10.60] Andrews v Australian and New Zealand Banking Group Ltd [2012] HCA 30 ............................ [7.220] Andrews v Hogan (1952) 86 CLR 223 ................................................................................... [14.380] Andrews v Parker [1973] Qd R 93 ........................................................................................... [2.240] Andrews v Partington (1791) 3 Bro CC 401; 29 ER 610 ........................................................ [11.170] Andrews v Superannuation Fund (1985) LSJS 153 ..................................................................... [5.65] Andrews v Taylor (1869) 6 WW & A'B (L) 223 ............................................................[2.625], [2.655] Angell v Randall (1867) 16 LT 498 ........................................................................................ [14.430] Ankerson v Connelly [1906] 2 Ch 544 .................................................................................. [17.440] Annen v Rattee (1985) 273 EG 503 .......................................................................[12.375], [12.475] Anning v Anning (1907) 4 CLR 1049 .............................................................................[8.55], [8.60] xx

Table of Cases

Anns v Merton BC [1978] AC 728 ............................................................................................. [8.85] Ansett Transport Industries (Operations) Pty Ltd v Halton (1979) 25 ALR 639 ....................... [18.250] Anson v Anson (2004) 12 BPR 22,303 .................................................................................. [12.285] Anstruther-​Gough-​Calthorpe v McOscar [1924] 1 KB 716 .................................................... [14.195] Antar v Fairchild Development Pty Ltd [2008] NSWSC 638 ....................................................... [5.35] Anthony v Commonwealth (1973) 47 ALJR 83 ........................................... [8.110], [16.50], [17.205] Anthony v Stanton [1943] VLR 179 ......................................................................................... [14.25] Aoun Investments Pty Ltd v Chief Commissioner of State Revenue (2006) 65 ATR 301; [2006] NSWSC 1394 ......................................................................[12.05], [12.220] Apple Fields Ltd v Damesh Holdings Ltd [2004] 1 NZLR 721 .................................................. [7.385] Applegate v Moss [1971] 1 QB 406 ........................................................................................ [3.285] Apriaden Pty Ltd v Seacrest Pty Ltd (2005) 12 VR 319; [2005] VSCA 139 ...............[14.410], [14.420] Arcade Pty Ltd, Re [1962] VR 274 ..............................................................................[18.30], [18.75] Arcadi v Whittem (1992) 59 SASR 51 ...................................................................................... [4.250] Archer v Timpar Nominees Pty Ltd [1999] WASC 20 ............................................................. [17.335] Archer’s Case (1597) 1 Co Rep 66b; 76 ER 146 ....................................................................... [10.65] Archos, Re [1994] 1 Qd R 223 .............................................................................................. [14.265] Arctic Investments Pty Ltd v Ductline Pty Ltd (1992) ATPR 41-​180 .......................................... [9.165] Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377 ...................................................................................................[14.315], [14.325] Argylle Developments Pty Ltd v ANZ Banking Group Ltd (1994) 4 Tas 172 ............................. [7.225] Arkbay Investments Pty Ltd (in liquidation) (receivers and managers appointed) v Tripod Funds Management Pty Ltd [2014] NSWSC 1003 ..................................................... [5.45] Armidale Dumaresq Council v M & P (North Coast) Pty Ltd (2005) 64 NSWLR 1 ...................... [5.35] Armitage v Nurse [1998] Ch 241 ............................................................................................ [2.420] Arnold v Minister Administering the Water Management Act 2000 (2009) 240 CLR 242 ........ [1.160] Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839 ................... [12.455] Arton Retirement Villages (Newcastle) Pty Ltd (t/​as Jenny Macleod Retirement Village) v Allen [2001] NSWRT 77 ................................................................................................ [15.250] Ashe v National Westminster Bank plc [2008] 1 WLR 710 ....................................................... [3.265] Asher v Whitlock (1865) LR 1 QB 1 ................................................................... [2.65], [2.70], [2.75], [3.295], [3.315] Ashmore Developments Pty Ltd v Eaton [1992] 2 Qd R 1 ..................................................... [14.290] Ashoil Holdings Pty Ltd v Fassoulas [2005] NSWCA 80 ...........................................[17.415], [18.230] Ashton v Hunt [1999] 1 Qd R 571 .................................................................................[4.75], [5.10] Ashworth Frazer Ltd v Gloucester City Council (No 2) [2002] 1 All ER 377; [2001] 1 WLR 2180 ......................................................................................................... [14.260] Asia Pacific Building Corporation Pty Ltd v Sharon Lee Holdings Pty Ltd [2013] VSC 11 ........ [14.425] Assaf v Fuwa [1955] AC 215 ................................................................................................... [2.485] Assets Co Ltd v Mere Roihi [1905] AC 176 .................................................. [4.145], [4.150], [4.200], [4.205], [4.225], [4.235], [4.245] Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 .......................................[14.210], [14.310] Astell v Australian Capital Territory [2016] ACTSC 238 ............................................................ [4.485] Atkins’ Will Trusts, Re [1974] 1 WLR 761 ................................................................................. [11.65] Atkinson, Re [1916] 1 Ch 91 ................................................................................................... [11.85] Atkinson and Horsell’s Contract, Re [1912] 2 Ch 1 .................................................................. [3.350] Atlantic 3-​Financial (Aust) Pty Ltd v Deskhurst Pty Ltd [2005] 1 Qd R 1 ................................... [4.170] Atler Pty Ltd v CDFC Australia Ltd (1982) 103 LSJS 70 ...............................................[14.60], [14.65] Attorney-​General v Antrobus [1905] 2 Ch 188 ........................................................................ [6.200] Attorney-​General v Brown (1847) 1 Legge 312 ....................................................................... [6.330] Attorney-​General v Cahill [1969] 1 NSWR 85 .......................................................................... [11.80] Attorney-​General v Chambers (1854) 4 De GM & G 206; 43 ER 486 .....................[16.210], [16.240] Attorney-​General v Earl of Lonsdale (1868) LR 7 Eq 377 ........................................................ [16.240] Attorney-​General v Emerson [1891] AC 649 ......................................................................... [16.210] Attorney-​General v Great Cobar Copper Mining Co (1900) 21 LR (NSW) 351 ...................... [16.150] xxi

Australian Real Property Law

Attorney-​General v Hodgson [1922] 2 Ch 429 ...................................................................... [17.335] Attorney-​General v Horner (No 2) [1913] 2 Ch 140 .............................................................. [17.225] Attorney-​General v Jacobs Smith [1895] QB 341 ..................................................................... [2.465] Attorney-​General v Morgan [1891] 1 Ch 432 ....................................................................... [16.150] Attorney-​General v Reeve (1885) 1 TLR 675 ......................................................................... [16.220] Attorney-​General v Simpson [1901] 2 Ch 671 ...................................................................... [17.215] Attorney-​General v White (1925) 26 SR (NSW) 216 .............................................................. [16.245] Attorney-​General v Williams (Government House Case) [1915] AC 573 .................................. [6.200] Attorney-​General v Wright [1897] 2 QB 318 ......................................................................... [16.210] Attorney-​General (Cth) v R T Co Pty Ltd (No 2) (1957) 97 CLR 146 ........................................ [16.50] Attorney-​General (NSW) v Brown (1847) 1 Legge 312 .................................... [2.10], [2.25], [6.235] Attorney-​General (NSW) v Collectors of Customs (NSW) (1908) 5 CLR 818 .............................. [1.80] Attorney-​General (NSW) v Love [1898] AC 679 ........................................................................ [3.45] Attorney-​General (NT) v Minister for Aboriginal Affairs (1990) 90 ALR 59 ............................... [4.325] Attorney-​General (Southern Nigeria) v John Holt & Co (Liverpool) Ltd [1915] AC 599 ............................................................................................[16.220], [16.235] Attorney-​General; Ex rel Carkeek v West Torrens Corporation (1981) 26 SASR 472 ................. [6.195] Attwater v Attwater (1853) 18 Beav 330; 52 ER 131 ............................................................... [2.245] Auckland City Council v Ports of Auckland Ltd [2000] 3 NZLR 614 ......................................... [16.45] Auckran v Pakuranga Hunt Club (1904) 24 NZLR 235 ...........................................[17.105], [17.220] Auerbach v Beck (1985) 6 NSWLR 424; [1985] NSW ConvR 55-​246 .......... [17.80], [17.95], [17.120] Aussie Invest Corp Pty Ltd v Pulcesia Pty Ltd (2005) 13 VR 168 ............................................... [2.565] Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1; [1997] Q ConvR 54-​485 ................................................................................ [14.220], [14.225], [15.65] Austerberry v Oldham Corporation (1885) 29 Ch D 750 ........................................[14.55], [18.310], [18.315], [18.320] Austin v Wright (1926) 29 WALR 55 ..................................................................................... [17.225] Austin’s Settlement, Re; Strachan v Austin [1960] VR 532 ....................................................... [2.210] Austotel Pty Ltd v Franklins Self-​Serve Pty Ltd (1989) 16 NSWLR 582 .................................... [17.130] Australian Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36,683 ....................................................................................................... [2.580] Australian & New Zealand Bank Ltd v Sinclair [1968] 2 NSWR 26 ........................................... [7.295] Australian & New Zealand Banking Group v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195; 52 ALJR 529 ................................................................................................. [7.455] Australian & New Zealand Banking Group Ltd v Prestia [2001] FCA 7 ................................... [12.415] Australian Aggregates (NSW) Pty Ltd v Maxmin Pty Ltd [1988] ACLD 576 ............................ [17.460] Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 ............................................ [5.90] Australian Guarantee Corp (NZ) Ltd v CFF Commercial Finance Ltd [1995] 1 NZLR 129 ....................................................................................................................... [5.175] Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 ...............................[4.200], [4.225], [4.240], [4.245] Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54 .................................................. [17.190] Australian Hi-​Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 .......................................... [17.270] Australian Joint Stock Bank v Colonial Finance, Mortgage, Investment & Guarantee Corporation (1894) 15 LR (NSW) 464 ............................................................................... [16.60] Australian Maritime Safety Authority v Quirk (1998) NSW ConvR 55-​858 ................................. [4.55] Australian Mortgage & Properties Pty Ltd v Balcon Pty Ltd (2001) BPR 19227 ...................... [18.270] Australian Mutual Provident Society v 400 St Kilda Road Pty Ltd [1991] 2 VR 417 ................. [14.255] Australian Natives’ Association Friendly Society v Peball Pty Ltd (1993) V ConvR 54-​482 ..................................................................................................................... [5.90] Australian Property and Management Pty Ltd v Devefi (1997) 7 BPR 15,255 ............................ [5.35] Australian Provincial Assurance Association Ltd v Rogers (1943) 43 SR (NSW) 202 ................ [14.430] Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700; 55 WN (NSW) 246 ...............................................................................................[16.10], [16.20] Australian Red Cross Society v Malor (1983) V ConvR 54-​109 ................................................... [3.90] xxii

Table of Cases

Australian Regional Credit v Mula (2009) 14 BPR 26,779; [2009] NSWSC 325 ..........[4.170], [4.205], [4.375], [7.200], [7.465], [9.152] Australian Safeway Stores Pty Ltd v Toorak Village Development Pty Ltd [1974] VR 268 ................................................................................................................. [14.375] Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd (1999) 9 BPR 17,533 ................ [5.90] Australian Softwood Forests Pty Ltd v Attorney-​General (NSW) (1981) 36 ALR 257 ............... [17.460] Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 ................................... [8.190] Auto Masters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286 ......................................... [9.185] Auto Panel Beaters & Radiators Pty Ltd (in liq) v Barclays Services Pty Ltd [2009] NSWSC 1165 ......................................................................................................... [4.150] Automotive & General Industries Ltd’s Lease, Re (unreported, VSC, 1 May 1970) ................. [14.345] Auty v Thompson (1903) 5 NZGLR 541 ................................................................................ [16.210] Auzhair Supplies Pty Ltd (in liq) v Gerace [2014] NSWCA 313 .................................................. [5.70] Avco Financial Services Ltd v Fishman [1993] 1 VR 90 ............................................................. [5.115] Avco Financial Services Ltd v White [1977] VR 561 ......................................................[5.35], [5.160] Aynsley v Glover (1875) LR 10 Ch App 283 .......................................................................... [17.445] Azkanaad Pty Ltd v Galanos Bros Pty Ltd (No 2) [2008] NSWSC 476; [2008] NSWCA 185 ..........................................................................................[14.105], [14.110]

B BOJ Properties Ltd v Allen’s Mobile Home Park Ltd (1979) 96 DLR (3d) 431 ......................... [17.150] BP Oil New Zealand Ltd v Ports of Auckland Ltd (2003) BCL 657 .......................................... [14.200] BP Properties Ltd v Buckler (1988) 55 P & CR 337 .................................................................... [3.85] BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 ...................... [14.215] Bacchus Marsh Brick & Pottery Co Ltd (in liq) v Federal Building Society (in liq) (1895) 22 VLR 181 ............................................................................................................ [16.95] Backhouse, Re [1921] 2 Ch 51 .............................................................................................. [11.220] Bacon v O'Dea (1989) 25 FCR 495 ........................................................................................... [5.35] Badcock, In the Marriage of (1979) 5 Fam LR 672; (1979) FLC 90-​723 ..................[12.365], [12.390] Bade v Rural City of Murray Bridge and Davies (2008) 101 SASR 302 ................................... [16.295] Badger v South Yorkshire Rly and River Dun Navigation Co (1858) 28 LJQB 118 ................... [16.265] Bagust v Rose (1963) 80 WN (NSW) 604 ................................................................................ [14.50] Bahr v Nicolay (No 2) (1988) 164 CLR 604 ................................................. [4.175], [4.205], [4.215], [4.230], [4.350], [4.355], [4.365], [4.370], [4.385], [8.140], [9.130] Bailey v Barnes [1894] 1 Ch 25 .................................................................................[2.470], [2.475], [2.500], [7.100] Bailey v J Paynter (Mayfield) Pty Ltd [1966] 1 NSWR 596 ...................................................... [14.195] Bailey v NSW Mont De Piete Deposit & Investment Co Ltd [1918] VLR 16 .............................. [7.210] Bailey v Stephens (1862) 12 CB (NS) 91; 142 ER 1077 ........................................................... [17.50] Baillie, Re; Faithful v Sydney Industrial Blind Institution (1907) 7 SR (NSW) 265 ...................... [2.220] Bain v Brand (1876) LR 1 App Cas 762 ................................................................................... [16.85] Baker v Merckel [1960] 1 QB 657 ......................................................................................... [14.270] Baker v White (1875) LR 20 Eq 166 ........................................................................................ [10.80] Baker, Re [1961] VR 641 ....................................................................................................... [13.210] Balanced Securities Ltd v Bianco [2010] VSC 162 .................................................................... [4.295] Baldwin v Rogers (1853) 3 De GM & G 649; 43 ER 255 .......................................................... [10.45] Balgra Office Enterprises Pty Ltd v Commissioner of State Taxation [2008] SASC 50 .......[2.55], [2.85] Ball, Re (1890) 2 Ir 313 ........................................................................................................... [2.500] Ball-​Guymer v Livantes (1990) 102 FLR 327 ...............................................................[16.40], [16.50] Ball and Huntley v Laffin (1876) 10 SALR 6 ............................................................................. [14.65] Ballard v Tomlinson (1885) 29 Ch D 115 .............................................................................. [17.350] xxiii

Australian Real Property Law

Ballard’s Conveyance, Re [1937] Ch 473 ...................................................... [18.55], [18.75], [18.80] Baloglow v Konstanidis [2001] NSWCA 451 ......................................................................... [14.110] Baltic Shipping Company v Dillon (1993) 176 CLR 344 .......................................................... [1.215] Bampton v Burchall (1842) 5 Beav 67 ..................................................................................... [3.360] Banjima People v State of Western Australia [2015] FCAFC 84 ................................................ [6.455] Banjo v Brent London Borough Council [2005] 1 WLR 2520 ................................................... [14.70] Bank of New South Wales v Commonwealth (1948) 76 CLR 1 .................................................. [1.80] Bank of New South Wales v O'Connor (1889) 14 App Cas 273 ................................................. [7.45] Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248 ........................ [4.200], [4.205], [4.225] Bank of Victoria v Forbes (1877) 13 VLR 760 ........................................................................... [3.165] Bank of Victoria v M’Hutchison (1881) 7 VLR (L) 452 .............................................................. [14.65] Bank of Western Australia v Connell (1996) 16 WAR 483 ........................................................ [4.330] Bank of Western Australia Ltd v Shearer [2005] SASC 366 ....................................................... [7.410] Bank of Western Australia Ltd v Studman [2000] WASC 287 ................................................. [12.420] Bankmist Holdings Pty Ltd v Azina Holdings Pty Ltd [2009] WASC 230 ................................. [13.305] Bannister v Bannister [1948] 2 All ER 133 ................................................................................ [9.105] Barakat v Ealing London Borough Council [1996] RVR 138 ................................................... [14.380] Baramon Sales Pty Ltd v Goodman Fielder Mills Ltd [2001] FCA 1672 ......................[18.05], [18.20], [18.70], [18.160] Barba v Gas & Fuel Corporation of Victoria (1976) 136 CLR 120 ..................................[4.75], [4.295] Barbagallo v J & F Catelan Pty Ltd [1986] 1 Qd R 245 ............................................................. [1.275] Barber, Re (1937) 37 SR (NSW) 470 ........................................................................................ [10.60] Barbour, Re [1967] Qd R 10 .................................................................................................. [12.130] Barclays Bank v O'Brien [1994] 1 AC 180 ...................................................................[4.355], [4.375] Barclays Bank plc v Boulter [1998] 1 WLR 1 ............................................................................ [2.455] Barina Properties Pty Ltd v Bernard Hastie (Australia) Pty Ltd [1979] 1 NSWLR 480 .................................................................................................................. [14.265] Barker v Adelaide CC [1900] SALR 29 ................................................................................... [16.270] Barlin Investments Pty Ltd v Westpac Banking Corporation (2012) 16 BPR 30,672 .......................................................................................... [2.570], [5.30], [5.225] Barnes v Addy (1874) LR 9 Ch App 244 .......................................... [2.520], [4.320], [4.355], [4.370] Barnes v James (1902) 27 VLR 749 .......................................................................................... [5.115] Barnhart v Greenshields (1853) 9 Moo PC 18; 14 ER 204 ....................................................... [2.505] Barns v Queensland National Bank Ltd (1906) 3 CLR 925 ....................................................... [7.450] Barrett v Barrett (1918) 18 SR (NSW) 637 ........................................... [2.360], [8.15], [8.35], [11.85] Barrett v Lounova (1982) Ltd [1989] 1 All ER 351 ................................................................. [14.215] Barrowcliff, Re [1927] SASR 147 .............................................................................[12.430], [12.435] Barry v Fenton [1952] NZLR 990 .......................................................................................... [17.320] Barry v Hasseldine [1952] 1 Ch 835 ...................................................................................... [17.150] Barry v Heider (1914) 19 CLR 197 ................................................................ [2.440], [2.445], [4.85], [4.130], [4.300], [4.355], [5.10], [5.40], [5.105], [8.115], [14.160] Bartha v O’Riordan [2004] QSC 205 ....................................................................................... [3.270] Bartholemew, Re (1849) 1 Mac & G 354; 41 ER 1302 ............................................................ [11.85] Bartlett v Ryan (2000) 10 BPR 18,077 ....................................................................................... [3.85] Bartlett v Tottenham [1932] 1 Ch 114 .................................................................................. [17.170] Barton v Lantsbery (2004) V ConvR 58-​577 .......................................................................... [14.225] Barwick’s Case (1597) 5 Co Rep 93b; 77 ER 199 ..................................................................... [10.50] Basham, Re [1987] 1 All ER 405 .............................................................................................. [8.195] Bashir v Commissioner of Lands [1960] AC 44 ...................................................................... [14.310] Bass Holdings Ltd v Morton Music Ltd [1988] 1 Ch 493 ....................................................... [14.345] Bassett v Nosworthy (1673) Rep Finch 102; 23 ER 55 ............................................................. [2.465] Bastian v Haydon [2010] NSWSC 1267 ..................................................................................... [5.70] Bateman v Foster (1844) 1 Coll 118; 63 ER 346 .................................................................... [11.170]

xxiv

Table of Cases

Bates v Donaldson [1896] 2 QB 241 ..................................................................................... [14.265] Batey v Potts (2004) 61 NSWLR 274 ..................................................................................... [12.435] Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; [1998] HCA 59 ............. [6.205] Batiste v Lenin [2002] NSWCA 316 ....................................................................................... [14.450] Batsford Estates (1983) Co Ltd v Taylor [2006] 2 P & CR 5 ....................................................... [3.85] Batson v De Carvalho (1948) 48 SR (NSW) 417 .................................................................... [14.345] Batt v Adams (2001) 82 P &CR 32 .......................................................................................... [3.250] Batten Pooll v Kennedy [1907] 1 Ch 256 .............................................................................. [16.120] Baumgartner v Baumgartner (1987) 164 CLR 137; 62 ALJR 29 .................................[5.270], [8.185], [9.120], [12.165], [12.285] Baxendale v Instow PC [1981] 2 All ER 620; 2 WLR 1055 ...................................................... [16.215] Baxter v Four Oaks Properties Ltd [1965] 1 Ch 816 ............................................................... [18.145] Baxton v Kara [1982] 1 NSWLR 604 ...................................................................................... [14.115] Bayley v Bradley (1848) 5 CB 396; 136 ER 932 ..........................................................[2.170], [14.75] Baypeak Pty Ltd v Lim [2005] VSC 77 ................................................................................... [17.340] Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709 .......................... [3.75], [3.95], [3.120], [3.125], [3.135], [3.140], [3.160], [3.315] Bayside Developments Pty Ltd v Copperart Pty Ltd (1994) 11 SR (WA) 316 .......................... [14.390] Beachway Management Ltd v Wisewell [1971] Ch 610 ......................................................... [11.165] Beaman v ARTS Ltd [1949] 1 KB 550 ...................................................................................... [3.285] Beamer Pty Ltd v Star Lodge Supported Residential Services Pty Ltd [2005] VSC 236 ............................................................................................................... [14.350] Beames v Leader [2000] 1 Qd R 347 ..........................................................................[4.260], [4.265] Beard v Westcott (1822) 5 B & Al 801; 106 ER 1383 ............................................................. [11.220] Beardman v Wilson (1868) LR 4 CP 57 .................................................................................. [14.245] Beardsley v Registrar of Titles [1993] 2 Qd R 117 .................................................................... [4.435] Beattie v Fine [1925] VLR 363 ..................................................................................[14.65], [14.110] Beatty v ANZ Banking Group Ltd [1995] 2 VR 292 ....................................... [4.160], [4.200], [4.225] Beaulane Properties Ltd v Palmer [2006] Ch 79 .................................... [3.15], [3.25], [3.80], [3.105] Beaumont v Whitcombe and Tombs (1897) 16 NZLR 133 .................................................... [14.195] Beavis, Re; Beavis v Beavis (1906) 7 SR (NSW) 66 ............................................ [2.360], [8.15], [8.35] Beca Developments Pty Ltd v Idameneo (No 92) (1990) 21 NSWLR 459 .......................[5.45], [5.50] Beck v Auerbach (1986) 6 NSWLR 454 ................................................................................. [17.270] Beck v Rebow (1706) 1 P Wms 94; 24 ER 309 ......................................................................... [16.90] Beckford v Wade (1805) 17 Ves Jun 87; 34 ER 34 .................................................................... [3.225] Beconwood Securities Pty Ltd v ANZ Banking Group Ltd [2008] FCA 594 ......................[7.05], [7.55] Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 .............................................. [5.45] Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 .................................... [5.90] Beesly v Hallwood Estates Ltd [1961] 1 Ch 105 ....................................................................... [8.105] Beever v Spaceline Engineering Pty Ltd (1993) 6 BPR 13,270 .........................................[2.50], [3.85] Bel Madelyn Investments Pty Ltd v Briscoes Charter Service (1988) 146 LSJS 30 ................... [14.270] Belgrave Nominees Pty Ltd v Barlin-​Scott Airconditioning (Aust) Pty Ltd [1984] VR 947 ......................................................................................................[16.30], [16.50] Belgravia Insurance Co Ltd v Meah [1964] 1 QB 436 ............................................................ [14.335] Bell v Graham [2000] VSC 142 ................................................................................................. [5.35] Bell v Scott (1922) 30 CLR 387 ..................................................................................[8.100], [8.275] Bellevue Crescent Pty Ltd v Marland Holdings Pty Ltd (1998) 43 NSWLR 364 ....................... [17.195] Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd [2012] 1 AC 383 ...................................................................................................[2.220], [2.250] Belyea v McBride [1942] 3 DLR 785 ........................................................................................ [11.75] Beman Pty Ltd v Boroondara City Council (2017) 224 LGERA157 ........................................... [18.65] Bence, Re [1891] 3 Ch 242 ..................................................................................................... [11.80] Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464 ............................................. [16.140] xxv

Australian Real Property Law

Bendall v Tyack [2010] NSWSC 431 ...................................................................................... [12.455] Beneficial Finance Corp Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 .............. [5.35] Benlist Pty Ltd v Olivetti Australia Pty Ltd (1992) ATPR 41-​168 .................................................. [9.25] Benmar Properties Pty Ltd v Makucha [1996] 2 Qd R 1 ........................................................... [4.335] Benn v Hardinge (1992) 66 P&CR 246 ................................................................................. [17.415] Bennett, Re; Union Trustee Co of Australia Co Ltd v Bennett [1951] St R Qd 202 .................... [2.210] Berdal v Burns [1990] WAR 140 .............................................................................[12.345], [12.420] Beresford v Booth (1999) 202 LSJS 160; [1999] SASC 166 .................................................... [12.290] Berkley v Poulett (1976) 242 EG 39 ........................................................................................ [16.40] Berkley v Poulett [1977] EGD 754 ........................................................................................... [16.50] Bernstein v Georgakakis [2010] VSC 52 .................................................................................... [5.35] Berry v Berry (1878) 7 Ch D 657 .......................................................................................... [10.130] Berryman v Sonnenschein [2008] NSWSC 213 ..................................................................... [17.325] Besmaw Pty Ltd v Sydney Water Corp (2001) 113 LGERA 246; [2001] NSWLEC 15 ............................................................................... [17.40], [17.45], [17.120] Best v Chief Land Registrar [2014] EWHC 1370 ........................................................................ [3.85] Beswick v Beswick [1966] Ch 538 ......................................................................................... [18.270] Beswick v Beswick [1968] AC 58 ........................................................................................... [18.270] Betlehem v Keytown Constructions Pty Ltd [2007] WASC 38 .................................................... [5.35] Bettison v Langton [2000] Ch 54 ........................................................... [17.450], [17.455], [17.465] Bevan v Dobson (1906) 26 NZLR 69 ....................................................................................... [3.430] Bevilacqua v Merakovsky [2005] VSC 235 ............................................................................. [18.240] Bewick, Re [1911] 1 Ch 116 ................................................................................................... [11.75] Bickersteth v Shanu [1936] AC 290 ......................................................................................... [11.85] Bickerton’s Aerodromes Ltd v Young (1958) 108 LJ 218 ........................................................ [14.345] Biggs v Hoddinot [1898] 2 Ch 307 ......................................................................................... [7.175] Biljabo v Western Australia (1995) 128 ALR 1 .......................................................................... [6.395] Bill Acceptance Corporation Ltd v GWA Ltd (1983) 78 FLR 171 .............................................. [9.160] Billiet v Commercial Bank of Australasia Ltd [1906] SALR 193 ............................................... [17.170] Billson v Residential Apartments Ltd [1992] 1 AC 494 ............................................[14.315], [14.350] Binions v Evans [1972] Ch 359 .................................................................... [4.365], [8.230], [9.105] Birch v Wright (1786) 1 TR 378 ...............................................................................[14.85], [14.300] Bird v Trustees Executors & Agency Co Ltd [1957] VR 619 .................................................... [18.270] Birmingham, Dudley & District Banking Co v Ross (1888) LR 38 Ch D 295 ............................................................................................................... [14.220] Birmingham Citizens Permanent Building Society v Gaunt [1962] Ch 883 .............................. [7.255] Bishop v Moy [1963] NSWR 468 ........................................................................................... [14.210] Bishop v Taylor (1968) 118 CLR 518 ........................................................................[14.25], [14.110] Biviano v Natoli (1998) 43 NSWLR 695 .................................................................[12.290], [12.305] Black v Apps [2005] NSWSC 943 .......................................................................................... [16.300] Black v Garnock (2007) 230 CLR 438 ................................................ [5.20], [5.165], [5.190], [5.220] Black v Poole (1895) 16 ALT 155 .......................................................................................... [14.135] Blackburn v Stables (1814) 2 V & B 367; 35 ER 358 ................................................................ [11.45] Blackburne v Hope-​Edwardes [1901] 1 Ch 419 ..................................................................... [17.530] Blackler v Felpure Pty Ltd (2000) NSW ConvR 57,275 ............................................................. [14.25] Blacklocks v JB Developments (Godalming) Ltd [1982] Ch 183 ............................................... [5.280] Blackman v Fysh [1892] 2 Ch 209 .......................................................................................... [10.50] Blacks Ltd v Rix [1962] SASR 161 .............................................................................[18.35], [18.180] Blackwood &Ibotson v London Chartered Bank of Australia (1871) 10 SCR (NSW) (Eq) 56; (1874) LR 5 PC 92 .............................................. [2.470], [2.620], [2.650] Blake v Lane (1876) 2 VLR (L) 54 .......................................................................................... [14.210] Blane v Francis [1917] 1 KB 252 ........................................................................................... [14.290] Blathwayt v Lord Cawley [1976] AC 397 ................................................................................. [2.240] Blewett v Blewett [1936] 2 All ER 188 ................................................................................... [14.340] Blewitt v Tregonning (1835) 3 Ad & El 554; 111 ER 524 ....................................................... [17.455] xxvi

Table of Cases

BliBli No 1 Pty Ltd v Kimlin Investments Pty Ltd [2008] QSC 289 ............................................ [4.370] Bligh v Martin [1968] 1 WLR 804 ............................................................................................ [3.140] Blockbuster Entertainment Ltd v Leakcliff Properties Ltd [1997] 08 EG 139 ........................... [14.265] Blomley v Ryan (1956) 99 CLR 362 ......................................................................................... [4.375] Blount v Layard [1891] 2 Ch 681n ........................................................................................ [16.245] Blundell v Catteral (1821) 5 B & Ald 268; 106 ER 1190 ........................................................ [16.210] Blyth Corporation’s Application, Re (1962) 14 P & CR 56 ..................................................... [18.225] Bob Jane T-​Marts v The Baptist Union of Victoria [1999] VSC 346 ............................................. [5.35] Bocardo SA v S & M Hotels Ltd [1979] 3 All ER 737 .............................................................. [14.255] Bocardo SA v Star Energy UK Onshore Ltd [2011] 1 AC 380; [2010] 3 WLR 654; 3 All ER 975 ...................................................................................[16.130], [16.315] Boddington v Robinson (1875) LR 10 Ex 270 .......................................................................... [10.50] Bodney v Bennell (2008) 167 FCR 84 ........................................................................[6.480], [6.490] Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 .................................................[3.415], [3.430] Bogdanovic v Koteff (1988) 12 NSWLR 472 ............................................................................ [4.320] Boglari v Steiner School and Kindergarten (2007) 20 VR 1 .................................................... [17.340] Bohn v Miller Bros Pty Ltd [1953] VLR 354 ............................................................................ [18.270] Bolton v Clutterbuck [1955] SASR 253 .................................................................................. [17.140] Bond and Leitch v Delfab Investments Pty Ltd (1980) 26 SASR 462; 90 LSJS 570 .................. [17.330] Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 ............[2.255], [15.195] Bondi Beach Astra Retirement Village Pty Ltd v Hohman [2010] NSWCA 38 ......................... [15.325] Bonifacio v NSW Trustee and Guardian (Acting as Executor of the Estate of the Late Adam Frank Woitala) [2015] NSWSC 124 ............................................................... [3.65] Bonner v Tottenham & Edmonton Permanent Investment Building Society [1899] 1 QB 161 ............................................................................................................. [14.305] Bonvale Enterprises Pty Ltd v Halfpenny Investments Pty Ltd (2005) 62 NSWLR 698; [2005] ANZ ConvR 208; NSW ConvR 56-​128; NSWSC 219 .......[17.40], [17.315] Bookville Pty Ltd v O’Loghlen [2007] VSC 67 ........................................................................ [17.415] Booth v Goodwin [1923] NZLR 703 ........................................................................................ [16.90] Borambil Pty Ltd v O'Carroll [1971] 1 NSWLR 1 ........................................................................ [4.55] Borg v Cehner [2001] VSC 438 ............................................................................................... [16.50] Borman v Griffith [1930] 1 Ch 493 ..........................................................................[17.75], [17.175] Borthwick-​Norton v Romney Warwick Estates Ltd [1950] 1 All ER 798 ...................[14.345], [14.350] Bosca Land Pty Ltd’s Caveat, Re [1976] Qd R 119 ..........................................................[5.35], [5.50] Boss v Hamilton Island Enterprises Ltd [2009] QCA 229 .........................................[14.260], [14.265] Bostock’s Settlement, Re [1921] 2 Ch 469 .............................................................................. [10.80] Bottomley v Bannister [1932] 1 KB 458 .................................................................................... [8.95] Bouch v Bickle (1915) 20 CLR 663 .......................................................................................... [6.175] Bouel v Cooktown Municipality (1885) 2 QLJ 93 .................................................................... [10.60] Boulter v Boulter (1898) 19 LR (NSW) Eq 135 ........................................................[12.265], [12.325] Boulter v Jochheim [1921] St R Qd 105; (1921) 29 CLR 602 (note) .......................[17.195], [17.415] Bouquey v DC of Marion [1932] SASR 32 ............................................................................... [17.40] Bourke v Bourke (No 2) (1994) 121 FLR 124 ......................................................................... [12.345] Bourke, In the Marriage of (1993) 16 Fam LR 779 ................................................................ [12.345] Bourseguin v Stannard Bros Holdings Pty Ltd [1994] 1 Qd R 231 ............................................ [4.365] Boursot v Savage (1866) LR 2 Eq 134 ..................................................................................... [2.550] Bowen v Blair [1933] VLR 398 ................................................................................................. [1.255] Bowen, Re [1893] 2 Ch 491 .................................................................................................. [11.250] Bowler v Hilda Pty Ltd (1998) 80 FCR 191; 153 ALR 95 .......................................................... [9.165] Bowles, Re [1902] 2 Ch 650 ................................................................................................... [11.10] Bowles, Re [1905] 1 Ch 371 ................................................................................................... [11.80] Bowman v Griffith [1930] 1 Ch 493 ...................................................................................... [17.170] Bowman v Tremaine [2016] WASC 294 .................................................................................. [3.160] Bowser v Colby (1841) 1 Hare 109; 66 ER 969 ..................................................................... [14.335] Box v Attfield (1886) 12 VLR 574 ............................................................................................ [14.65] xxvii

Australian Real Property Law

Boyce v Beckman (1890) 11 LR (NSW) (L) 139 ....................................................................... [2.655] Boyd v Mayor of Wellington [1924] NZLR 1174 .............................. [4.145], [4.150], [4.360], [4.405] Boyer v Warbey [1953] 1 QB 234 ..........................................................................[14.165], [14.300] Bracewell v Appleby [1975] Ch 408 ...................................................................................... [18.245] Brackenbury v Gibbons (1876) 2 Ch D 417 ............................................................................ [10.45] Bradbury v Grimble & Co [1920] 2 Ch 548 ............................................................................ [14.65] Bradford House Pty Ltd v Leroy Fashion Group Ltd [1983] ATPR 44,162 ............................... [14.215] Bradley v Carritt [1903] AC 253 .............................................................................................. [7.165] Bradshaw v Davey [1952] 1 All ER 350 .................................................................................... [16.25] Bradshaw v Griffiths [2016] QCA 20 ..................................................................................... [17.285] Bradshaw v Pawley [1980] 1 WLR 10 ...................................................................................... [14.45] Bradshaw v Toulmin (1784) Dickens 633; 21 ER 417 .............................................................. [12.80] Braham v Stephen [2015] VSC 87 ......................................................................................... [14.420] Braidwood v Dunn [1917] NZLR 269 ...................................................................................... [16.95] Brain, Re (1874) LR 18 Eq 389 .............................................................................................. [14.310] Brambles Holdings Ltd v Carey (1976) 15 SASR 270 ............................................................... [4.225] Brand v Chris Building Co Pty Ltd [1957] VR 625 .....................................................[8.225], [16.280] Brandon v Robinson (1811) 18 Ves Jun 429; 34 ER 379 .......................................................... [10.50] Bray v Bray (1926) 38 CLR 542 ............................................................................................. [12.445] Braye v Horsfall (1908) 8 SR (NSW) 258 ............................................................................... [17.190] Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd (2007) 20 VR 311; [2007] VSCA 311 ........................................................................................... [16.130] Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1 .............................................. [14.275] Bree v Scott (1903) 29 VLR 692 ...................................................................................[3.45], [3.165] Breen v Williams (1996) 186 CLR 71 ....................................................................................... [1.190] Brendy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 ................. [6.430] Brennan v Duncan (No 2) [2006] NSWSC 851 ..................................................................... [12.320] Brennan v Pitt Son and Badgery (1898) 20 NSWLR (Eq) 179 .................................................. [2.495] Breskvar v Wall (1971) 126 CLR 376 ............................................................. [1.25], [4.125], [4.130], [4.135], [4.155], [4.175], [4.480], [5.165], [5.185], [5.255], [5.260], [5.280] Breskvar v White [1978] Qd R 188 .............................................................................[4.435], [4.480] Brett v Cumberland (1619) Cro Jac 521; 79 ER 446 .............................................................. [14.270] Brian Stevens Pty Ltd v Clarke (1965) 83 WN (Pt 1) (NSW) 32 .............................................. [14.200] Brickwood v Young (1905) 2 CLR 387 ..................................................................[12.275], [12.305], [12.325] Bridge Wholesale Acceptance Corp (Aust) Ltd v Burnard (1992) 27 NSWLR 415 .................................................................................................................. [1.265] Bridges v Bridges [2010] NSWSC 1287 ........................................................................[3.85], [3.365] Bridges v Mees [1957] Ch 475 ................................................................................................ [3.215] Bridgewater v Leahy (1998) 194 CLR 457 ..................................................................[8.220], [9.140] Bridle v Ruby [1988] 3 WLR 191 ........................................................................................... [17.225] Brighton and Hove General Gas Co v Hove Bungalows Ltd [1924] 1 Ch 372 .........[16.215], [16.220] Brikom Investments Ltd v Carr [1979] QB 467 ...................................................................... [14.320] Brilliant v Michaels [1945] 1 All ER 121 ................................................................................... [14.45] Brine and Davies, Re [1935] 1 Ch 388 .................................................................................... [3.350] Brisbane CC v Attorney-​General (Qld) [1978] 3 WLR 299 ....................................................... [6.205] Bristol and West Building Society v Henning [1985] 1 WLR 778 .............................................. [2.520] British American Cattle Co v Caribe Farm Industries Ltd [1998] 1 WLR 1529 ........................... [4.325] British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137 .................................................................................................. [14.450] British Bakeries (Midlands) Ltd v Michael Testler& Co Ltd (1986) 277 EG 1245 ..................... [14.265] British Petroleum Pension Trust Ltd v Behrendt (1986) 52 P & CR 117 .................................. [14.345] xxviii

Table of Cases

British Red Ash Collieries Ltd, Re [1920] 1 Ch 326 ................................................................... [16.95] Broad v Public Trustee [1939] NZLR 140 ................................................................................. [7.375] Broadcast Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (2004) 221 CLR 178 ...............................................................................[4.325], [6.90] Brocklesby v Temperance Permanent Building Society [1895] AC 173 ......... [2.420], [2.435], [5.165] Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27 ............................... [5.45] Broken Hill Proprietary Co Ltd v Hapag Lloyd Aktiengesellschaft [1980] 2 NSWLR 572 .................................................................................................................. [18.250] Bromley Park Garden Estates Ltd v Moss [1982] 2 All ER 890 ................................................ [14.265] Bromor Properties Ltd’s Application, Re (1995) 70 P & CR 569 ............................................. [18.135] Brook, Ex parte; Re Roberts (1878) 10 Ch D 100 .................................................................... [16.95] Brooker Settled Estates Ltd v Ayers (1987) 282 EG 325 ........................................................... [14.35] Brooker’s Colours Ltd v Sproules (1910) 10 SR (NSW) 839 .................................................... [14.335] Brooks Caveat, Re [2014] QSC 76 ............................................................................................. [5.45] Brotherton v Hatt (1706) 2 Vern 574; 23 ER 973 ..................................................................... [2.550] Brough v Nettleton [1921] 2 Ch 25 ...................................................................................... [14.115] Brown v Commonwealth Bank of Australia (1994) 63 SASR 188 ............................[15.205], [15.310] Brown v Heffer (1967) 116 CLR 344 ....................................................................................... [8.140] Brown v Independent Baptist Church of Woburn 325 Mass 645; 91 NE 2d 922 (1950) ...................................................................................................... [11.255] Brown and Austrust Ltd v Commonwealth Bank of Australia (1993) 173 LSJS 145 (at first instance); (1994) 63 SASR 203 ......................................................... [4.340] Browne v Flower [1911] 1 Ch 219 ...........................................................................[14.225], [17.80] Brownfield v Earle (1914) 17 CLR 615 ..................................................................................... [11.85] Brownsea v National Trustees Executors & Agency Co of Australasia Ltd [1959] VR 243 ..................................................................................................[14.110], [17.130] Brudenell v Elwes (1801) 1 East 442; 102 ER 171 .................................................................... [11.10] Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555 ................................... [5.240], [8.50], [8.55], [8.60], [12.390], [12.395] Brunner v Greenslade [1971] Ch 993 .................................................................................... [18.155] Brunswick Developments Pty Ltd v Shock Records Pty Ltd [1996] 1024 FCA 1 ...................... [14.110] Brush, Re [1962] VR 596 ......................................................................................................... [12.80] Brutan Investments Pty Ltd v Underwriting & Insurance Ltd (1980) 39 ACTR 47 ..................... [7.455] Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 ................................................ [14.35] Buchanan v Byrnes (1906) 3 CLR 704 ....................................................................[14.380], [14.405] Buchanan Borehole Collieries Pty Ltd v NSW Coal Compensation Review Tribunal (1997) 9 BPR 16,253 ............................................................................................ [3.430] Buchholz v Kempsey Shire Council [2005] NSWSC 235 .........................................[17.105], [17.125] Buckby v Speed [1959] Qd R 30 ............................................................................................. [14.85] Buckinghamshire County Council v Moran [1990] Ch 623 ............................... [3.75], [3.85], [3.90], [3.105], [3.110], [3.140], [3.145], [3.150] Buckland v Butterfield (1820) 2 Brod & B 54; 129 ER 878 ....................................................... [16.20] Bucknell v Mann (1862) 2 SCR (NSW) 1 ................................................................................. [14.80] Buckton’s Settlement Trusts, Re [1964] Ch 497 ..................................................................... [11.220] Buckworth v Simpson and Benner (1835) 1 Cr M & R 834; 149 ER 1317 .............................. [14.300] Budget Rent-​a-​Car System Pty Ltd v B S Stillwell & Co Pty Ltd (1989) V ConvR 54-​336 .......... [3.415] Buildev Development Pty Ltd v PIC Sales Pty Ltd [2004] NSW ConvR 56-​087 ........................... [5.35] Bukowski (dec’d), Re [1954] St R Qd 286 ............................................................................. [11.170] Bull v Bull [1955] 1 QB 234 .................................................................................................. [12.145] Bulli Coal Mining Co v Osborne [1899] AC 351 .......................................................[3.285], [16.315] Bulstrode v Lambert [1953] 2 All ER 728; [1953] 1 WLR 1064 ............................................... [17.330] Bundy v Alberts [2007] VSC 90 ............................................................................................... [15.95] Bunney v South Australia (2000) 77 SASR 319; [2000] SASC 141 ...........................[16.295], [16.305] Bunney v South Australia (2001) 112 LGERA 213; [2001] SASC 18 ....................................... [16.300] xxix

Australian Real Property Law

Bunning Building Supplies Pty Ltd v Sgro (1995) V ConvR 54-​535 ............................................ [5.35] Burgess v Rawnsley [1975] Ch 429 ........................................................ [12.340], [12.345], [12.365] Burgess, Re [1899] SASR 145 ................................................................................................ [13.260] Burke v Dawes (1938) 59 CLR 1 ...................................................................................[4.75], [4.295] Burke v State Bank of New South Wales [1994] 37 NSWLR 53 ................................................ [4.370] Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382 .........................................................[18.35], [18.180] Burman v AGC (Advances) Ltd [1994] 1 Qd R 123 .................................................................... [5.90] Burnham v Carroll Musgrove Theatres Ltd (1928) 41 CLR 540 ...................................[14.60], [14.65] Burnyeat, Re [1923] 2 Ch 52 .................................................................................................. [11.85] Burrows v Crimp (1887) 8 LR (NSW) 198 ............................................................................... [2.650] Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd [1970] 1 NSWR 137; (1969) 91 WN (NSW) 521 ......................................................................... [16.120] Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73; 45 ALJR 203 ....................................................................... [4.195], [5.205], [13.70], [16.120], [17.95] Burton v Barclay and Perkins (1831) 7 Bing 745; 131 ER 288 ................................................ [14.385] Burton v Camden London Borough Council [2000] 2 AC 399 ................................................. [12.40] Bury v Pope (1586) Cro Eliz 118; 78 ER 375 ......................................................................... [16.130] Business Australia Capital Mortgage Pty Ltd v Randwick Nominees Pty Ltd (2004) 11 BPR 21,649 ..................................................................................................................... [5.60] Butcher v Bowen [1964] NSWR 36 ......................................................................................... [14.60] Butcher v Elder Realty Pty Ltd (2002) 55 NSWLR 558; [2002] NSWCA 237 ........................... [16.220] Butland v Cole (1995) 87 LGERA 122 ................................................................................... [16.305] Butler v Fairclough (1917) 23 CLR 78 ........................................................................[5.150], [5.155] Butler v Standard Telephones & Cables Ltd [1940] 1 All ER 121 ............................................ [16.315] Byrne v St George Bank (1996) V ConvR 54-​543 ...................................................................... [5.40] Byrne v Steele [1932] VLR 143 ...............................................................................[17.345], [17.370] Byrne v The Owners of Ceresa River Apartments Strata Plan [2017] WASCA 104 ................... [13.300] Byrnes v Jokona Pty Ltd [2002] FCA 41 ..................................................................[14.225], [14.410] Byron Bay Retirement Villages Pty Ltd v Zandata Pty Ltd [2008] NSWSC 1123 ...................... [14.350]

C CIBC Mortgages plc v Pitt [1994] 1 AC 200 ............................................................................ [5.275] CM Group Pty Ltd's Caveat, Re [1986] 1 Qd R 381 ................................................................. [8.140] CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd (2008) 65 ACSR 650 ...........................................................................[2.420], [2.570], [5.250], [5.275] CPT Custodian Pty Ltd v Commissioner of State Revenue; Commissioner of State Revenue v Karingal 2 Holdings Pty Ltd (2005) 224 CLR 98 .....................................[2.370], [5.35] Cable v Bryant [1908] 1 Ch 259 ..............................................................................[14.220], [17.80] Caboche v Ramsay (1993) 119 ALR 215 ................................................................................ [2.220] Cadell v Palmer (1833) 1 Cl & Fin 372; 6 ER 956 .......................................................[11.10], [11.45] Cadia Holdings Pty Ltd v New South Wales (2010) 242 CLR 195 ...........................[16.150], [16.160] Cadija Unmar v S Don Manis Appu [1939] AC 136 ................................................................... [3.90] Cain v NSW Land and Housing Corporation [2014] NSWCA 28 ............................................ [15.100] Calabrese v Miuccio (No 2) [1985] 1 Qd R 17 ...................................................................... [12.345] Calabro v Bayside City Council [1999] 3 VR 688 ........................................................[4.325], [4.330] Caldwell v Fleming [1927] NZLR 145 ...................................................................................... [11.80] Caldy Manor Estate Ltd v Farrell [1974] 1 WLR 1303 .............................................................. [2.255] Callen, Re (1918) 18 SR (NSW) 219 ...................................................................................... [13.255] Callow v Rupchev [2009] NSWCA 148 ..................................................................[12.265], [12.280], [12.290], [12.320] Calverley v Green (1984) 155 CLR 242 ..........................................................................[9.80], [9.85] Cambridge v Rous (1858) 25 Beav 409; 53 ER 693 ................................................................. [11.80] Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 .................... [9.160] xxx

Table of Cases

Campbell v Baigent [2001] NSWSC 1348 ............................................................................. [17.405] Campbell v Bank of New South Wales (1883) 16 NSWLR (E) 285 ........................................... [7.345] Campbell v Commercial Banking Company of Sydney (1881) 2 NSWR 375 ...............[7.395], [7.415] Campbell v Crane (2013) 17 BPR 32,483; [2013] NSWCA 43 ............................................... [16.300] Campbell v Glasgow (1919) 27 CLR 313 ................................................................................ [2.185] Campbell v Holyland (1877) 7 Ch D 166 .....................................................................[7.50], [7.335] Campbell v McGrath [2005] NSWSC 496 ..............................................................[17.130], [17.170] Campion, Re [1908] SALR 1 ............................................................................. [8.15], [8.35], [10.50] Canada Bay Council, City of v Bonaccorso Pty Ltd (2007) 71 NSWLR 424 .................[4.130], [4.335] Canas Property Co Ltd v K L Television Services Ltd [1970] 2 QB 433 ................................... [14.315] Canberra International Airport Pty Ltd v Ansett Australia Ltd (2002) 41 ACSR 309; [2002] FCA 329 ............................................................................................................... [14.350] Cancer Care Institute of Australia Pty Ltd (admin apptd), Re (2013) 16 BPR 31,529; [2013] NSWSC 37 ......................................................... [16.50], [16.85], [16.90] Canning’s Will Trusts, Re [1936] Ch 309 ............................................................................... [11.220] Cannon v Villars (1878) 8 Ch D 415 ..................................................................................... [17.330] Cantelo v Kapellides [2003] VSC 442 .................................................................................... [17.245] Capar v Wasylowski [1983] 4 WWR 526 ................................................................................ [17.230] Cape v Trustees of the Savings Bank of New South Wales (1893) 14 NSWLR (Eq) 204 ........................................................................................................... [7.365] Capell v Winter [1907] 2 Ch 376 ...............................................................................[2.595], [5.115] Capital & Counties Bank v Rhodes [1903] 1 Ch 631 ............................................................. [14.385] Capital Access v Welch (2002) 218 LSJS 177 ......................................................................... [12.410] Capital Finance Australia Ltd v Karabassis (2003) 11 BPR 21,123 .............................................. [5.35] Capital Quality Homes Ltd v Colwyn Construction Ltd (1976) 61 DLR (3d) 385 .................... [14.390] Caraher v Lloyd (1905) 2 CLR 480 ........................................................................................ [10.110] Caraher, Re (1904) 21 WN (NSW) 213 ................................................................................... [10.85] Caratti v Grant (1978) 3 ACLR 322 ....................................................................................... [12.390] Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272 ..................................................................... [14.190] Cardinaels-​Hooper v Tierney (1995) 7 BPR 14435 ................................................................. [12.275] Cardiothoracic Institute v Shrewdcrest Ltd [1986] 3 All ER 633 ............................................... [14.70] Cardwell v King Ranch Australia Pty Ltd (1984) 58 ALJR 386 ..................................................... [6.15] Cargill v Gotts [1980] 1 WLR 521 ......................................................................................... [17.220] Carisfield Estate Pty Ltd v Douglas [1998] SASC 7003 ........................................................... [15.250] Carkeek v Tate-​Jones [1971] VR 691 ...................................................................................... [12.320] Carlin v Mladenovic (2002) 84 SASR 155 .............................................................................. [16.300] Carnovale v State Bank of New South Wales (unreported, Sup Ct NSW, 3 November 1992) .............................................................................................................. [7.85] Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150 .................................. [14.220] Carr v Finance Corporation of Australia Ltd (1982) 150 CLR 139; 56 ALJR 730 ........................ [7.405] Carr v Lambert (1866) LR 1 Exch 168 ................................................................................... [17.510] Carr-​Glynn v Frearsons [1999] Ch 326 .................................................................................... [12.70] Carradine Properties Ltd v Aslam [1976] 1 All ER 573 ............................................................ [14.365] Carrathool Hotel Pty Ltd v Scutti [2005] NSWSC 401 ............................................[14.190], [14.450] Carroll v Azolia Pty Ltd (unreported, SC of WA, 19 January 1998) ............................................. [5.45] Carroll v Chew (1946) 47 SR (NSW) 229 ................................................................................ [2.210] Carson v Wood (1884) 10 VLR (L) 223 .................................................................................. [14.325] Carter v Aldous [1921] VLR 234 ............................................................................................ [14.365] Carter v Carter (1857) 3 K & J 617; 69 ER 1256 ...................................................................... [2.540] Carter v Murray [1981] 2 NSWLR 77 .................................................................................... [16.325] Carter v Wake (1887) 4 Ch D 605 ........................................................................................... [7.245] Cartwright, Re; Avis v Newman (1889) 42 Ch D 532 ...............................................[13.55], [14.200] Carver v Westpac Banking Corporation Ltd [2002] NSWSC 431 .............................................. [7.455] Case of Mines (1568) 1 Plow 310; 75 ER 472 ....................................................................... [16.150] xxxi

Australian Real Property Law

Casey v Aldous (1994) 63 SASR 347 ....................................................................................... [15.80] Cash Resources Australia Pty Ltd v BT Securities Ltd [1990] VR 576 ......................................... [5.115] Cashmore’s Application, Re [1967] Tas SR 217 .........................................................[18.30], [18.165] Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2 ........................ [2.560], [4.245], [12.45] Cassegrain v Gerard Cassegrain and Co Pty Ltd (2016) 16 QUT .............................................. [4.245] Cassel, Re [1926] Ch 358 ...................................................................................................... [11.165] Casson v Leichhardt Council (2011) 186 LGERA 34; [2011] NSWLEC 243 ............................. [16.270] Castagna v Great Wall Resources Pty Ltd [2005] NSWSC 942 .................................[17.415], [18.230] Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11 ....................[4.285], [17.270] Catanzariti v Whitehouse (1981) 55 FLR 426 ......................................... [12.275], [12.280], [12.470] Catholic Supplies Ltd and Jones, Re [1922] NZLR 196 ........................................................... [14.335] Cattley v Arnold (1859) 1 J & H 651; 70 ER 905 ..................................................................... [14.60] Caunce v Caunce [1969] 1 WLR 286; 1 All ER 722 ..................................... [2.515], [2.520], [14.115] Cave v Robinson Jarvis and Rolfe [2003] 1 AC 384 .................................................................. [3.285] Cawthorne v Thomas (1993) 6 BPR 13,840 ............................................................................ [3.365] Ceda Drycleaners Ltd v Doonan [1998] 1 NZLR 224 ............................................................... [18.15] Cedar Holdings Ltd v Green [1979] 2 All ER 517 ....................................................[12.405], [12.410] Ceedive Pty Ltd v May [2005] NSWSC 222 ............................................................................. [4.355] Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40 ......................................................... [15.95] Celik Developments Pty Ltd v Mayes [2005] QSC 224 .......................................................... [13.305] Celsteel Ltd v Alton House Holdings Ltd [1985] 2 All ER 562; 1 WLR 204 .............................. [17.340] Celsteel Ltd v Alton House Holdings Ltd (No 2) [1987] 2 All ER 240 ...................................... [14.225] Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 ....................[14.325], [14.345], [14.350] Central London Commercial Estates Ltd v Kato Kagaku Co Ltd [1998] 4 All ER 948 ....................................................................................................................... [3.340] Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd [1984] 2 NSWLR 128 .......................................................................................................[7.110], [7.115] Cervi v Letcher (2011) 33 VR 320 ...............................................................................[3.80], [3.115], [3.160], [3.165] Chaka Holdings Pty Ltd v Sunsim Pty Ltd (1987) NSW ConvR 55-​367 .................................... [14.30] Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452 ...................................................................................... [4.345], [4.420], [4.450], [4.460], [4.465] Chambers v Kingham (1878) 10 Ch D 743 ........................................................................... [14.385] Chambers v Randall [1923] 1 Ch 149 ................................................................................... [18.100] Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 ..........................................................................................................[2.565], [2.570] Chan v Cresdon Pty Ltd (1989) 168 CLR 242; 89 ALR 522 .............................. [1.250], [4.75], [5.10], [7.235], [8.115], [8.135], [8.140], [12.385], [14.80] Chan Tin Shi v Li Tin Sung [2006] HKCFA 7 .................................................................[3.15], [3.255] Chandless-​Chandless v Nicholson [1942] 2 KB 321 ............................................................... [14.335] Chandos Developments Pty Ltd v Mulkearns [2008] NSWCA 62 ........................................... [14.195] Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675; [2007] NSWSC 694 .................................................................................. [4.170], [4.435], [7.75] Chandra v Perpetual Trustees Victoria Ltd (2008) 13 BPR 25,259 ............................................ [4.435] Chang v Registrar of Titles (1976) 137 CLR 177 .........................................................[2.565], [8.140] Chaplin v Smith [1926] 1 KB 198 ......................................................................................... [14.250] Chapman’s Settlement Trusts, Re [1977] 1 WLR 1163 ........................................................... [11.170] Charalambous v Ktori [1972] 1 WLR 951 .............................................................................. [14.210] Chardon, Re [1928] Ch 464 .................................................................................................. [11.235] Charles Frodsham & Co Ltd v Morris (1972) 229 EG 961 ..................................................... [14.275] Charmar Electrical Pty Ltd v Minda Incorporated (1990) 55 SASR 112 .......................[4.215], [4.300]

xxxii

Table of Cases

Chartered Trust PLC v Davies [1997] 2 EGLR 83 .................................................................... [14.225] Charters, Re [1927] 1 Ch 466 ............................................................................................... [11.170] Chase-​Manhattan Bank v Israel-​British Bank (London Ltd) [1981] Ch 105 ............................... [5.270] Chase Corporation (Australia) Pty Ltd v North Sydney Brick and Tile Company Ltd (1994) 35 NSWLR 1 ........................................................................................................... [7.160] Chasemore v Richards (1859) 7 HLC 349 ................................................................................ [1.100] Chasfild Pty Ltd v Taranto [1991] 1 VR 225 ................................................................[4.135], [4.160] Chateau Douglas Hunter Valley Vineyards Ltd v Chateau Douglas Hunter Valley Winery & Cellars Ltd [1978] ACLD 258 .....................................................[16.50], [16.115] Chatfield v Elmstone Resthouse Ltd [1975] 2 NZLR 269 .........................................[14.195], [14.210] Chatham BC’s Application, Re (1970) 21 P & CR 661 .......................................................... [18.225 ] Chee Min Thoo v Owners of Strata Plan 50276 [2011] NSWSC 657 ..................................... [13.335] Cheedy on behalf of the Yidjibarndi People v Western Australia [2010] FCA 690 ..................... [6.375] Chelsea Estates Investment Trust Co Ltd v Marche [1955] Ch 328 ........................................ [14.355] Chelsea Investments Pty Ltd v FCT (1966) 115 CLR 1 ........................................................... [14.380] Chester v Buckingham Travel Ltd [1981] 1 All ER 386 ........................................................... [14.210] Chetty v Chetty [1916] 1 AC 603 ........................................................................................... [3.175] Cheyne v Moses [1919] St R Qd 74 ...................................................................................... [14.275] Chhokar v Chhokar [1984] FLR 313 ...................................................................................... [12.295] Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 73 .................................................................. [9.145] Chick v Dockray (2011) 20 Tas R 167 ..................................................................................... [4.285] Chieco v Evans (1990) 5 BPR 11,297 .................................................................................... [12.280] Child v Bulmer [1891] 3 Ch 59 ............................................................................................. [12.340] Chiodo v Murphy (1995) V ConvR 54-​531 ............................................................................... [5.35] Chipper v Octra Nominees Pty Ltd [2006] FCA 1633 ................................................................ [5.35] Chipperfield v Carter (1895) 72 LT 487 ................................................................................ [14.110] Chirnside v Chirnside [1947] VLR 183 ................................................................................... [13.125] Chirnside v Registrar of Titles [1921] VLR 406 ....................................................................... [16.150] Chisum Services Pty Ltd, Re (1982) 7 ACLR 641 ...................................................................... [4.225] Chittick v Galea [2007] NSWSC 38 ....................................................................................... [14.335] Chiu v Healey [2003] NSWSC 857 .........................................................................[17.240], [17.415] Chong v Chanell (No 2) [2009] NSWSC 1066 .......................................................................... [5.90] Chorley Borough Council v Ribble Motor Services Ltd (1996) 72 P & CR D32 ...................... [14.215] Chrisdell Ltd v Johnson (1987) 283 EG 1553 ........................................................................ [14.325] Christie v Dalco Holdings Pty Ltd [1964] Tas SR 34 ................................................[17.190], [18.140] Christie v Quaite (1906) 26 NZLR 495 .................................................................................... [8.260] Christ’s Hospital v Grainger (1849) 1 Mac & G 460; 41 ER 1343 ........................................... [11.250] Chudleigh’s Case (1595) 1 Co Rep 113b; 76 ER 261 ..................................................[10.65], [10.80] Chung Ping Kwan v Lam Island Development Co Ltd [1997] AC 38 ............ [3.255], [3.320], [3.330] Church Commissioners for England v Nodjoumi (1986) 51 P & CR 155 ............................... [14.325] Church Property Trustees, Diocese of Newcastle v Ebbeck (1960) 104 CLR 394 ...................... [2.240] Church of England Collegiate School of St Peter, The v Chesser House Pty Ltd (1993) ANZ ConvR 110 ....................................................................................................... [7.85] Churcher v Danis Hotels Pty Ltd (1980) 8 BPR 15,863 ...........................................[12.175], [12.225] Churchill v Evans (1809) 1 Taunt 529; 127 ER 939 ................................................................ [16.320] Cihan v Oncu (2004) 11 BPR 21,653; [2004] NSWSC 338 .................................................... [14.385] Cini v Pets Paradise Franchising (SA) Pty Ltd (2008) 102 SASR 177; [2008] SASC 287 ............... [5.90] Cini v Pets Paradise Franchising (SA) Pty Ltd [2009] SASC 7 ...................................................... [5.80] Circuit Finance Australia Ltd v Panella (2011) 16 BPR 30,347 .....................................[2.565], [2.580] Circuit Finance Australia Ltd v Registrar of Titles [2006] 1 Qd R 204 ...............................[5.35], [5.75] Cirino v Registrar-​General (1993) 6 BPR 13,260 ........................................................[4.345], [4.450], [17.270] Citicorp v McLoughney and Registrar General of Deeds (1984) 35 SASR 375 .......................... [7.455] City of Subiaco v Haytesbury Properties Pty Ltd (2001) 24 WAR 146; [2001] WASCA 140 .......................................................................................................... [14.390] xxxiii

Australian Real Property Law

City & Metropolitan Properties Ltd v Greycroft Ltd [1987] 1 WLR 1085 ................................ [14.270] Civil Service Co-​operative Society Ltd v McGrigor’s Trustee [1923] 2 Ch 347 ....................... [14.320], [14.325], [14.345] Clambake Pty Ltd v Tipperary Projects Pty Ltd (No 3) [2009] WASC 52 ......................[14.65], [14.75] Clarence City Council v Howlin [2016] TASSC 61 ................................................................. [17.280] Clarence City Council v Howlin [2019] TASFC 1 ...................................................................... [4.285] Clarey v Permanent Trustee Co Ltd [2005] VSCA 128 ............................................................. [5.155] Clark v Barnes [1929] 2 Ch 368 ............................................................................................ [17.190] Clark v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 ................................................ [7.415] Clark v Raymor (Brisbane) Pty Ltd (No 2) [1982] Qd R 790 ................................................... [12.410] Clarke v Burnie City Council [2008] TasSC 75 ........................................................[18.195], [18.290] Clarke v Grant [1950] 1 KB 104 .............................................................................................. [14.70] Clarke v Palmer (1882) 21 Ch D 124 ...................................................................................... [2.420] Clarke v Tresider (1867) 4 WW & A'B (L) 164 .......................................................................... [16.95] Clarke v Wilkie (1977) 17 SASR 134 ...................................................................................... [16.300] Classic Heights Pty Ltd v Black Hole Enterprises Pty Ltd (1994) V ConvR 54-​506 ....................... [5.35] Claude Neon Ltd v Melbourne & Metropolitan Board of Works (1969) 43 ALJR 69 ................. [1.205] Claverling v Ellison (1859) 7 HL Cas 707 ................................................................................. [2.260] Clay v Karlson (1998) 19 WAR 287 ......................................................................................... [2.100] Clayton v Corby (1843) 5 QB 415 ........................................................................................ [17.450] Clayton v Ramsden [1943] AC 320 ......................................................................................... [2.260] Clear Channel UK Ltd v Manchester City Council [2005] 2 P & CR 2 ...................................... [14.35] Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 ...................................[18.05], [18.35], [18.70], [18.90], [18.125] Clement v Jones (1909) 8 CLR 133 .............................................................. [3.125], [3.140], [3.160] Clements v Ellis (1934) 51 CLR 217 ............................................................ [4.130], [4.135], [4.140], [4.145], [4.320] Clifford v Dove [2003] NSWSC 938 .......................................................................[17.105], [18.320] Clifford’s Settlement Trusts, Re [1981] Ch 63 ........................................................................ [11.170] Clifton v Bury (1887) 4 TLR 8 ................................................................................................ [16.315] Climie v Wood (1869) LR 4 Ex 328 ............................................................................[16.60], [16.90] Clobberie’s Case (1677) 2 Vent 342; 86 ER 476 ...................................................................... [11.85] Clohesy v Maher (1880) 6 VLR (L) 357 ................................................................................... [8.120] Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605; [2002] NSWCA 389 ...............................................................................................[4.60], [17.35], [17.50], [17.60], [17.65], [17.90], [17.110], [17.115], [17.450], [17.460] Clout v Markwell [2001] QSC 091 .......................................................................................... [5.270] Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122 .................................................... [7.210] Clowes v Bentley Pty Ltd [1970] WAR 24 .............................................................................. [14.195] Clubley v Bochrinis [2005] WASC 24 .................................................................................... [18.230] Clyde Properties Ltd v Tasker [1970] NZLR 754 ....................................................................... [7.415] Clyne v Lowe (1968) 69 SR (NSW) 433 ................................................................................ [14.145] Coast Securities No 9 Pty Ltd v Bondoukou (1986) 69 ALR 385 .............................................. [8.330] Coatsworth v Johnson (1885) 55 LJQB 220 ............................................................................. [14.70] Cobb v Lane [1952] 1 All ER 1199 .......................................................................................... [14.35] Cobb v Stokes (1807) 8 East 358; 103 ER 380 ...................................................................... [14.360] Cobbold v Abraham [1933] VLR 385 .................................................................................... [18.140] Cockburn v Cockburn [1921] NZLR 652 ................................................................................. [16.60] Cockerill, Re [1929] 2 Ch 131 ................................................................................................. [2.245] Cockle’s Will, Re Trusts [1967] Ch 690 .................................................................................. [11.170] Cody v Underwood [2003] QSC 345 .........................................................................[3.100], [3.125] Coe v Commonwealth (1979) 24 ALR 118 .............................................................................. [6.315] xxxiv

Table of Cases

Cogente Pty Ltd v Doe (1998) 98 LGERA 162 ......................................................................... [18.20] Cohen v Cohen (1929) 42 CLR 91 .......................................................................................... [3.220] Cohen v Popular Restaurants Ltd [1917] 1 KB 480 ................................................................ [14.275] Cohen, Re; National Provincial Bank Ltd v Katz (No 1) [1953] Ch 88 .................................... [12.165] Colchester Borough Council v Smith [1992] Ch 421 ............................................................... [3.375] Cole v Kelly [1920] 2 KB 106 ...................................................................................[14.85], [14.290] Cole v Sewell (1843) 4 Dr & War ............................................................................................ [10.80] Colegrave v Dias Santos (1823) 2 B & C 76; 107 ER 311 ...........................................[16.55], [16.90] Coleman v Bone (1996) 9 BPR 16,235 ...................................................................................... [5.35] Coleman v London County & Westminster Bank Ltd [1916] 2 Ch 353 .................................... [2.595] Coleman, Re [1936] Ch 528 ................................................................................................. [11.220] Coles KMA Ltd v Sword Nominees Pty Ltd (1986) 44 SASR 120 ................................................ [5.65] Coles Myer New South Wales Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638 ................................................................................................................... [17.300] Collett v Curling (1847) 10 QB 785; 116 ER 298 .................................................................. [14.165] Collingridge v Sontor Pty Ltd (1997) 141 FLR 440 .................................................................... [5.45] Collins v Hopkins [1923] 2 KB 617 ........................................................................................ [14.190] Collins v Winter (1924) 43 NZLR 449 ................................................................................... [14.190] Collison v Lettsom and Whitton (1815) 6 Taunt 224; 128 ER 1020 ....................................... [14.275] Colls v Home & Colonial Stores Ltd [1904] AC 179 .................................................[17.25], [17.435] Colman v Golder [1957] VR 196 ........................................................................................... [14.115] Colthurst v Bejushin (1550) 1 Plow 23; 75 ER 36 .................................................................... [10.50] Colvin v Bowen (1958) 75 WN (NSW) 262 ........................................................................... [14.265] Commercial & General Acceptance Ltd v Nixon (1981) 152 CLR 491; 56 ALJR 130 ....................................................................................................................... [7.455] Commercial Bank of Australia v Schierholter [1981] VR 292 .........................................[5.90], [7.435] Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 .............................[4.375], [7.200], [9.175] Commissioner for Fair Trading v Voulon [2005] WASC 229 ..................................................... [15.30] Commissioner for Main Roads v North Shore Gas Co Ltd (1967) 120 CLR 118 ....................... [17.40] Commissioner of State Revenue v Uniqema Pty Ltd (2004) 9 VR 523; [2004] VSCA 82 ................................................................................................................. [16.50] Commissioner of State Revenue (WA) v TEC Desert Pty Ltd (2009) 40 WAR 344; [2009] WASCA 128 ..............................................................................................[16.15], [16.85], [16.95] Commissioner of Taxation v Metal Manufacturers Ltd (2001) 108 FCR 150 ...............[16.20], [16.40] Commonwealth v Colonial Combing Spinning & Weaving Co Ltd (1922) 31 CLR 421 ..................................................................................................................... [13.255] Commonwealth v Cornwell (2007) 229 CLR 519 .................................................................... [3.285] Commonwealth v K N Harris Pty Ltd [1965] NSWR 63 ........................................................... [14.30] Commonwealth v Registrar of Titles (Vic) (1918) 24 CLR 348; [1918] VLR 228 .........[17.20], [17.25], [17.80], [17.110] Commonwealth v South East Queensland Aboriginal Corp for Legal Services [2006] 1 Qd R 12 ................................................................................................. [4.330] Commonwealth v Verwayen (1990) 170 CLR 394 ....................................................[8.235], [17.130] Commonwealth v Yarmirr (1999) 101 FCR 171; 168 ALR 426 ................................................. [6.460] Commonwealth v Yarmirr (2001) 208 CLR 1 ...............................................................[2.35], [6.465] Commonwealth Bank v Kyriackou (2003) V ConvR 54-​674 ....................................................... [5.40] Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589 ................................................. [5.45] Commonwealth Bank of Australia v Garon Pty Ltd [1999] WASC 170 ....................................... [5.90] Commonwealth Bank of Australia v Kyriackou [2003] V ConvR 54-​543 ................................... [5.255] Commonwealth Bank of Australia v Psevdos [2015] SASC 66 .....................................[5.200], [5.210] Commonwealth Bank of Australia Ltd v Lee (1996) 22 ACSR 574 ........................................... [7.455] Commonwealth Development Bank of Australia Ltd v Cormack (1983) 108 LSJS 38 ............................................................................................................ [7.410] xxxv

Australian Real Property Law

Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47 .......................................................................................[1.225], [2.160], [14.70], [14.250] Competitive Funerals Pty Ltd v Gurmit Singh Rai [2005] NSWSC 1171 .....................[14.45], [14.50], [14.110], [14.115] Composite Buyers Ltd v Soong (1995) 38 NSWLR 286 ............................................................. [5.35] Composite Buyers Ltd v State Bank of New South Wales (1991) 3 ACSR 196 .......................... [2.590] Concepts Property Ltd v McKay [1984] 1 NZLR 560 ............................................................... [16.95] Concord MD v Coles (1905) 3 CLR 96; 23 WN (NSW) 39 .........................................[1.125], [17.05], [17.10], [17.40], [17.60], [17.95] Conlan v Registrar of Titles (2001) 24 WAR 299 .......................................... [4.155], [4.230], [4.245], [4.320], [4.365] Connellan Nominees Pty Ltd v Camerer [1988] 2 Qd R 248 ................................................. [17.345] Connolly v Noone and Cairns Timber Ltd [1912] St R Qd 70 ................................................ [17.460] Conroy v Lowndes [1958] Qd R 375 ....................................................................................... [1.275] Consolidated Development Pty Ltd v Holt (1986) 6 NSWLR 607 ............................................. [11.15] Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 424 .............................................[4.165], [4.170] Constantine v Sanders [2007] NSWSC 250 ........................................................................... [14.335] Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 ................................ [4.370] Cook v Shoesmith [1951] 1 KB 752 ...................................................................................... [14.250] Cook, Re [1964] VR 808 ........................................................................................[18.220], [18.225] Cooke v Cooke [1987] VR 625 ................................................................................................ [9.120] Cooke v Dunn (1998) 9 BPR 16,489 ................................................... [3.85], [3.90], [3.165], [3.360] Coomber v Curry (1993) V ConvR 54-​464 .............................................................................. [4.160] Coomber v Howard (1845) 1 CB 440; 135 ER 611 ................................................................ [14.165] Cooper v Dick (1862) 1 SCR (NSW) 127 ............................................................................... [14.430] Cooper v Federal Commissioner of Taxation (1958) 100 CLR 131 ............................[3.430], [14.385] Cooper v Stuart (1889) 14 AC 286 .............................................................................[2.25], [6.167], [6.235], [6.265], [11.15] Cooper, Re (1881) 20 Ch D 611 ............................................................................................. [2.605] Cooper’s Lease, Re (1968) 19 P & CR 541 ............................................................................ [14.265] Cope v Keene (1968) 118 CLR 1 ....................................................................................[8.50], [8.55] Copeland v Greenhalf [1952] Ch 488; 1 All ER 809 ....................................................[17.65], [17.95] Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396 ................[14.110], [14.410] Coras v Webb [1942] QSR 66 ....................................................................................[4.135], [4.335] Corbett v Halifax Building Society plc [2003] 1 WLR 964 ........................................................ [2.460] Cordingley, Re (1948) 48 SR (NSW) 248 ............................................................................... [12.455] Corin v Patton (1990) 169 CLR 540; 92 ALR 1 ................................................ [5.10], [5.240], [8.60], [12.340], [12.360], [12.365], [12.370], [12.395], [12.400] Corinne Court (Owners of) 290 Stirling Street Perth Strata Plan 12821 v Shean Pty Ltd (2000) 23 WAR 1 ........................................................................... [4.130] Cornish v Brook Green Laundry Ltd [1959] 1 QB 394 ........................................................... [14.115] Coronation Street Industrial Properties Ltd v Ingall Industries Plc [1989] 1 WLR 304 ............. [14.275] Coronet Homes Pty Ltd v Bankstown Finance Investment Co Ltd [1966] 2 NSWR 351 ............ [4.265] Corozo Pty Ltd v Total Australia Ltd [1988] 2 Qd R 366 .......................................................... [4.360] Corporate Affairs Commission v ASC Timber Pty Ltd (1989) 18 NSWLR 577 ........................... [4.215] Corporate Affairs Commission v Australian Softwood Forest Pty Ltd [1978] 1 NSWLR 150 .... [17.460] Corporation of London v Riggs (1880) 13 Ch D 798 ............................................................. [17.150] Corry v Corry (1983) FLC 91-​343 ......................................................................................... [12.345] Corser v Cartwright (1875) LR 7 HL 731 ................................................................................. [2.455] Costa & Duppe Properties Pty Ltd v Duppe [1986] VR 90 ............................................[2.370], [5.35] Costello v Official Trustee in Bankruptcy (1998) V ConvR 54-​579 .............................................. [5.80] Costin v Costin (1994) NSW ConvR 55-​715 .......................................................................... [12.400] Costin v Costin (1997) NSW ConvR 55-​811 .......................................................................... [12.400] xxxvi

Table of Cases

Cottee Dairy Products Pty Ltd v Minad Pty Ltd (1997) 8 BPR 15,611 .........................[4.365], [16.85] Couche v Adams [2002] NSWSC 27 ..................................................................................... [17.415] Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460 ............................[1.250], [1.310] Countess of Shrewsbury's Case (1600) 5 Co Rep 13b; 77 ER 68 .............................................. [14.70] Courtenay, Re (1905) 74 LJ Ch 654 ...................................................................................... [11.170] Cousin v Grant (1991) 103 FLR 236 ...................................................................................... [18.140] Cousins v Cousins (1906) 3 CLR 1198 .................................................................................. [13.220] Couturier, Re [1907] 1 Ch 470 ................................................................................................ [11.85] Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605 ................... [1.215], [1.250], [9.10], [17.10] Cox v Archer (1964) 110 CLR 1 .............................................................................[13.240], [13.245] Cox v Bourne (1897) 8 QLJ 66 ................................................................................................ [4.435] Cox v Glue (1848) 5 CB 533; 136 ER 987 ............................................................................. [16.150] Crabb v Arun DC [1976] Ch 179 ............................................................... [6.160], [8.195], [17.130] Crago v Julian [1992] 1 All ER 744 ........................................................................................ [14.105] Cram Foundation v Corbett-​Jones [2006] NSWSC 495 ........................................................... [2.220] Crampton v French (1995) V ConvR 54-​529 ............................................................................. [5.35] Crawford Realty Co v Ostrow (1959) 150 A 2d 5 .................................................................... [17.70] Crawley Borough Council v Ure [1995] 3 WLR 95 ................................................................. [12.375] Credit Tribunal (SA), Re; ex parte GMAC (1977) 137 CLR 545 .................................................. [8.90] Creer v P & O Lines of Australia Pty Ltd (1971) 125 CLR 84 .................................................. [14.255] Creery v Summersell and Flowerdew & Co Ltd [1949] Ch 751 ............................................. [14.355] Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 ......... [4.375] Crestfort Ltd v Tesco Stores Ltd [2005] EG 148 ..................................................................... [14.265] Cricklewood Property & Investment Trust Ltd v Leighton’s Investment Trust Ltd [1945] AC 221 .................................................................................................. [14.390] Crocombe v Pine Forests of Australia Pty Ltd [2005] NSWSC 151 ................ [7.255], [13.45], [13.65] Crofts v Middleton (1856) 8 De GM & G 192; 44 ER 364 ..................................................... [10.110] Cromwell Developments Ltd v Godfrey (1998) 33 EG 72 ...................................................... [14.380] Crock v Tribunal (2003) 59 NSWLR 300 ................................................................................ [15.100] Croser (decd), Re (1973) 6 SASR 420 ...................................................................................... [11.85] Cross and National Australia Bank Ltd, Re (1992) Qld ConvR 54-​433 ........................................ [5.40] Crossley & Sons v Lightowler (1867) LR 2 Ch App 478 ......................................................... [17.420] Crossley Bros Ltd v Lee [1908] 1 KB 86 ......................................................................[16.70], [16.85] Crow v Wood [1971] 1 QB 77 ...............................................................................[16.320], [17.175] Crowley v Templeton (1914) 17 CLR 457 ................................................................................. [4.60] Crown Lands, Commissioners of v Page [1960] 2 QB 274 ........................................[6.165], [14.165] Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2013] VSC 614 .......................... [14.115] Cruse v Carr [1933] Ch 278 .................................................................................................. [14.190] Cruse v Mount [1933] Ch 278 .................................................................................................. [8.85] Cruz v Osborne [1999] WASC 8 ................................................................................................ [5.50] Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 .................................................. [7.455] Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd [2011] HCA 27 ............................ [18.260] Cunningham v Moody (1748) 1 Ves Sen 174; 27 ER 965 ........................................................ [10.45] Cupit v Jackson (1824) McCle 495; 148 ER 207 .................................................................... [17.530] Curryer’s Will Trusts, Re [1938] Ch 952 ................................................................................... [11.80] Cussons Ltd, Re (1904) 73 LJ Ch 296 ...................................................................................... [3.215] Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 ......................................... [5.90] Cuthbertson v Irving (1859) 4 H & N 742; 157 ER 1034 ......................................................... [14.80] Cuvet v Davis (1883) 9 VLR (L) 390 ...................................................................................... [17.445]

D D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317 ...................................................... [16.95] D’Silva v Lister House Development Ltd [1971] 1 Ch 17 ....................................................... [14.110]

xxxvii

Australian Real Property Law

Da Costa, Re [1912] 1 Ch 337 .............................................................................................. [11.240] Daar Pty Ltd v Feza Foundation Ltd [2001] NSWSC 949 ....................................................... [17.170] Dabbs v Seaman (1925) 36 CLR 538 .................................................................................... [17.195] Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552 ................................................... [18.250] Dallyn Investments Pty Ltd, Re [1989] 1 Qd R 121 .................................................................... [5.75] Dalton v Henry Angus & Co (1881) 6 App Cas 740 ................................. [17.20], [17.230], [17.360] Dalton v Pickard [1926] 2 KB 545n ....................................................................................... [14.380] Dancher v Fitzgerald (1919) 19 SR (NSW) 260 ....................................................................... [7.295] Daniel v Gracie (1844) 6 QB 145; 115 ER 56 .......................................................................... [14.50] Daniell v Paradiso (1991) 55 SASR 395 ..................................................................................... [5.40] Darcy v Ryan (1882) 8 VLR (Eq) 36 ....................................................................................... [14.115] Dashwood v Magniac [1891] 3 Ch 306 .................................................................................. [13.50] Davenport v Smith [1921] 2 Ch 270 ......................................................................[14.320], [14.345] Davenport v The Queen (1877) 3 App Cas 115 ..................................... [14.315], [14.325], [14.440] Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd [1986] 1 Qd R 406 ...............[14.250], [14.265] Davey v Harrow Corporation [1958] 1 QB 60 ....................................................................... [16.315] Davey, Re [1915] 1 Ch 837 ..................................................................................................... [11.80] David Blackstone Ltd v Burnetts (West End) Ltd [1973] 1 WLR 1487 ..................................... [14.325] David Payne & Co Ltd, Re; Young v David Payne & Co Ltd [1904] 2 Ch 608 .......................... [2.550] David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 93 ALR 271 ........................................................................................................................ [7.220] Davidson v O’Halloran [1913] VLR 367 ................................................................................... [2.640] Davidson v Registrar of Titles [2002] WASC 168 ...................................................................... [7.105] Davies v Bennison (1927) 22 Tas LR 52 ................................................................................. [16.315] Davies v Davies (1982) 8 Fam LR 188 ................................................................................... [12.365] Davies v Davies (1888) 38 Ch D 499 .................................................................................... [14.200] Davies v Davies (No 2) [2010] WACA 151 ................................................................................. [5.90] Davies v Du Paver [1953] 1 QB 184 ...................................................................................... [17.230] Davies v Laughton (1996) 3 NZ ConvC 192,356; (1997) 3 NZLR 705 .................................... [4.170] Davies v Littlejohn (1923) 34 CLR 174 .......................................................................[6.150], [6.165] Davies v Ryan [1951] VLR 283 ................................................................................................ [4.135] Davies Application, Re [2001] 03 EG 134 .............................................................................. [18.225] Davis v Foots [1940] Ch 751 ..................................................................................................... [8.85] Davis v Town Properties Investment Corporation Ltd [1903] 1 Ch 797 ..................[14.275], [14.290] Davis v Whitby [1974] Ch 186 .............................................................................................. [17.225] Davis v Williams (2003) 11 BPR 21,313; [2003] NSWCA 371 .....................................[4.225], [4.240] Davis Contractors Ltd v Fareham Urban DC [1956] AC 686 .................................................. [14.390] Dawes, Re [1954] VLR 76 ...................................................................................................... [13.215] Dawson, Re (1888) 9 Ch D 155 .............................................................................................. [11.60] Day v Gould [2006] QSC 252 ................................................................................................... [5.35] Day v Harland and Wolff Ltd [1953] 2 All ER 387 .................................................................. [14.195] Dayani v Bromley London Borough Council [1999] EGLR 144 .............................................. [14.200] De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56 ...................................................... [12.440] De Falbe, Re [1901] 1 Ch 523 ...................................................................... [16.25], [16.30], [16.35] De Gray v Richardson (1747) 3 Atk 469; 26 ER 1069 .............................................................. [10.20] De Landgrafft v Brown (1993) 9 SR (WA) 236 ........................................................[14.390], [14.410] De Luxe Confectionery Ltd v Waddington [1958] NZLR 272 ................................................. [14.115] De Pasquale Bros Pty Ltd v Cavanagh Biggs & Partners Pty Ltd [2000] 2 Qd R 461; (1999) Aust Tort Reports 81-​521 .................................................................. [17.360] De Rose v South Australia (2003) 133 FCR 325; [2003] FCAFC 286 ...........................[6.480], [6.490] Dean, Re (1889) 41 Ch D 552 ................................................................................................ [11.45] Dean v Dean [1891] 3 Ch 150 ................................................................................................ [10.50] Deane, Earle, In the Will of v Deane [1913] VLR 272 ............................................................. [11.165] Deanshaw v Marshall (1978) 20 SASR 146 .................................................................[5.35], [17.340] Dear v Reeves [2001] TLR 225 .................................................................................................. [5.35] xxxviii

Table of Cases

Debonair Nominees Pty Ltd v J & K Berry Nominees Pty Ltd (2000) 77 SASR 261 .....................................................................................................[14.245], [14.270] Dee Tech Pty Ltd v Neddam Holdings Pty Ltd (No 2) [2009] NSWSC 1355 ...........[14.335], [14.350] Deguisa v Lynn [2019] SASCFC 107 ......................................................... [18.35], [18.140], [18.180] Dehnert, Re [1973] VR 449 ................................................................................................... [13.210] Delaney v Molloy (1993) NSW ConvR 55-​664 .......................................................[12.400], [12.435] Delehunt v Carmody (1986) 161 CLR 464 .............................................................[12.175], [12.200] Delohery v Permanent Trustee Co (NSW) (1904) 1 CLR 283 ..........................................[1.90], [3.45] Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd (1983) 155 CLR 129 ................................................................................................................... [13.305] Denham Bros Ltd v W Freestone Leasing Pty Ltd [2002] QSC 307 ........................................ [14.275] Denham Bros Ltd v W Freestone Leasing Pty Ltd [2004] 1 Qd R 500; [2003] QCA 376 ...............................................................................................[11.125], [11.260] Denn d Gaskin v Gaskin (1777) 2 Cowp 657; 98 ER 1292 ..................................................... [12.120] Dennerstein, Re [1963] VR 688 .............................................................. [18.125], [18.145], [18.160] Dennis, Re [1995] 3 All ER 171 ............................................................................................. [12.415] Dennis v McDonald [1982] 2 WLR 275; Fam 63 .................................... [12.265], [12.290], [12.295] Dennis and Copley v Eddie [1952] VLR 92 ............................................................................ [14.335] Denys v Shuckburgh (1840) 4 Y & C Ex 43; 160 ER 912 ....................................................... [12.245] Depas Pty Ltd v Dimitriou [2006] VSC 281 ............................................................................... [5.90] Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129 .................................................................................................................. [5.45] Dewhirst v Edwards [1983] 1 NSWLR 34 .................................................................[8.110], [17.130], [17.225] Dharmalingham v Registrar of Titles (2006) V ConvR 54-​718 .................................................. [5.100] Dia v Liu [2018] VSC 189 ........................................................................................................ [2.580] Dial A Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 557 .................................................................................................................... [2.60] Di Biase v Rezek [1971] 1 NSWLR 735 .................................................................................... [14.50] Di Masi v Piromalli [1980] WAR 57 ....................................................................................... [17.205] Di Napoli v New Beach Apartments Pty Ltd (2004) 11 BPR 11 21,493; [2004] NSWSC 52 ........................................................................................................... [16.315] Dickinson v Brown [1989] ACLD 144 .................................................................................... [16.250] Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 ............................[2.560], [4.435], [4.440], [5.225], [12.55] Dikstein v Kanevsky [1947] VLR 216 ......................................................................[14.215], [14.365] Dileum Pty Ltd v J K Corporation Pty Ltd (1989) 1 WAR 244 ................................................. [14.270] Dillon v Nash [1950] VLR 293 ............................................................................................... [14.215] Dillwyn v Llewelyn (1862) De GF & J 517; 45 ER 1285 ........................................................... [8.195] Diment v N H Foot Ltd [1974] 1 WLR 1427 ...........................................................[17.210], [17.230] Dimos v Willetts [2000] 2 VR 170 ............................................................................................. [5.70] Direct Food Supplies (Vic) Pty Ltd v DLV Pty Ltd [1975] VR 358 ............................................ [14.335] Director of Housing v Parsons [2019] TASFC 3 ...................................................................... [15.100] Dissanayake v Hillman [2007] VSC 426 ................................................................................. [18.215] District Land Registrar v Thompson [1922] NZLR 627 ............................................................. [4.405] Dixon v Gayfere (1853) 17 Beav 421 ...................................................................................... [3.360] Dixon v Muckleston (1872) 8 Ch App 155 ................................................................[2.435], [2.440], [5.155] Dixon Investment Co Pty Ltd (in liq) v Woakwine Industries Pty Ltd [2002] SASC 161 ..................................................................................................[16.15], [16.90] Dobbie v Davidson (1991) 23 NSWLR 625 ........................................................................... [17.270] Dockrill v Cavanagh (1944) 45 SR (NSW) 78 .......................................................................... [14.65] Dodds v Hills (1865) 2 H & M 424; 71 ER 528 ........................................................................ [2.480] Doe v Registrar-​General (1997) 96 LGERA 275 ........................................................................ [18.20] Doe d Abby v Stevens (1823) 3 B & Ad 299; 110 ER 112 ...................................................... [14.310] xxxix

Australian Real Property Law

Doe d Aslin and Finch v Summersett (1830) 1 B & Ad 135; 109 ER 738 ................[12.375], [12.470] Doe d Bennett v Turner (1840) 7 M & W 226; 151 ER 749 ..................................................... [14.75] Doe d Carlisle v Woodman and Forster (1807) 8 East 227; 103 ER 329 ................................. [14.365] Doe d Carter v Barnard (1849) 13 QB 945; 116 ER 1524 .......................................................... [2.70] Doe d Cheny v Batten (1775) 1 Cowp 243; 98 ER 1066 ....................................................... [14.440] Doe d Davies v Thomas (1851) 6 Exch 854; 155 ER 792 ......................................................... [2.165] Doe d Davy v Oxenham (1840) 7 M & W 131; 151 ER 708 .......................................[3.230], [3.255] Doe d Goodbehere v Bevan (1815) 3 M & S 353; 105 ER 644 .............................................. [14.250] Doe d Graves v Wells (1839) 10 Ad & E 427; 113 ER 162 ..................................................... [14.375] Doe d Lewis v Rees (1834) 6 C & D 610 ................................................................................... [3.90] Doe d Lloyd v Passingham (1827) 6 B & C 305; 108 ER 465 ................................................... [10.80] Doe d Lloyd v Powell (1826) 5 B & C 308; 108 ER 115 ..........................................[14.310], [14.320] Doe d Lockwood v Clarke and Brown (1807) 8 East 185; 103 ER 313 ................................... [14.310] Doe d Matthews v Jackson (1779) 1 Doug 175; 99 ER 115 ................................................... [14.440] Doe d Mussell v Morgan (1790) 3 Term Rep 763; 100 ER 846 ................................................ [10.65] Doe d Nash v Birch (1826) 1 M & W 402; 150 ER 490 ......................................................... [14.325] Doe d Pitt v Hogg (1824) 4 Dow & Ry 224; 171 ER 1144 ..................................................... [14.250] Doe d Seebkristo v East India Co (1856) 10 Moo PCC 140; 14 ER 445 .................................. [16.220] Dogan v Morton (1935) 35 SR (NSW) 142 ........................................................................... [14.345] Dogrow Pty Ltd v Teakdale Pty Ltd [2013] NSWSC 1380 ...................................................... [14.220] Doherty v Allman (1878) 3 AC 709 ..........................................................................[13.50], [18.250] Dollars and Sense Finance Ltd v Nathan [2008] 2 NZLR 557 ................................................... [4.240] Dolphin’s Conveyance, Re; Birmingham Corporation v Boden [1970] Ch 654 ...................... [18.145] Domb v Isoz [1980] 1 All ER 942 .......................................................................................... [18.250] Dominion Lifestyle Tower Apartment Ltd v Global Capital Corporation Pty Ltd (2005) V ConvR 54-​696 ........................................................................................... [5.35] Donoghue v Stevenson [1932] AC 562 ..................................................................................... [8.85] Dorward v Salter (unreported, Full Ct of Sup Ct, Victoria, 8 December 1859) ......................... [2.655] Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409 ..........[5.20], [5.245], [5.270], [5.275] Dougal v McCarthy [1893] 1 QB 736 ..................................................................................... [14.70] Douglas v Cicirello [2006] WASCA 226 ................................................................................. [14.405] Douglas v Forrest (1828) 4 Bing 686; 130 ER 933 ................................................................... [3.175] Douglas & Co (Insurance) Pty Ltd v Economic Insurance Co Ltd (1951) 68 WN (NSW) 225 .......................................................................................................... [14.375] Dowd v Various Proprietors [2016] NTSC 24 ......................................................................... [17.405] Downie v Lockwood [1965] VR 257 ............................................................ [1.260], [2.510], [4.300], [5.250], [14.135], [14.210] Downing v WIN Television (NSW) Pty Ltd [2010] NSWSC 1132 .............................................. [16.50] Dowse v Wynyard Holdings Ltd [1962] NSWR 252 ............................................................... [14.225] Dowty Boulton Paul Ltd v Wolverhampton Corp (No 2) [1976] Ch 13 .................................. [17.105] Doyle v Phillips (No 1) (1997) 8 BPR 15,523; NSW ConvR 56,427 ........... [18.75], [18.150], [18.270] Drake v Grey [1936] Ch 451 ................................................................................................... [18.65] Dralter Pty Ltd v Channel Land Co Pty Ltd (1988) V ConvR 54-​324 .............................[5.70], [5.175] Drane v Evangelou [1978] 1 WLR 455 .................................................................................. [14.225] Draper’s Conveyance, Re [1968] 2 WLR 166 ......................................................................... [12.365] Dresden Estates Ltd v Collinson (1987) 281 EG 1321 .............................................................. [14.35] Dresdner v Scida (2003) 12 BPR 22,629; [2003] NSWSC 957 ............................................... [17.340] Dresdner v Scida (2004) NSW ConvR 56-​089 ......................................................................... [2.210] Drive Yourself Hire Co (London) Ltd v Strutt [1954] 1 QB 250 .............................................. [18.270] Drummond’s Settlement, Re [1988] 1 All ER 449; 1 WLR 234 ................................[11.165], [11.170] Duff v Blinco [2006] QCA 497 ...............................................................................[17.460], [17.465] Duffield v Duffield (1829) 2 Bl NS 260; 4 ER 1334 .................................................................. [10.40] Duffy v Lamb (1998) 75 P & CR 364 .................................................................................... [17.105] Duggan v Kelly (1848) 10 Ir Eq Rep 295 ................................................................................. [2.240] xl

Table of Cases

Duke of Marlborough v Osborn (1864) 5 B & S 67; 122 ER 758 ............................................. [14.50] Duke of Norfolk’s Case (1681) 3 Ch Ca 1; 22 ER 931 .................................................[10.50], [11.10] Duke of Westminster v Guild [1985] 1 QB 688; [1984] 3 WLR 630 ........................[14.190], [14.215] Duke of Westminster v Swinton [1948] 1 KB 524 .................................................................. [14.350] Dumpor’s Case (1601) 4 Co Rep 119b; 76 ER 1110 ...............................................[14.255], [14.320] Dunbar v Plant [1998] Ch 412 .............................................................................................. [12.435] Duncan v McDonald [1997] 3 NZLR 669 ................................................................................ [4.170] Duncomb v Duncomb (1695) 3 Lev 437; 83 ER 770 ............................................................... [10.70] Dunecar Pty Ltd (in liq) v Colbron (2001) 40 ACSR 342 ............................................................ [5.60] Dunell v Phillips (1982) 2 BPR 9517 .......................................................................[17.340], [17.385] Dungannon v Smith (1846) 12 Cl & Fin 546 .......................................................................... [11.85] Dunn v Blackdown Properties Ltd [1961] Ch 433 ....................................................[11.25], [11.250] Dunraven Securities Ltd v Holloway (1982) 264 EG 709 ....................................................... [14.345] Dunstan, Re [1918] 2 Ch 304 ................................................................................................. [2.245] Duppa v Mayo (1669) .......................................................................................................... [14.330] Durham and Sunderland Ry Co v Wawn (1840) 3 Beav 119; 49 ER 47 .................................. [12.310] Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd [2000] NSWCA 28 ......................................... [18.230] Dykstra v Dykstra (1991) 22 NSWLR 556 .................................................................................. [5.45]

E EDF Energy Networks (EPN) plc v BOH Ltd (2010) 2 P & CR 3 ................................................ [3.415] ER Ives Investment Ltd v High [1967] 2 QB 379 .......................................................[8.230], [18.320] Eade v Vogiazopoulos (No 2) (1993) V ConvR 54-​458; [1999] 3 VR 889 ....................[4.160], [4.170] Eagle Trust Plc v SBC Securities Ltd [1993] 1 WLR 484 ............................................................ [2.495] Eagling v Gardner [1970] 2 All ER 838 .................................................................................. [18.145] Earl Bathurst v Fine [1974] 1 WLR 905 .................................................................................. [14.350] Earl of Ilchester v Rashleigh (1889) 5 TLR 739 ....................................................................... [16.240] Earl of Mansfield v Blackburne (1840) Bing NC 426; 133 ER 165 ............................................ [16.90] Earl of Stafford v Buckley (1750) 2 Ves Sen 170; 28 ER 111 ......................................[10.50], [17.495] Eastdoro Pty Ltd (No 2), Re [1990] 1 Qd R 424 .......................................................[4.170], [14.120] Eastgate v Equity Trustees Executors & Agency Co Ltd (1964) 110 CLR 275 ..................................................................................................................... [12.85] Easy Buy International Pty Ltd v Macquarie Goodman Property Services Ltd (2006) 13 BPR 24,655; [2006] NSWSC 148 ....................................................................... [2.160] Eaton v Swansea Waterworks Co (1851) 17 QB 267; 117 ER 1282 .............................[3.85], [17.220] Eccles v Bryant [1948] Ch 93 .................................................................................................... [8.70] Eccles v Mills [1898] AC 360 ................................................................................................. [14.270] Ecclesiastical Commissioners for England’s Conveyance, Re [1936] Ch 430 ........................... [18.270] Eckford v Stanbroke Pastoral Co Pty Ltd [2012] 2 Qd R 324 .................................................... [3.340] Eddadock Pty Ltd v Denning Properties Pty Ltd [2002] NSWSC 208 ..................................... [14.260] Edge v Boileau (1885) 16 QBD 117 ...................................................................................... [14.225] Edgington v Clark [1964] 1 QB 367 ........................................................................................ [3.365] Edmonds v Donovan (2005) 12 VR 513 .................................................................................... [5.45] Edward Street Properties Pty Ltd, Ex parte [1977] Qd R 86 ................................................... [17.290] Edwards v Horrigan; Ex parte Horrigan [1923] St R Qd 8 ........................................................ [14.65] Edwards v Santos Ltd (2011) 242 CLR 421 ............................................................................. [6.340] Edwards v Sims 24 SW 2d 619 (1929) .................................................................................. [16.315] Efstratiou v Glantschnig [1972] NZLR 594 .............................................................................. [4.225] Egerton v Esplanade Hotels London Ltd [1947] 2 All ER 88 ................................................... [14.345] Egerton v Harding [1975] QB 62 .......................................................................................... [16.320] Egerton v Massey (1857) 3 CB(NS) 338; 140 ER 771 .............................................................. [10.65] Eimbart Pty Ltd, Ex parte [1982] Qd R 398 ........................................................................... [12.455] El Ajou v Dollar Land Holdings Plc [1993] 3 All ER 717 ............................................................ [2.495] xli

Australian Real Property Law

Elderly Citizens Home of SA Inc v Balnaves (1998) 72 SASR 210 ................................[5.110], [5.180] Elfar v Registrar General of New South Wales [2010] NSWSC 539 ........................................... [4.440] Elite Investments Ltd v T I Bainbridge Silencers Ltd (1986) 280 EG 1001 ............................... [14.195] Elitestone Ltd v Morris [1997] 2 All ER 513; 1 WLR 687 ........................................................... [16.45] Ell t/​as GNP Printing v Cisera [2001] NSWSC 242 ................................................................... [14.65] Ellaway v Lawson [2006] QSC 170 .......................................................................................... [2.240] Ellenborough Park, Re [1956] Ch 131; [1955] 3 WLR 892; 3 All ER 667 ....................[6.200], [17.35], [17.60], [17.80], [17.85] Elliott, Re (1886) 7 LR (NSW) 271 ............................................................................................. [5.35] Elliott v Bishop (1854) 10 Exch 496; 156 ER 534 .................................................................... [16.90] Elliott v Boynton [1924] 1 Ch 236 ........................................................................................ [14.315] Elliott v Johnson (1866) LR 2 QB 120 .................................................................................... [14.300] Elliott v Renner [1923] St R Qd 172 .......................................................................[17.330], [17.335] Ellis v Lambeth LBC (2000) 32 HLR 596 .................................................................................... [3.85] Ellison v Vukicevic (1986) 7 NSWLR 104 ..................................... [4.60], [17.460], [17.465], [17.470] Elliston v Reacher [1908] 2 Ch 374 ........................................................ [18.135], [18.140], [18.145] Elmant Pty Ltd v Dickson (2001) V ConvR 54-​647 ..................................................................... [5.35] Elmcroft Developments Ltd v Tankersley-​Sawyer (1984) 270 EG 140 .................................... [14.195] Elroa Nominees Pty Ltd v Registrar of Titles [2003] QCA 165 .................................................. [4.125] Elsafty Enterprises Pty Ltd v Mermaids Café and Bar Pty Ltd [2007] QSC 394 .......................... [9.210] Elton v Cavill (No 2) (1994) 34 NSWLR 289 ............................................... [2.245], [2.255], [12.460] Elwes v Maw (1802) 3 East 38; 102 ER 510; [1802] All ER Rep 320 ..........................[16.20], [16.100] Emerald Quarry Industry Pty Ltd v Commissioner of Highways (1976) 14 SASR 486 .................................................................................................................... [17.460] Emerald Securities Pty Ltd v Tee Zed Enterprises Pty Ltd (1981) 101 LSJS 101 ......................... [7.480] Emhill Pty Ltd v Bonsoc Pty Ltd (No 2) [2007] VSCA 108 .......................................[14.380], [14.410] Emmanuel (Rundle Mall) Pty Ltd v CS (SA) (1986) 39 SASR 582; 17 ATR 307 ......................... [16.30] Encino Plaza Pty Ltd v Wilson International Pty Ltd [1988] V ConvR 54-​308; (1988) V ConvR 63,908 ........................................................................................[8.70], [14.110] Endeavour Lodge Motel Ltd v Langford [1998] 2 NZLR 121 ................................................. [14.320] EngMee Yong v Letchumanan [1980] AC 331 ........................................................................... [5.90] English, Scottish & Australian Bank Ltd v City National Bank [1933] St R Qd 81 ...................... [7.295] English, Scottish & Australian Bank Ltd, The v Phillips (1937) 57 CLR 302 ............................... [3.430] Epic Feast Ltd v Mawson KLM Holdings Pty Ltd (1998) 71 SASR 161 ...................................... [7.170] Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd [1997] SASC 6391 ......................[8.120], [8.160] Equitiloan Securities Pty Ltd v Registrar of Titles [1997] 2 Qd R 597 ...........................[4.395], [4.400] Equity and Law Home Loans v Prestidge [1992] 1 WLR 137 .................................................... [2.520] Equity Trustees Executors & Agency Co Ltd v Riddell [1954] VLR 161 ................................... [13.160] Equuscorp Pty Ltd v Antonopoulos [2008] VSCA 179 ...............................................[14.50], [14.110] Errington v Errington and Woods [1952] 1 KB 290 ...................................... [8.190], [8.230], [14.35] Essendon Corporation v Criterion Theatres Ltd (1947) 74 CLR 1 ............................................... [1.80] Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269 ................................ [7.185] Estate of Bristow, Re [2005] NSWSC 1252 ............................................................................ [18.270] Estate of Chow Cho-​Poon, Re (2013) 10 ASTLR 251; [2013] NSWSC 844 ................[2.270], [11.170] Estate of Soukup (1997) 97 A Cr R 103 ................................................................................. [12.435] Esther Investments Pty Ltd v Cherrywood Park Pty Ltd [1986] WAR 279 ............................... [14.350] Ettricke v Ettricke (1767) Amb 656; 27 ER 426 ...................................................................... [12.120] Eucalypt Group Pty Ltd v Robin [2003] QSC 63 .................................................................... [18.230] Eudunda Farmers' Co-​operative Society Ltd v Mattiske [1920] SALR 309 ................................... [5.35] Euston Centre Properties Ltd v H & J Wilson Ltd (1982) 262 EG 1079 ................................... [14.110] Evanel Pty Ltd v Nelson (1995) 39 NSWLR 209; 7 BPR 14,388; [1996] ANZ ConvR 328; [1995] NSW ConvR 55-​759 ......................................... [17.35], [17.80], [17.95] Evans v Athedim (Vic) Pty Ltd (2000) V ConvR 64,334 .......................................................... [14.355] Evans v Coventry (1854) 5 De GM & G 911; 43 ER 1125 ....................................................... [7.310] Evans v Davis (1878) 10 Ch D 747 ........................................................................................ [14.325] xlii

Table of Cases

Ewart v General Finance Guarantee & Agency Society (Australasia) (1889) 15 VLR 625 ............................................................................................................ [7.410] Executive Seminars Pty Ltd v Peck [2001] WASC 229 .................................................[3.85], [16.300] Expert Clothing Service and Sales Ltd v Hillgate House Ltd [1986] 1 Ch 340 ........................ [14.345] Expo International Pty Ltd v Chant [1979] 2 NSWLR 820 ........................................................ [7.455] Eye Corp Australia Pty Ltd v Goliath Investments Pty Ltd [2006] NSWSC 159 ............[16.85], [16.90] Eyre v McCracken (2000) 80 P & CR 220 ............................................................................. [14.195] Ezekiel v Orakpo [1976] 3 All ER 659 .................................................................................... [14.330]

F F & F Holdings Pty Ltd v Ridge Lane Pty Ltd [1998] VSCA 72 .................................................. [4.205] FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552 .............................. [5.115] FNCB-​Waltons Finance Ltd v Crest Realty Pty Ltd (1977) 10 NSWLR 621 ................................ [4.400] FTFS Holdings Pty Ltd v Business Acquisitions Australia Pty Ltd [2006] NSWSC 846 ......................................................................................................................... [5.50] Facchetti v Facchetti [2004] NSWSC 898 .............................................................................. [12.340] Facchini v Bryson [1952] 1 TLR 1386 ...................................................................................... [14.35] Fairbairn v Varvaressos (2010) 78 NSWLR 577 ........................................... [2.270], [10.40], [10.110] Fairclough v Swan Brewery [1912] AC 565 ............................................................................. [7.175] Fairless v Registrar of Titles [1997] 1 VR 404 ........................................................................... [4.440] Fairlie, Re (1959) 76 WN (NSW) 475 ........................................................................................ [5.50] Fairweather v St Marylebone Property Co Ltd [1963] AC 510 ...................................[3.255], [3.320], [3.325], [3.335], [3.340] Faloon and Piesse v District Land Registrar [1997] 3 NZLR 498 ..................................[17.10], [17.40] Farah Constructions Pty Ltd v Say-​Dee Pty Ltd (2007) 230 CLR 89 ............................[4.225], [4.320], [4.350], [4.370], [5.205] Farley v Hawkins [1997] 2 Qd R 361; [1996] Q ConvR 54-​483 ...................................[16.45], [16.50] Farmer v Residential Tenancies Tribunal [2000] NSWSC 199 ................................................. [15.100] Farquharson Brothers & Co v King & Co [1902] AC 325 ........................................................... [7.35] Farrand v Yorkshire Banking Co (1888) 40 Ch D 182 .............................................................. [2.580] Farrar v Farrars Ltd (1888) 40 Ch D 395 ................................................................................. [7.385] Farrier-​Wamak Ltd v Bank of New Zealand [1965] AC 376 ...................................................... [8.110] Farrow’s Bank Ltd, Re [1921] 2 Ch 164 ................................................................................. [14.250] Farvet Pty Ltd v Frost [1997] 2 Qd R 39 .................................................................................... [5.45] Fawaz (decd), Re [1958] VR 426 ................................................................................[11.60], [11.85] Federal Airports Corporation v Makucha Developments Pty Ltd (1993) 114 ALR 679 .......................................................................................................[14.30], [14.335] Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 All ER 371 ...................[18.120], [18.300], [18.305] Fejo v Northern Territory (1998) 195 CLR 96 ..............................................................[2.35], [2.180], [6.70], [6.420] Felnex Central Properties Ltd v Montague Burton Properties Ltd (1981) 260 EG 705 ....................................................................................................................... [14.65] Fenato v Antonello [2006] NSWSC 763 ................................................................................ [12.340] Fenner v Blake [1900] 1 QB 426 ........................................................................................... [14.380] Ferella v Otvosi [2005] NSWSC 962 .......................................................................[18.140], [18.225] Ferguson v Miller [1978] 1 NZLR 819 ...................................................................[12.275], [12.280], [12.310], [13.50] Ferguson v Registrar of Titles [1919] VLR 509 .............................................. [3.165], [3.315], [3.350] Fergusson, Re (1882) 3 LR (NSW) 43 ...................................................................................... [10.60] Fermora Pty Ltd v Kelvedon Pty Ltd [2011] WASC 281 ............................................................ [2.260] Fernance v Simpson [2003] NSWSC 121 ...............................................................[17.225], [17.230] Ferrishurst Ltd v Wallcite Ltd [1999] Ch 355 ..............................................................[2.505], [2.515] Festing v Allen (1843) 12 M & W 279; 152 ER 1204 ............................................................... [10.80] xliii

Australian Real Property Law

Field v Barkworth (1986) 277 EG 193 ................................................................................... [14.250] Field, Re [1918] 1 IR 140 ........................................................................................................ [3.320] Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1998) 196 CLR 245 ....... [7.85], [7.285], [7.465] Finance Corporation of Australia Ltd v Commissioner of Stamp Duties [1981] Qd R 493 ............................................................................................................... [7.345] Findlay v Nut Farms of Australia Pty Ltd [1989] ANZ ConvR 40 ............................................. [14.410] Fink v Robertson (1967) 4 CLR 864 ......................................................................................... [7.345] Finlay v R & I Bank of Western Australia Ltd (1993) 6 BPR 13,232; NSW ConvR 55-​686 ............................................................................................[5.175], [5.205], [5.220], [5.225] Finnegan v Cementation Co [1953] 1 QB 688 ........................................................................ [3.175] Finucane v Registrar of Titles [1902] SRQ 75 ........................................................................... [4.435] First National Securities Ltd v Hegerty [1985] 1 QB 850 ........................................................ [12.405] First National Securities Ltd v Jones [1978] 2 WLR 475 ............................................................ [8.105] Fischer v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] QCA 214 .............................................................................................................. [13.290] Fisher v Aboriginal Hostels Ltd [1998] VSC 130 ..................................................................... [15.125] Fisher v Deputy Federal Commissioner of Land Tax (1915) 20 CLR 242 .................................. [6.110] Fisher v Dixon (1845) 12 Cl & Fin 312; 8 ER 1426 .................................................................. [16.90] Fitt v Luxury Developments Pty Ltd [2000] VSC 258 ...............................................[18.15], [18.140], [18.160] Fitzgerald v Button (1891) 17 VLR 52 ..................................................................................... [14.60] Fiver Trading Pty Ltd v Spajack Pty Ltd [2005] NSWSC 532 ................................................... [14.105] Flavell v Lange [1937] NZLR 444 .......................................................................................... [17.340] Fleeton v Fitzgerald (1998) 9 BPR 16,715 ..............................................................[14.355], [14.380] Flemming v Gibson (2001) 34 MVR 40 ................................................................................... [3.280] Fletcher v George (No 6) [2009] FMCA 69 ............................................................................. [4.370] Fletcher v Manton (1940) 64 CLR 37 ...................................................................................... [8.280] Fletcher v Nokes [1897] 1 Ch 271 ........................................................................................ [14.345] Fletcher, Re [1917] 1 Ch 339 ...................................................................................[3.415], [14.385] Flexman v Corbett [1930] 1 Ch 672 ..................................................................................... [14.210] Fliegner v MNM Pty Ltd (2000) NSW ConvR 55-​937 .............................................................. [4.265] Flight v Glossopp (1835) 2 Bing NC 125; 132 ER 50 ............................................................. [14.275] Foenander v Dabscheck [1954] VLR 38 ................................................................................... [14.60] Forbes v Git [1922] 1 AC 256 ............................................................................................... [12.135] Forbes v Moffatt, Moffatt and Hammond (1811) 18 Ves Jun 384; 34 ER 362 .......................... [3.420] Forbes v NSW Trotting Club Ltd (1979) 143 CLR 242 ............................................................. [1.215] Ford v Heathwood [1949] QWN 11 ...................................................................................... [17.105] Ford v Lacy (1861) 7 H & N 151; 158 ER 429 ....................................................................... [16.250] Forder v Cemcorp Pty Ltd (2001) 51 NSWLR 486 ..........................................................[5.35], [5.50] Forestview v Perpetual Trustees WA (1998) 193 CLR 154 ..........................................[18.05], [18.55], [18.290], [18.310] Forgeard v Shanahan (1994) 35 NSWLR 206 ........................................ [12.265], [12.275], [12.300], [12.320], [12.325] Forge Group Power Pty Ltd (in liq)(recs and mgers apptd) v General Electric International Inc (2016) 305 FLR 101 ..................................................................... [16.50] Forrest Trust, Re; Trustees, Executors & Agency Co Ltd v Anson [1953] VLR 869 ....................... [7.70] Forster v Finance Corporation of Australia Ltd [1980] VR 63 .........................................[5.60], [7.435] Forsyth v Blundell (1973) 129 CLR 477 ........................................................ [7.455], [7.475], [7.480] Foster v Dawber (1851) 6 Ex 839; 155 ER 785 ........................................................................ [7.375] Foster v Robinson [1951] 1 KB 149 ....................................................................................... [14.380] Foundling Hospital (Governors and Guardians) v Crane [1911] 2 KB 367 ................................ [8.105] Four-​Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317 .......................................... [7.255] Fourniotis v Vallianatos [2018] VSC 369 .................................................................................. [3.285] Four Oaks Enterprises Pty Ltd v Clark [2002] ANZ ConvR 440; TASSC 39 .......................[5.35], [5.50] xliv

Table of Cases

Fowley Marine (Emsworth) Ltd v Gafford [1967] 2 All ER 472 ............................................... [16.210] Fox, Re [1997] 1 Qd R 43 ..................................................................................................... [12.120] Fox v Jolly [1916] 1 AC 1 ...................................................................................................... [14.345] Fox v Toll Properties Pty Ltd [2007] VSC 138 ........................................................................ [14.435] Francis v Francis [2009] SASC 363 ........................................................................................ [12.440] Francis, Re; Ex parte Official Trustee in Bankruptcy (1988) 82 ALR 333 .................................. [12.415] Francis Longmore & Co Ltd v Stedman [1948] VLR 322 ............................................[14.30], [14.50] Franklin v Ind (1883) 17 SALR 133 .......................................................................................... [3.400] Franklin, Re [2009] VSC 496 ................................................................................................... [3.270] Fraser v Di Paolo [2008] VSC 117 ......................................................................................... [18.215] Frater v Finlay (1968) 91 WN (NSW) 730; 2 DCR (NSW) 132 ................................[18.320], [17.380] Frazer v Walker [1967] 1 AC 569 ................................................................ [4.130], [4.135], [4.140], [4.145], [4.150], [4.155], [4.320], [4.350], [4.355], [4.405], [7.75] Frederick Berry Ltd v Royal Bank of Scotland [1949] 1 KB 619 ............................................... [14.265] Freed v Taffel [1984] 2 NSWLR 322 ....................................................................................... [12.370] Freeman v Hambrook [1947] VLR 70 .................................................................................... [14.365] Freeman d Vernon v West (1763) 2 Wils KB 165; 95 ER 745 .................................................... [10.50] French v Elliott [1959] 3 All ER 866 ....................................................................................... [14.435] Friedman v Barrett; Ex parte Friedman [1962] Qd R 498 ......................................................... [4.215] Friend v Mayer [1982] VR 941 ................................................................................................ [7.365] Frieze v Unger [1960] VR 230 ................................................................................[12.410], [12.470] Frost, Re (1889) 43 Ch D 246 ................................................................................................. [11.70] Frugtniet v Australian Securities and Investments Commission [2019] HCA 1 .......................... [7.158] Fuller v Chamier (1866) LR 2 Eq 682 ....................................................................................... [10.65] Fuller’s Theatre & Vaudeville Co Ltd v Rofe [1923] AC 435 .....................................[14.247], [14.320] Fulton v 523 Nominees Pty Ltd [1984] VR 200 ..................................................................... [12.475] Fulwood Nominees Pty Ltd v Teitz (1987) V ConvR 54-​217 .................................................. [17.225] Fyfe v Smith [1975] 2 NSWLR 408 .............................................................................[7.255], [7.265]

G G & M Dawson Pty Ltd v Cripps [2003] NSWADT 274 ......................................................... [14.120] G J Coles & Co Ltd v FCT (1975) 132 CLR 242 ..................................................................... [14.245] GMS Syndicate Ltd v Gary Elliott Ltd [1982] Ch 1 ................................................................. [14.355] Gadsdon v Gadsdon [2003] WASC 48 ...................................................................................... [5.35] Gafford v Graham and Grandco Securities Ltd (1999) 77 P & CR 73 ..................................... [18.245] Gaite’s Will Trusts, Re (1949) 65 TLR 194 ...................................................................[11.60], [11.65] Gallagher v Rainbow [1994] HCA 24; (1994) 179 CLR 624 .......................................[17.55], [17.70], [17.390], [17.440] Gallash v Schutz (1882) 16 SALR 129 ..................................................................................... [3.400] Gallic Pty Ltd v Cynayne Pty Ltd (1986) 83 FLR 31 .................................................[14.330], [14.410] Gallo v St Cyr (1983) 144 DLR (3d) 146 ............................................................................... [14.200] Galvasteel Pty Ltd v Monterey Building Pty Ltd [1974] 10 SASR 176 ......................................... [5.75] Gangemi v Watson (1994) 11 WAR 505 ................................................................[17.215], [17.220], [17.230] Gapes v Fish [1927] VLR 88 .................................................................................................... [17.40] Garafano v Reliance Finance Corporation Pty Ltd (1992) NSW ConvR 55-​640 .....................................................................................................[4.130], [4.350], [4.360] Garcia v National Australia Bank Ltd (1998) 194 CLR 395 .........................................[2.520], [4.375], [5.120], [5.185], [9.150] Gardiner v Chief Commissioner of State Revenue (2004) 59 NSWLR 549 .............................. [12.395] Gardner v Hodgson’s Kingston Brewery Co Ltd [1903] AC 229 ............................................. [17.225] xlv

Australian Real Property Law

Gardner v Ingram (1889) 61 LT 729 ..................................................................................... [14.365] Garibaldi Mining & Crushing Co v Cravens New Chum Co NL (1884) 10 VLR (L) 233 .......... [16.270] Garland v Brown (1864) 10 LT 292 ....................................................................................... [11.215] Garnham, Re [1910] 2 Ch 413 ................................................................................................ [11.70] Gartner v Kidman (1962) 108 CLR 12 ..................................................................................... [1.100] Gas & Fuel Corp (Vic) v Barba [1976] VR 755 .............................................. [1.125], [17.45], [17.55] Gasiunas v Meinhold (1964) 6 FLR 182 ..................................................................................... [5.50] Gaudron v Mackay (1936) 60 WN (NSW) 11 .......................................................................... [6.175] Gebardi v Woosup (No 2) (2017) 253 FCR 310; [2017] FCA 1467 .......................................... [6.455] Gebhardt v Dempster [1914] SASR 287 ................................................................................ [12.340] Geftakis v Maritime Services Board of New South Wales [1988] ANZ ConvR 36 .................................................................................................[14.110], [14.115] GeitaSebea v Territory of Papua (1941) 67 CLR 544 ................................................................ [16.95] Gentle v Faulkner [1900] 2 QB 267 ....................................................................................... [14.250] George v Biztole Corporation Pty Ltd (1995) V ConvR 54-​519 .......................................[5.35], [5.50] George T Collings (Aust) Pty Ltd v HF Stevenson (Aust) Pty Ltd (1991) ATPR 41-​104 ...................................................................................................................... [9.180] George Wimpey & Co Ltd v Sohn [1967] Ch 487 .....................................................[3.115], [3.120], [3.135], [3.145] Gerace v Auzhair Supplies Pty Ltd (2014) 310 ALR 85 ............................................................. [3.225] German v Chapman (1877) 7 Ch D 271 ................................................................................. [18.15] Gerrard v O’Reilly (1823) 3 Dr & War 414; 61 ER 97 ............................................................... [2.550] Gerraty v McGavin (1914) 18 CLR 152 ................................................................................. [14.345] Gertsman, Re [1966] VR 45 .................................................................................................. [13.200] Gesmundo v Anastasiou (1975) 1 BPR 9297 ......................................................................... [16.305] Ghey and Galton’s Application, Re [1957] 2 QB 650 ............................................................. [18.225] Ghilarducci v Ghilarducci [1993] ANZ ConvR 331 ....................................... [3.110], [3.125], [3.270] Gibb Australia Pty Ltd v Cremor Pty Ltd (1992) 108 FLR 129 ................................................ [14.450] Gibbs v Messer [1891] AC 248 ................................................................... [4.130], [4.135], [4.140], [4.145], [4.150], [4.320] Gibson v Hammersmith and City Rwy Co (1863) 32 LJ Ch 337; 62 ER 748 ............................. [16.55] Gibson v Kirk (1841) 1 QB 850; 113 ER 1357 ....................................................................... [14.430] Gifford v Dent [1926] WN 336 ............................................................................................. [16.130] Gifford v Lord Yarborough (1828) 5 Bing 163; 130 ER 1023 ..................................[16.215], [16.220] Giles v Rhind [2009] Ch 191 ................................................................................................... [3.285] Gill v Lewis [1956] 2 QB 1 .................................................................................................... [14.335] Ginelle Finance Pty Ltd v Diakakis (2002) 12 BPR 22,137 ........................................................ [4.360] Giumelli v Giumelli (1999) 196 CLR 101 ...................................................................[5.270], [8.205], [8.220], [8.235] Given v Pryor (1979) 39 FLR 437; 24 ALR 442 ........................................................................ [9.165] Given v Pryor (1980) 30 ALR 189 ............................................................................................ [9.170] Gladwell v Steen [2000] SASC 141 ....................................................................................... [16.305] Glasshouse Investments Pty Ltd v MPJ Holdings Pty Ltd [2005] NSWSC 456 ..........[14.220], [14.225] Gleeson v Richey [1959] VR 258 ............................................................................[14.330], [14.365] Glensaugh Pty Ltd v Registrar-​General (2001) 10 BPR 19,311 ................................................. [4.485] Glentham Pty Ltd v City of Perth [1986] WAR 205 ................................................................ [16.120] Glentham Pty Ltd v Luxer Holdings Pty Ltd [2002] WASC 80 ................................................ [14.330] Glenwood Lumber Co v Phillips [1904] AC 405 ...................................................................... [14.30] Global Capital Industries Pty Ltd v Dela Property Developments Pty Ltd [2006] 1 Qd R 501 .............................................................................................................. [5.50] Global College Pty Ltd v Sooncorp Holdings Pty Ltd [2008] NSWSC 750 .............................. [14.315] Global Finance Group Pty Ltd (In Liq), Re; Ex parte Read [1999] WASC 23 .............................. [4.245] Global Minerals Australia Pty Ltd v Valerica Pty Ltd (2000) 10 BPR 18,463 ................................ [5.35] Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 ...................................... [9.160] xlvi

Table of Cases

Glouftis v Glouftis (1987) 44 SASR 298 ................................................................................... [9.120] Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529 .............[8.275], [8.285] Gohl v Hender [1930] SASR 158 ............................................................................[17.340], [17.385] Gold v Roseberg [1997] 3 SCR 767; 152 DLR (4th) 385 .......................................................... [4.370] Goldberg v Edwards [1950] 1 Ch 247 ....................................................................[17.170], [17.175] Goldberg v Tanner (1991) 56 SASR 482 ................................................. [17.205], [17.210], [17.215] Golden Lion Hotel (Hunstanton) Ltd v Carter [1965] 1 WLR 1189 ........................................... [3.415] Golden Mile Property Investments Pty Ltd v Cudgegong Australia Pty Ltd [2015] NSWCA 100 ..................................................................................................... [8.130] Golding v Hands [1969] WAR 121 .........................................................................[12.365], [12.390] Golding v Tanner (1991) 56 SASR 482 .....................................................................[8.110], [17.235] Goldmile Properties Ltd v Lechouritis [2003] 2 P & CR 1 ....................................................... [14.225] Goldstein v Sanders [1915] 1 Ch 549 ................................................................................... [14.275] Goldstraw v Goldstraw (2006) V Conv R 54-​712; [2002] VSC 491 ..................... [5.30], [5.35], [5.90] Goldsworthy Mining Ltd v Federal Commissioner of Taxation (1973) 128 CLR 199 ..................................................................................................................... [14.50] Gonsalves v Debreczini (1999) 9 BPR 17,163 ............................................................................ [5.90] Goodlittle d Dodwell v Gibbs (1826) 5 B & C 709; 108 ER 264 .............................................. [10.50] Goodman v Gallent [1986] 1 All ER 311 ............................................................................... [12.145] Goodman v Saltash Corporation (1882) 7 AC 633 ................................................................ [11.250] Goodright Humphreys v Moses (1774) 2 Wm Bl 1019; 96 ER 599 .......................................... [2.465] Good’s Lease, Re [1954] 1 WLR 309 ...................................................................................... [14.355] Goodwin v Baylis (1875) 13 SCR (NSW) Eq 27 ....................................................................... [10.60] Goodwin v Gilbert [2000] QSC 309 .......................................................................................... [5.90] Goodwin v Papadopoulos [1985] ACLD 775 ........................................................................... [17.45] Goodwin v Western Australian Sports Centre Trust [2014] WASC 138 ....................................... [3.50] Gordon v Body Corporate Strata Plan No 3023 (2004) 15 VR 557; [2006] V ConvR 54-​710; [2004] VSC 359 ...........................................................[17.30], [17.360] Gordon v Lever [2018] NSWCA 43 ....................................................................................... [17.285] Gordon v Lidcombe Developments Pty Ltd [1966] 2 NSWR 9 ............................................... [14.225] Gorman (A Bankrupt), Re [1990] 1 All ER 717 ........................................................[12.290], [12.320] Gough v Wood & Co [1894] 1 QB 713 ................................................................................... [16.70] Goulburn CC v McIntosh (1985) 3 BPR 9367 .......................................................................... [16.45] Governors of Bridewell Hospital v Fawkner and Rogers (1892) 8 TLR 637 ............................. [14.265] Gower v Postmaster-​General (1887) 57 LT 527 ..................................................................... [14.275] Goyal v Chandra (2006) 68 NSWLR 313; [2006] NSWSC 239 ............................................... [12.355] Grace Bros Pty Ltd v Commonwealth (1946) 72 CLR 269 ......................................................... [1.80] Graham v KD Morris & Sons Pty Ltd [1974] Qd R 1 .............................................................. [16.135] Graham v Market Hotels Ltd (1943) 67 CLR 567 ................................................................... [14.195] Graham v Philcox [1984] QB 747 ..........................................................................[17.175], [17.440] Graham H Roberts Pty Ltd v Maurbeth Investment Pty Ltd [1974] 1 NSWLR 93 ...................... [1.215] Grahame Allen and Sons Pty Ltd v Water Resources Commission [2000] 1 Qd R 523 .............. [3.285] Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] Ch 592 .................... [14.285] Grand Junction Co Ltd v Bates [1954] 2 QB 160 ................................................................... [14.355] Gray v Taylor [1998] 1 WLR 1093 ........................................................................................... [14.35] Gray v Wykeham-​Martin (unreported, Court of Appeal, 17 January 1977, No 10A) .................................................................................................................. [3.105] Great Western Rly Co v Smith (1876) 2 Ch D 235 ..................................................[14.247], [14.355] Green’s Case (1582) Cro Eliz 3; 78 ER 269 ............................................................................ [14.325] Greenwich London BC v McGrady (1983) 46 P & CR 223 .................................................... [14.380] Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49 ........................... [14.335] Greko v C Gillam Investments Pty Ltd [2005] QCA 184 .......................................................... [15.80] Grescot v Green (1700) 1 Salk 199; 91 ER 179 ..................................................................... [14.285] Gresley v Mousley (1859) 4 De G & J 78; 45 ER 31 ................................................................. [3.225]

xlvii

Australian Real Property Law

Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202 ............................. [4.130], [4.170], [4.200], [4.225], [4.245], [4.350], [4.355], [4.360], [4.375], [7.75] Griddith v Pelton [1958] Ch 205 ........................................................................................... [14.275] Grieve v Enge (2006) Q Conv R 54-​644 (affd (2006) Q Conv R 54-​651) ................................. [4.215] Griffiths v Minister for Lands, Planning and Environment (2008) 235 CLR 322 ........................ [6.455] Grigsby v Melville [1972] 1 WLR 1355; [1973] 1 All ER 385 .................................................... [17.95] Grill v Hockey (1991) 5 BPR 11,421 ...................................................................................... [17.415] Grimwood v Moss (1872) LR 7 CP 360 ................................................................................. [14.325] Grinskis v Lahood [1971] NZLR 502 .......................................................................[17.320], [17.340] Groongal Pastoral Co v Falkiner (1924) 35 CLR 157 ................................................................ [7.375] Grugeon v Gerrard (1840) 4 Y & C Ex 119; 160 ER 945 .......................................................... [7.365] Guardian Loans Pty Ltd v FTFS Holdings Pty Ltd [2009] NSWSC 1163 ...................................... [5.60] Guggenheimer v Registrar of Titles (2002) V ConvR 54-​658 ......................... [3.120], [3.160], [3.165] Guillemard v Silverthorne (1908) 99 LT 584 ......................................................................... [14.345] Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164 ........................................................... [5.45] Gulliver v Wickett (1745) 1 Wils KB 105; 95 ER 517 ................................................................ [10.75] Gumland Property Holding Pty Ltd v Duffy Bros Fruit Markets (Campbelltown) Pty Ltd [2006] NSWSC 10 ......................................................[14.325], [14.380] Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 ....................................................[4.170], [14.275], [14.405], [14.410] Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98 ......................................................................... [7.55] Gustin v Taajamba Pty Ltd (1994) 6 BPR 13,393 ....................................................................... [5.45] Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672 ..................... [12.405], [12.410], [12.420] Gyarfas v Bray (1989) 4 BPR 9736 ........................................................................................ [18.200]

H HE Dibble Ltd v Moore [1970] 2 QB 181 ...................................................................[16.20], [16.40] HG & R Nominees Pty Ltd v Fava [1997] 2 VR 368 ....................................................[4.225], [4.375] HG Royal Park Pty Ltd v Strata Corporation 7176 Inc [2007] SASC 348 ................................. [13.270] HL (Qld) Nominees Pty Ltd v Jobera [2009] SASC 165 ............................................................ [4.370] Hadden, Re; Public Trustee v More [1931] All ER Rep 539 ......................................................... [6.10] Hadfield v Hadfield [2010] NSWSC 561 .................................................................................. [2.260] Hagee (London) Ltd v A B Erikson and Larson [1976] QB 209 ................................................. [14.70] Haggerty v City of Oakland 161 Cal App 2d 407; 326 P 2d 957 (1958) .................................. [11.75] Haidar v Blendale Pty Ltd [1993] 2 VR 524 ............................................................................ [14.245] Hair v Gillman (2000) 80 P & CR 108 ................................................................................... [17.175] Halaga Developments Pty Ltd v Grime (1986) 5 NSWLR 740 .................................................... [5.80] Hali Retail Stores Pty Ltd v Hafaz [2007] NSWSC 412 ............................................................ [14.110] Hall v Busst (1960) 104 CLR 206 ..............................................................................[2.255], [12.460] Hall v Ewin (1888) 37 Ch D 74 ............................................................................................. [14.270] Hall v Hall [1956] QWN 28 ..................................................................................................... [7.395] Hall v Public Trustee (ACT) (2003) 150 ACTR 8 ..................................................................... [12.370] Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 229 CLR 545 ............................................................................................................[4.75], [5.10] Halsall v Brizell [1957] Ch 169 .............................................................................................. [18.320] Hamatan Pty Ltd v Narracan Nominees Pty Ltd [1993] V ConvR 54-​471 ............................... [14.270] Hamdan v Widodo [2004] WASC 123 ....................................................................................... [5.25] Hamersley Iron Pty Ltd v Roberts (1996) 10 WAR 52 ............................................................... [15.30] Hamilton v Iredale (1903) 3 SR (NSW) 535 ............................................................................. [4.265] Hamilton v Joyce [1984] 3 NSWLR 279 ..................................................................[17.215], [17.230] Hamilton v Kaljo (1989) 17 NSWLR 381 ................................................................................. [3.285] Hamilton v Warne (1907) 4 CLR 1293 .................................................................................. [14.310] xlviii

Table of Cases

Hamilton-​Smith v CFS Managed Property Ltd & Perpetual Nominees Ltd [2005] SASC 461 ....................................................................................................... [14.370] Hammersley v Newton (2005) 30 WAR 568; [2005] WASC 221 ............................................ [10.115] Hammersmith & Fulham London BC v Top Shop Centres Ltd [1989] 2 All ER 655 ................ [14.355] Hammersmith & Fulham London Borough Council v Monk [1992] 1 AC 478 .........................................................................................................[12.315], [12.375], [14.365] Hamp v Bygrave (1983) 266 EG 720 .........................................................................[16.20], [16.25] Hampshire Automotive Centre Pty Ltd v Centre Com (Sunshine) Pty Ltd [2019] VSCA 77 ............................................................................................................... [17.205] Hampshire v Wickens (1878) LR 7 Ch D 555 ......................................................................... [14.210] Hanak v Green [1958] 2 QB 9 ............................................................................................... [14.450] Hanbury v Jenkins [1901] 2 Ch 401 ........................................................................................ [17.45] Hancock v Watson [1902] AC 14 ............................................................................................ [11.30] Hankey v Clavering [1942] 2 KB 326 .................................................................................... [14.365] Hanny v Lewis (1998) 9 BPR 16,205; [1999] NSW ConvR 55-​879 ......................................... [17.285] Hanny v Lewis (1998) 9 BPR 97,702 ..................................................................................... [17.120] Hansford v Jago [1921] 1 Ch 322 ..........................................................................[17.170], [17.200] Hanson Constructions Materials Pty Ltd v Roberts [2016] NSWCA 240 ..................................... [5.90] Hanson v Graham (1801) 6 Ves Jun 239; 31 ER 1030 .............................................................. [11.85] Harada v Registrar of Titles (Vic) [1981] VR 743 ........................................................[17.05], [17.35], [17.55], [17.65], [17.95] Hardebol v Perpetual Trustee Co Ltd [1975] 1 NSWLR 221 ..................................................... [11.45] Hardie v Cuthbert (1998) 65 LGRA 5 .................................................................................... [16.295] Harding v National Insurance Co (1871) 2 AJR 67 ................................................................... [16.90] Harding, Re [1956] NZLR 482 ................................................................................................. [11.85] Hargreaves v Rothwell (1836) 1 Keen 154; 47 ER 21 ............................................................... [2.550] Hargreaves, Re (1890) 43 Ch D 401 ....................................................................................... [11.35] Hari v Trotter (1959) 76 WN (NSW) 112 ................................................................................. [6.167] Harkness v Harkness (1904) 20 WN (NSW) 269 .................................................................... [13.220] Harlock v Ashberry (1882) 19 Ch D 539 ................................................................................. [3.260] Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200 ..................................................... [14.220] Harnett v Green (No 2) (1883) 4 LR (NSW) 292 ....................................................................... [3.85] Harrem Pty Ltd v Toyo Tyre Rubber Australia Ltd [2008] NSWSC 776 ...................[14.190], [14.215], [14.410] Harrington v Keene (1975) 11 SASR 361 ................................................................................ [6.180] Harrington-​Smith on behalf of the Wongatha People v Western Australia (No 8) [2004] FCA 338 ........................................................................................ [6.430] Harris v Barnes (1768) 4 Burr 2157; 98 ER 125 ....................................................................... [10.55] Harris v De Pinna (1886) 33 Ch D 238 .................................................................................. [17.115] Harris v Flower (1905) 74 LJ Ch 127 ..................................................................................... [17.150] Harris v Goddard [1983] 1 WLR 1203 ................................................................................... [12.330] Harris v King (1936) 56 CLR 177 ................................................................................[11.70], [11.80] Harris v Nickerson (1873) LR 8 QB 286 ................................................................................... [8.260] Harris v Ryding (1839) 5 M & W 60; 151 ER 27 .................................................................... [16.120] Harris v Sydney MC (1910) 10 SR (NSW) 860 ....................................................................... [16.270] Harris v Wogama Pty Ltd [1969] 1 NSWR 245 .......................................................................... [3.85] Harrison v Petkovic [1975] VR 79 .......................................................................................... [14.165] Harrison v Wells [1967] 1 QB 263 ........................................................................................... [14.80] Hart v Windsor (1843) 12 M & W 68; 152 ER 1114 .............................................................. [14.190] Hart, Re [1954] SASR 1 .............................................................................. [13.50], [13.65], [13.230] Hartleys Ltd v Yukich [2002] WASC 184 .................................................................................. [1.265] Hartshorne v Watson (1838) 4 Bing NC 178; 132 ER 756 ..................................................... [14.330] Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302 ......................................................... [8.120] Harvey v Pratt [1965] 2 All ER 786 ...........................................................................[14.45], [14.110] xlix

Australian Real Property Law

Harvey, Re (1888) 39 Ch D 289 .............................................................................................. [11.80] Harvey Fields Private Estates Pty Ltd v 33 Malcolm Street Pty Ltd [2012] WASC 218 ............. [13.305] Haselhurst v Elliot [1945] VLR 153 ........................................................................................ [14.105] Haslam v Money for Living (Aust) Pty Ltd (2008) 250 ALR 419 ............................................... [4.295] Haven Gold Mining Co, Re (1882) 20 Ch D 151 ................................................................... [16.150] Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185 ............................................ [14.225] Hawkins, Re (1948) 49 SR (NSW) 114 ....................................................................................... [6.80] Hawkins v Minister for Lands (1949) 78 CLR 479 .................................................................... [6.110] Hawkins v Rutter [1892] 1 QB 668 ........................................................................................ [17.115] Hawksley v May [1956] 1 QB 304 ......................................................................................... [12.365] Haupiri Courts Ltd (No 2), Re An Application by [1969] NZLR 353 ........................................... [5.40] Hayes v Northern Territory [1999] FCA 1248 .......................................................................... [4.130] Hayes v O’Sullivan (2001) 24 WAR 40 ....................................................................................... [5.35] Hayes v Seymour-​Johns (1981) 2 BPR 9366 ............................................................................ [14.50] Hayes d Foorde v Foorde (1770) 2 Bl W 698; 96 ER 410 ......................................................... [10.55] Hayward v Chaloner [1968] 1 QB 107 .......................................................................[3.150], [3.245] Hayward v Skinner [1981] NSWLR 590 ................................................................................. [12.455] Haywood v Brunswick Permanent Benefit Building Society (1881) 8 QBD 403 ........................ [18.15] Headland Developments Pty Ltd v Bullen [1975] 2 NSWLR 309 ............................................ [11.245] Healey v Hawkins [1968] 1 WLR 1967 ................................................................................... [17.225] Heasman v Pearse (1871) LR 7 Ch App 275 .......................................................................... [11.250] Heathe v Heathe (1749) 2 Atk 121; 26 ER 476 ...................................................................... [12.120] Heatley v Newton (1881) 19 Ch D 326 .................................................................................. [8.260] Hedley v Roberts [1977] VR 282 .............................................................................[12.40], [12.405], [12.475], [17.105] HeggiesBulkhaul Ltd v Global Minerals Australia (2003) 59 NSWLR 312; [2003] NSWSC 851 ............................................................................................[4.230], [14.290] Heid v Connell Investments Pty Ltd (1989) 16 NSWLR 629 ..................................................... [4.440] Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 .............. [2.435], [2.570], [2.575], [2.585], [5.110], [5.115], [5.120], [5.170], [5.185], [5.200] Hemer Pty Ltd v Benni (No 2) (2011) 111 SASR 309 ............................................................... [4.130] Hemmes Hermitage Pty Ltd v Abdurahman (1991) 22 NSWLR 343 ........................[4.175], [17.120], [17.340], [17.385] Hemmings v Stoke Pages Golf Club Ltd [1920] 1 KB 720 .........................................[1.210], [14.315] Henderson v Eason (1851) 17 QB 701; 117 ER 1451 ............................................[12.250], [12.260], [12.265], [12.270] Henderson v Squire (1869) LR 4 QB 170 ............................................................................... [14.235] Henderson’s Caveat, Re [1998] 1 Qd R 632 ...................................................................[5.35], [5.50] Henningsen v Nolan (2004) 88 SASR 214 ..............................................................[14.250], [14.270] Henry, Ex parte; Re Commissioner of Stamp Duties (1963) 63 SR (NSW) 298 ....................... [17.460] Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309 ......................... [7.455] Henville v Walker (2001) 206 CLR 459 ...........................................................................[8.80], [9.27] Herman v Gill (1921) 24 WALR 10 ........................................................................................ [14.385] Hesketh v Willis Cruisers Ltd (1968) 19 P & CR 573 .............................................................. [16.245] Hewitt v Loosemore (1851) 9 Hare 449; 68 ER 586 ...................................................[2.425], [2.545] Hextall’s Application, Re (2000) 79 P & CR 382 .................................................................... [18.225] Heytesbury Properties Pty Ltd v City of Subiaco (1999) 108 LGERA 259; [2000] WASC 8 ................................................................................................................ [14.390] Heyward v Miles [1944] VLR 155 .......................................................................................... [14.365] Hickey v Powershift Tractors Pty Ltd (1998) NSW ConvR 55-​889 ............................................ [4.225] Hickey v Powershift Tractors Pty Ltd (1999) NSW ConvR 56-​936 ............................................ [4.245] Hickman v Peacey [1945] AC 304 ........................................................................................... [12.80] Higgs v Nassauvian Ltd [1975] AC 464 ..................................................................................... [3.95] Highway Properties Ltd v Kelly, Douglas & Co Ltd (1971) 17 DLR (3d) 710 .......................... [14.390] l

Table of Cases

Hill v Fulbrook (1822) Jac 574; 37 ER 967 ............................................................................. [12.245] Hill v Griffin (1987) 282 EG 85 .............................................................................................. [14.355] Hill v Hickin [1897] 2 Ch 579 ................................................................................................ [12.245] Hill v Kempshall (1849) 7 CB 975; 137 ER 386 ...................................................................... [14.330] Hill v Lyne (1893) 14 NSWLR 449 ......................................................................................... [16.210] Hill v O’Brien (1938) 61 CLR 96 .............................................................................................. [6.175] Hill v Short [1910] SASR 141 ................................................................................................. [14.335] Hill v Transport for London [2005] 3 All ER 677 ........................................................................ [3.50] Hill v Tupper (1863) 2 H & C 121; 159 ER 51 ......................................................................... [17.60] Hillebrand v Council of the City of Penrith [2000] NSWSC 1058 ............................................. [3.280] Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2002) 55 NSWLR 446 ............................................ [4.335] Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 ...................................[4.325], [4.335] Hilton v Ankesson (1827) 27 LT 519 ..................................................................................... [16.320] Hilton v Gray (2008) Q Conv R 54-​686; [2007] QSC 401 .........................................[4.170], [4.225], [7.75] Hindcastle Ltd v Barbara Attenborough Associates Ltd [1996] 2 WLR 262 ............................. [14.270] Hinds v Uellendahl (1992) 107 FLR 254 .................................................................................. [4.215] Hinds v Uellendahl (No 2) (1992) 112 FLR 222 ....................................................................... [4.215] Hindson v Ashby [1896] 2 Ch 1 ............................................................................................ [16.245] Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 ..................................................................................................[12.175], [12.195], [12.220], [12.225] His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15 ............................................................................... [5.60] Hitchman v Walton (1838) 4 M & W 413; 150 ER 1489 ....................................................... [16.105] Hoare, In the Will of [1908] VLR 369 ....................................................................................... [2.185] Hobson v Gorringe [1897] 1 Ch 182 .........................................................................[16.30], [16.70] Hobson’s Will, Re [1907] VLR 724 ........................................................................................... [11.85] Hocana Pty Ltd v Jamsapi Pty Ltd [2007] NSWSC 928 ............................................................... [5.35] Hockley v Rendell (1909) 11 WALR 170 .................................................................................. [13.50] Hodgkinson v Crowe (1875) LR 10 Ch App 622 ................................................................... [14.210] Hodgson v Marks [1971] Ch 892; [1980] 2 All ER 408 ............................... [2.515], [9.105], [14.115] Hodson and Howe’s Contract, Re (1887) 35 Ch D 66 ............................................................. [7.330] Hoffman v Fineberg [1949] Ch 245 ...................................................................................... [14.345] Hohol v Hohol [1981] VR 221 ................................................................................................. [5.270] Holden v Blaiklock [1974] 2 NSWLR 262 ............................................................................... [14.340] Holiday Flat Co v Kuczera [1978] SLT 47 ............................................................................... [15.195] Holland v Hodgson (1872) LR 7 CP 328 .....................................................................[16.20], [16.70] Holland, Re; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165 .................................. [12.415] Homebase Ltd v Allied Dunbar Assurance PLC [2002] 2 EGLR 23 .......................................... [14.260] Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605 ........................... [14.215] Homes v Mill Lodge Properties Ltd [1980] 1 All ER 371 ......................................................... [18.120] Hong v Choo [2004] HKCFI 24 ............................................................................................. [12.375] Hong Kong and Shanghai Banking Corp v Kloeckner& Co AG [1990] 2 QB 514; [1989] 3 All ER 513; [1990] 3 WLR 634 ............................................................................ [14.450] Hooke v Holland [1984] WAR 15 .............................................................................................. [5.45] Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109 ......................................................................................................... [8.105] Hooper v ANZ Banking Group Ltd (1996) 5 Tas R 398 ...................................................[5.50], [5.90] Hooper v Rawson [1920] NZGLR 476 ..................................................................................... [16.95] Hooper, Re [1932] 1 Ch 38 ..................................................................................................... [11.40] Hooper’s Settlement Trusts, Re [1948] 1 Ch 586 ................................................................... [11.165] Hopkinson v Rolt (1861) 9 HL Cas 514; 11 ER 829 .................................................................. [2.455] Hoppe, Re [1961] VR 381 ..................................................................................................... [13.120] Hopper v Corporation of Liverpool (1943) 88 Sol J 213 ........................................................ [11.235] li

Australian Real Property Law

Hordern v Permanent Trustee Co (1894) 10 WN (NSW) 190 .................................................. [10.55] Horn v Beard [1912] 3 KB 181 ................................................................................................ [14.85] Horn v Gilpin (1755) Amb 255; 27 ER 170 ........................................................................... [12.250] Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 ......................................................................................... [9.165] Horsey Estate Ltd v Steiger [1899] 2 QB 79 ...........................................................[14.275], [14.340], [14.345] Horvath v Commonwealth Bank of Australia [1999] 1 VR 643 ...................................[4.130], [4.335], [4.350], [4.355], [4.360] Hose v Cobden [1921] VLR 617 ............................................................................................ [16.325] Hosking v Haas [2009] NSWSC 624 ........................................................................................ [18.20] Hosking v Haas (No 2) [2009] NSWSC 1328 ..........................................................[18.140], [18.175] Hough v Taylor (1927) 29 WALR 97 ...........................................................................[3.85], [17.225] Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 ....................................[13.95], [13.265], [13.280], [13.365] Hounslow London B C v Twickenham Garden Developments Ltd [1971] Ch 233 ................................................................................................................... [1.215] Hounslow London Borough Council v Pilling [1994] 1 All ER 432 ......................................... [14.365] House v Caffyn [1922] VLR 67 .......................................................................................[9.65], [9.70] House of Peace Pty Ltd v Bangladesh Islamic Centre of New South Wales Inc (2009) 231 FLR 362 ..............................................................................[4.205], [4.335] Housing Commission (NSW) v Allen [1967] 1 NSWR 776 ..................................................... [14.315] Howard v B Miles Womens Foundation Inc [2012] NSWSC 1173 .......................................... [15.100] Howard v Fanshawe [1895] 2 Ch 581 ................................................................................... [14.335] Howitt v Fitzgerald (1898) 24 VLR 387 ................................................................................. [17.170] Hoy v Allerton [2001] QSC 440 ............................................................................................ [17.120] Hua Chiao Commercial Bank Ltd v Chiapua Industries Ltd [1987] AC 99 .............................. [14.275] Hubbard’s Will Trusts, Re [1963] Ch 275 ............................................................................... [11.220] Huckvale v Aegean Hotels Ltd (1989) 58 P&CR 163 ............................................................... [17.50] Hudpac Pty Ltd v Voros Investments Pty Ltd [2009] QSC 275 ............................................... [13.305] Hudston v Viney [1921] 1 Ch 98 .................................................................. [2.420], [2.425], [2.545] Hughes v Cork [1994] EGCS 25 .............................................................................................. [3.140] Hughes v Griffin [1969] 1 WLR 23 ............................................................................................ [3.85] Hull and Selby Rly, Re (1839) 5 M & W 327; 151 ER 139 .......................................[16.225], [16.235] Hulme v Brigham [1943] KB 152 ............................................................................................ [16.20] Hulme v Schaecken [1999] NSWSC 1291 ..............................................................[12.360], [12.365] Humberstone v Dubois (1842) 10 M & W 765; 152 ER 681 .................................................. [14.435] Humble v Langston (1841) 7 M & W 517; 151 ER 871 ......................................................... [14.305] Hume v MacKenzie (1839) 6 Cl & Fin 628; 7 ER 834 ............................................................ [16.240] Hume v Perpetual Trustees Executors & Agency Co of Tasmania Ltd (1939) 62 CLR 242 ............................................................................................................ [11.85] Humphrey v Burrell [1951] NZLR 262 ................................................................................... [16.225] Humphries v The Proprietors of “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597 .........................................................................[13.265], [13.275] Hunt v Luck [1902] 1 Ch 428 ..................................................................................[2.510], [14.115] Hunt, Re [2017] VSC 779 ....................................................................... [18.140], [18.145], [18.160] Hunter’s Lease, Re [1942] Ch 124 ......................................................................................... [14.275] Hurt v Bowmer [1937] 1 All ER 797 ...................................................................................... [17.340] HuseyinAkici v L R Butlin Ltd [2006] 1 WLR 201 .....................................................[14.250], [14.345] Hussey v Palmer [1972] 1 WLR 1286 ...................................................................................... [9.105] Hutchinson v Lemon [1983] 1 Qd R 369 .............................................................................. [17.195] Hutton v Watling [1948] Ch 26 ............................................................................................ [11.245] Hyde v Pearce [1982] 1 All ER 1029 ........................................................................................ [3.215] Hyde v Pimley [1952] 2 QB 506 ............................................................................................ [14.255] Hyde Management Services Pty Ltd v FAI Insurances Ltd (1979) 144 CLR 541 ........................ [7.365] lii

Table of Cases

Hyman v Rose [1912] AC 623 ............................................................................................... [14.350] Hyman v Van den Bergh [1907] 2 Ch 516 ............................................................................ [17.225] Hynes v Vaughan (1985) 50 P & CR 444 ................................................................................ [16.50] Hypec Electronics v Registrar-​General [2008] NSWSC 18 ........................................................ [4.170] Hypec Electronics v Registrar-​General (No 2) [2008] NSWSC 138 ........................................... [3.415]

I I and L Securities Ltd Pty v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 ....................... [9.27] IAC v Torulli [1974] WAR 125 ................................................................................................. [7.375] IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 .............................. [2.590], [5.115], [5.160], [5.170], [5.185], [5.220], [5.235], [5.240], [14.145] ICM Agriculture Pty Ltd v Commonwealth (2009) 240 CLR 140 ..................................[1.80], [1.160] IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 ................ [2.495], [2.550], [5.115], [5.120], [5.185], [5.205] Ian Rumney Office Equipment Pty Ltd v Tasmania (unreported, Supreme Court of Tasmania, 18 June 1997); [1998] TASSC 6 ................................................[3.90], [3.250] Iggulden v May (1806) 7 East 237; 103 ER 91 ...................................................................... [14.210] Ikeuchi v Liu (2001) 160 FLR 94 .............................................................................................. [5.270] Imperial Bros Pty Ltd v Ronim Pty Ltd [1999] 2 Qd R 172 ......................................................... [4.40] Imperial Tobacco Co (of Great Britain & Ireland) Ltd v Wilmott [1964] 1 WLR 902 ....................................................................................................................... [11.240] Imray v Oakshette [1897] 2 QB 218 ..................................................................................... [14.355] Indian Taj Pty Ltd v Gilany [2004] NSWSC 1193 ................................................................... [14.380] Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580 ...................................................................................................[14.80], [14.105] Ingle v Vaughan Jenkins [1900] 2 Ch 368 ............................................................................... [3.415] Inglewood Investment Co Ltd v Baker [2003] 2 P & CR 23 .........................................[3.80], [3.115], [3.120], [3.135], [3.160] Inglis v Clarence Holdings Ltd [1997] 1 NZLR 268 ................................................................ [14.110] Inkhorn Pty Ltd v Herbert [2000] WASC 333 ..............................................................[7.305], [7.455] Inland Revenue Commissioners v Bernstein [1961] Ch 399 ..................................................... [18.50] Inner City Businessmen’s Club Ltd v James Kirkpatrick Ltd [1975] 1 NZLR 636 ......................................................................................................[14.325], [14.335] Inns, Re [1947] Ch 576 ........................................................................................................... [13.40] Insearch Ltd v Kin Hing Pty Ltd [2003] NSWSC 875 .............................................................. [14.110] International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513 ............................................................................................[14.260], [14.265] International Tea Stores Co v Hobbs [1903] 2 Ch 165 ........................................................... [17.175] Interview Holdings Pty Ltd v Registrar of Titles [2008] WASC 144 ..................................[5.35], [5.90] Inwards v Baker [1965] 2 QB 29 ................................................................................[5.265], [8.195] Ioppolo v Ioppolo (1978) 4 Fam LR 124 ................................................................................... [5.35] Isaacs v Lord [1920] VLR 274 .................................................................................................. [16.55] Islam v South Sydney City Council (1999) NSW ConvR 56,930 ............................................ [14.315] Ivimey v Stocker (1866) LR 1 Ch App 396 ..............................................................[17.350], [17.445]

J J & C Reid Pty Ltd v Abau Holdings Pty Ltd [1989] ANZ ConvR 44 ........................................ [14.410] J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 ...........[2.570], [5.40], [5.135], [5.160], [5.165], [5.170], [5.175], [5.180], [5.185], [5.195], [5.200] J Alston & Sons Ltd v BOCM Pauls Ltd [2009] 1 EGLR 93 ........................................................ [3.145] liii

Australian Real Property Law

J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 .................................[1.250], [1.265] J Flavelle (decd), Re; Moore v Flavelle [1969] 1 NSWR 361 ...................................................... [3.205] J F Perrott & Co Ltd v Cohen [1951] 1 KB 705 ........................................................................ [3.250] J Sainsbury Plc v Enfield London BC [1989] 1 WLR 590; 2 All ER 817 ..................................... [18.120] J Wright Enterprises Pty Ltd (in liq) v Port Ballidu Pty Ltd [2010] QSC 213 .................[4.170], [4.225] JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121 .................................................................................................... [14.260] JA Pye (Oxford) Ltd v Graham [2000] 3 WLR 242 ..................................................................... [3.15] JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 ................................................ [3.15], [3.25], [3.80], [3.85], [3.90], [3.105], [3.110], [3.115], [3.125], [3.130], [3.140], [3.145] JA Pye (Oxford) Ltd v United Kingdom [2005] 43 EHRR 3 ......................................................... [3.25] JA Pye (Oxford) Ltd v United Kingdom [2008] 46 EHRR 45 ............................................[3.25], [3.30] JA Westaway & Son Pty Ltd v Registrar-​General (1996) 7 BPR 14,773 ..................................... [5.225] JDM Investments Pty Ltd v Todbern Pty Ltd [2000] NSWSC 349 ........................................... [14.255] JNJ Investments Australia Pty Ltd v Sunnyville Pty Ltd (2006) Q Conv R 54-​650 ...................... [5.230] Jabbour v Sherwood [2003] FCA 529 ...................................................................................... [5.270] Jacklin v Proprietors of Strata Plan No 2975 [1975] 1 NSWLR 15 .......................................... [13.360] Jackson v Crosby (No 2) (1979) 21 SASR 280 ......................................................................... [8.215] Jackson v Lever (1792) 3 Bro CC 605; 29 ER 724 .................................................................. [17.495] Jackson v Randall [2000] 2 Qd R 31 ...................................................................................... [16.325] Jackson, Re (1887) 34 Ch D 732 ........................................................................................... [12.150] Jacob v Down [1900] 2 Ch 156 ............................................................................................ [14.345] Jacobs v Platt Nominees Pty Ltd [1990] VR 146 .......................................... [5.115], [5.140], [5.160], [5.180], [5.185], [5.195] Jaeger v Mansions Consolidated Ltd (1903) 87 LT 690 .......................................................... [14.225] Jaffe v Premier Motors Ltd [1960] NZLR 146 ........................................................................... [7.395] Jaggard v Sawyer [1995] 1 WLR 269 ........................................................................[1.275], [18.245] Jam Factory Pty Ltd v Sunny Paradise Pty Ltd [1989] VR 584 ................................................. [14.335] Jamaica Mutual Life Assurance Society v Hillsborough Ltd [1989] 1 WLR 1101 ...................... [18.145] James v Dean (1805) 11 Ves Jun 383; 32 ER 1135 ................................................................... [14.70] James v Lock (1978) 264 EG 395 ............................................................................................ [14.45] James v Registrar-​General (1967) 69 SR (NSW) 361 ................................................................ [4.400] James v Stevenson [1893] AC 162 ........................................................................................ [17.415] Jandric v Jandric [1999] WASC 22 ............................................................................................. [5.70] Janney v Stellar Works Pty Ltd (2017) 53 VR 677 ................................................................... [16.140] Jans v Public Trustee [2002] NSWSC 628 .............................................................................. [12.435] Jared v Clements [1903] 1 Ch 428 .......................................................................................... [2.495] Javad v Aqil [1991] 1 WLR 1007; 1 All ER 243 ............................................................[14.60], [14.70] Jea Holdings (Aust) Pty Ltd v Registrar-​General of NSW [2013] NSWSC 587 ......................... [17.270] Jee v Audley (1787) 1 Cox Eq Cas 324; 29 ER 1186 ................................................................ [11.60] Jelbert v Davis [1968] 1 All ER 1182; 1 WLR 589 ................................................................... [17.340] Jelley v Buckman [1974] QB 488 ........................................................................................... [14.290] Jenkins v Levinson (1929) 29 SR (NSW) 151 ......................................................................... [14.215] Jennings v Sylvania Waters Pty Ltd [1972] 2 NSWLR 4 ............................................................ [4.175] Jessamine Investment Co v Schwartz [1978] QB 264 ................................... [3.240], [3.245], [3.340] Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140 .................................................................................................................... [5.35] Joad Pty Ltd v Ospies Hotel Pty Ltd [1994] V ConvR 54-​505 .................................................... [14.90] Jobson v Nankervis (1943) 44 SR (NSW) 277 ........................................................................ [17.195] Jobson and the Real Property Act 1900, Re (1951) 51 SR (NSW) 76 ........................................ [4.400] John Trenberth Ltd v National Westminster Bank Ltd (1979) 39 P & CR 104 ......................... [16.315] John White & Sons v J & M White [1906] AC 72 ................................................................... [17.350] Johns v Delaney (1890) 16 VLR 729 ......................................................... [17.20], [17.215], [17.220] liv

Table of Cases

Johns v Johns [2004] 3 NZLR 202 ..............................................................................[3.185], [10.05] Johnsey Estates Ltd v Lewis and Manley (Engineering) Ltd (1987) 54 P & CR 296 ................................................................................................................ [14.305] Johnson v Agnew [1980] AC 367 .............................................................................[1.275], [18.250] Johnson v Buttress (1936) 56 CLR 113 .......................................................................[4.375], [9.140] Johnson v International Harvester Co (NZ) Ltd [1925] NZLR 529 ............................................ [16.90] Johnson v Senes and Berger [1961] NSWR 566 ..................................................................... [14.345] Johnson, Re [2000] 2 Qd R 502 ....................................................................................[3.15], [3.90], [3.110], [3.130] Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564; [2000] FCA 1572 ............................................................................................................... [9.160] Johnson’s Will Trusts, Re [1967] Ch 387 .................................................................................. [2.240] Johnston v Boyes [1899] 2 Ch 73 ............................................................................................ [8.260] Johnstone v Hudlestone (1825) 4 B & C 922; 107 ER 1302 ................................................... [14.435] Johnstone, Re [1973] Qd R 347 .............................................................................[12.345], [12.420] Jolevski v Jolevska [2010] NSWSC 416 .................................................................................. [12.455] Jones, Re (1935) 35 SR (NSW) 560 ........................................................................................... [5.50] Jones, Re; Farrington v Forrester [1893] 2 Ch 461 ................................................................. [12.325] Jones (decd), Re (1950) 66 TLR (Pt 2) 51 ................................................................................ [11.75] Jones v Baker (2002) 10 BPR 19,115 ......................................................................................... [5.50] Jones v Bartlett (2000) 205 CLR 166 ............................................................................[8.85], [15.20] Jones v Chappell (1875) LR 20 Eq 539 .................................................................................... [13.50] Jones v Daniel (2005) 212 ALR 588 ....................................................................................... [12.345] Jones v Jones (1876) 1 QBD 279 ............................................................................................. [2.240] Jones v Lavington [1903] 1 KB 235 ....................................................................................... [14.225] Jones v Maynard [1951] Ch 572 ........................................................................................... [12.165] Jones v Price [1965] 2 QBD 618 ............................................................................................ [16.320] Jones v Pritchard [1908] 1 Ch 630 ......................................................... [17.120], [17.360], [17.365] Jones v Sherwood Hills Pty Ltd (unreported, 8 July 1975); (1975) 52 ALJ 223 ........................................................................................................[18.175], [18.195] Jonns v Tan (1999) NSW ConvR 55-​906 .................................................................................... [5.35] Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW) 568 .................. [5.225] Jonton Pty Ltd, Re [1992] 2 Qd R 105 ..................................................................................... [5.270] Jordan v May [1947] KB 427 ................................................................................................... [16.20] Jorss’ Caveat, Re [1982] Qd R 458 ............................................................................................ [5.90] Joseph, Re; Joseph v Equity Trustees Executors & Agency Co Ltd [1960] VR 550 ..................................................................................................[13.120], [13.160] Joseph v Lyons (1884) 15 QBD 280 ........................................................................................ [2.365] Josephson v Mason (1912) 12 SR (NSW) 249 ........................................................................... [4.75] Jourdain v Wilson (1821) 4 B & Ad 266; 106 ER 935 ............................................................. [14.275] Joy v Curator of the Estates of Deceased Persons (1895) 21 VLR 620 ......................................... [6.80] Joyce v Barker Bros (Builders) Ltd (1980) 40 P & CR 512 ....................................................... [12.130] Julian v McMurray (1924) 24 SR (NSW) 402 ......................................................................... [14.195] Julong Pty Ltd v Fenn (2003) Q ConvR 54-​586 ....................................................................... [4.170]

K K, Re [1985] Ch 85 ............................................................................................................... [12.435] KJRR Pty Ltd v Commissioner of State Revenue (Vic) (1999) 99 ATC 4335 ............................... [14.40] KY Enterprises Pty Ltd v Darby [2013] VSC 484 ............................................ [3.160], [3.310], [3.360] Kagan, Re [1966] VR 538 ...................................................................................................... [11.250] Kain v Norfolk [1949] Ch 163 ............................................................................................... [17.335] Kanak v National Native Title Tribunal (1995) 132 ACR 329 .................................................... [6.430] Kangas v Tsangaras (1990) 5 BPR 11,254 .............................................................................. [12.290] lv

Australian Real Property Law

Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235; [2000] NSWCA 313 .............................................................................................[14.25], [4.130], [4.170], [14.270] Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381 ..............................................[14.110], [14.215] Kardiasmenos v Pioneer Management Pty Ltd [2005] NSWSC 778 ............................[5.110], [5.160] Karpany v Dietman (2013) 303 ALR 216; [2013] HCA 47 ....................................................... [6.425] Karynette Pty Ltd, Ex parte [1984] 2 Qd R 211 ..................................................................... [16.290] Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303; [1999] NSWSC 1045 .............[17.285], [17.300] Kataria v Safeland PLC [1998] 05 EG 155 .............................................................................. [14.315] Kaufman v Michael (1892) 18 VLR 375 ................................................................................. [14.115] Kauri Timber Co (Ltd) v District Land Registrar, Auckland (1902) 21 NZLR 84 ......................... [11.15] Kay’s Leasing Corporation Pty Ltd v CSR Provident Fund Nominees Pty Ltd [1962] VR 429 .....................................................................................................[7.410], [7.425], [16.70] Kazas & Associates Pty Ltd v Multiplex Pty Ltd (2002) 11 BPR 20,353; [2002] NSWSC 840 ......................................................................................................... [14.215] Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 .......................................................[8.110], [17.360] Keddell v Regarose Pty Ltd [1995] 1 Qd R 172 ........................................................................ [4.485] Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77 ........................................... [9.165] Keeves v Dean [1924] 1 KB 685 ............................................................................................ [14.250] Keitley, Re [1992] 1 VR 583 ................................................................................................... [12.435] Kellow-​Falkiners Motors Pty Ltd v Nimorakiotakis (2000) V ConvR 64,434; [2000] VSCA 1 ......................................................................................................[14.60], [14.80] Kelly, Re [1932] IR 255 ............................................................................................................ [11.45] Kelly v Alternative Web Pty Ltd [2010] SASC 4 ...................................................................... [14.335] Kelrit Investments Pty Ltd v Transform Composites Holdings Pty Ltd [2003] FCA 662 ........... [14.110] Kelsen v Imperial Tobacco Co (Great Britain & Ireland) Ltd [1957] 2 QB 334 ....................... [16.130], [16.135], [16.315] Kemp v Public Curator of Queensland [1969] Qd R 145 ....................................................... [12.430] Kendle v Melsom (1998) 193 CLR 46 ...................................................................................... [7.310] Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56 ............................................................ [12.165] Kenny v Preen [1963] 1 QB 499 ........................................................................................... [14.225] Kent v Cavanagh (1973) 1 ACTR 43 ....................................................................................... [6.195] Kenworthy v Ward (1853) 11 Hare 196; 68 ER 1245 ............................................................... [12.65] Kenyon v Hart (1865) 6 B & S 249; 122 ER 1188 .................................................................. [16.315] Ker v Hamilton (1880) 6 VLR (Eq) 172 .................................................................................. [11.165] Kerabee Park Pty Ltd v Daley (1978) 2 NSWLR 222 .......................................... [5.50], [5.60], [7.435] Kerdamec Ocean Fresh Restaurant Ltd v Viaduct Quay Ltd [2001] ANZ ConvR 509 ................................................................................................................ [14.85] Kern Corp Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 ........................................... [2.565] Kerridge v Foley (1964) 82 WN (Pt I) (NSW) 293 .................................................................... [18.20] Keswick Developments Pty Ltd v Keswick Island Pty Ltd [2012] 2 Qd R 114 ............................ [6.150] Ketby-​Fletcher’s Will Trusts, Re [1969] 1 Ch 339 ................................................................... [11.170] Kettlewell v Refuge Assurance Co [1908] 1 KB 545 ................................................................. [4.240] Kettlewell v Watson (1882) 21 Ch D 685 ................................................................................ [2.555] Khan v Hadid (No 2) (2008) NSW Conv R 56-​210 .................................................................. [4.215] Khan v Khan (2004) 62 NSWLR 229 ......................................................................................... [8.70] Khattar v Wiese (2005) 12 BPR 23,235; [2005] NSWSC 1014 ............................................... [17.300] Khouri v Khoury [2004] NSWSC 770 .................................................................................... [14.115] Kidner v Dept of Social Security (1993) 18 AAR 545 ............................................................... [5.270] Kids Campus Holdings Pty Ltd v Kelly [2007] VSC 282 .......................................................... [14.265] Kiely v Beneficial Finance Corporation Ltd (1992) 6 WAR 521 ................................................. [4.215] Kierford Ridge Pty Ltd v Ward [2005] VSC 215 ...........................................................[3.90], [3.125], [3.140], [3.250]

lvi

Table of Cases

Kilgour v Gaddes [1904] 1 KB 457 ...........................................................................[17.75], [17.220] Killick v Second Covent Garden Property Co Ltd [1973] 1 WLR 658 ...................................... [14.265] Kilpatrick v Wollongong City Council [2005] NSWLEC 658 ..................................................... [4.335] Kindervater, Re Application by [1996] ANZ ConvR 331 ......................................................... [17.285] King, Re [1963] Ch 459 ........................................................................................................ [14.290] King v AGC (Advances) Ltd [1983] 1 VR 682 ............................................................................ [5.35] King v Coupland [1981] Qd R 121 .......................................................................................... [3.280] King v David Allen & Sons Billposting Ltd [1916] 2 AC 54 ...................................................... [1.205] King v Smail [1958] VR 273 .................................................................................................... [4.320] King v The President, Councillors and Ratepayers of the Shire of Phillip Island (unreported, Sup Ct Vic, 10 August 1994) ....................................................................... [17.130] King Investment Solutions Ltd v Hussain [2005] NSWSC 1076 ...................................[7.325], [7.330] Kingdon v Hutt River Board (1905) 25 NZLR 145 ................................................................. [16.245] Kingsmill v Millard (1855) 11 Exch 313 .................................................................................. [3.250] Kingsnorth Trust Ltd v Tizard [1986] 1 WLR 783; [1986] 2 All ER 54 ....................................... [2.515] Kioa v West (1985) 159 CLR 550 .............................................................................................. [3.30] Kirby v Cowderoy [1912] AC 599 ........................................................................................... [3.165] Kirk v Sutherland [1949] VLR 33 ................................................................................[3.300], [3.315] Kirkcaldie v Wellington City Corp [1933] NZLR 1101 ............................................................ [17.105] Kirkland v Quinross Pty Ltd (2008) 14 BPR 26,979; [2008] NSWSC 286 ................................. [4.435] Kitay v Strathfield Holdings Ltd (1998) 27 ACSR 716 ................................................................ [5.90] Kitchen v Royal Air Force Association [1958] 1 WLR 563 ......................................................... [3.285] Kitching v Phillips [2009] WASC 396 ........................................................ [17.40], [17.115], [17.130] Kizbeau Pty Ltd v WGB Pty Ltd (1995) 184 CLR 281 ............................................................... [1.255] Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 ................................................ [3.280] Klumper, Re [2003] NSWSC 854 ........................................................................................... [13.115] Knight v Gould (1833) 2 My & K 265; 39 ER 956 ................................................................. [12.195] Knight v Simmonds [1896] 1 Ch 653 ................................................................................... [18.155] Knight v Williams [1901] 1 Ch 256 ....................................................................................... [14.380] Knight’s Case (1588) 5 Co Rep 54b; 77 ER 137 ....................................................................... [14.50] Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441 ................................ [7.175], [7.195], [7.360] Knockholt Pty Ltd v Graff [1975] Qd R 88 ............................................................................. [14.450] Knox v Dwyer [2001] SASC 315 ........................................................................................... [16.300] Kogarah Municipal Council v Golden Paradise Corporation [2005] NSWCA 230 ...................................................................................................................... [4.335] Konica Business Machines Australia Pty Ltd v Tizine Pty Ltd (1992) 26 NSWLR 687 ................................................................................................................ [14.380] Kontikis v Schreiner (1989) 16 NSWLR 706 ........................................................................... [16.325] Koompahtoo Local Aboriginal Land Council v KLALC Property Investment Pty Ltd [2008] NSWCA 6 ................................................................................................... [4.130] Koonara Management Pty Ltd v Rockliff (No 2) [2019] FCA 805 ............................................. [9.160] Koorootang Nominees Pty Ltd v ANZ Banking Group Ltd [1998] 3 VR 16 .................[4.160], [4.225], [4.370], [4.375] Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6 ................................................... [8.175] Kort Pty Ltd v Shaw [1983] WAR 113 .................................................................................... [18.225] Kostos v Devitt (1979) 1 BPR 9231 ....................................................................................... [16.300] Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 ............................. [2.490], [2.550], [4.225] Kranz v National Australia Bank Ltd (2003) 8 VR 310; [2003] VSCA 92 ................................... [4.375] Krawitz Will Trusts, Re [1959] 1 WLR 1192 .............................................................................. [2.260] Kreglinger v New Patagonia Meat & Cold Storage Co Ltd [1914] AC 25 ...................[7.165], [7.195] Kumar v Dunning [1989] QB 193 ......................................................................................... [14.275] Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419 ....................................................... [5.35] Kushner v Law Society [1952] 1 All ER 404 ........................................................................... [14.120] Kyren Pty Ltd v Cinema Place Pty Ltd [2006] SASC 93 .......................................................... [17.340]

lvii

Australian Real Property Law

L L & T (Sales) Pty Ltd v Chief Commissioner of State Revenue [2007] NSWSC 1061 ................................................................................................................... [14.110] L’Estrange v L’Estrange [1902] 1 IR 64 .................................................................................. [12.125] LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517 ..........................................[4.350], [4.355], [4.370] LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1989) 24 NSWLR 490; Aust Torts Reports 80-​269 ...................................................................... [16.140] La Martina v Penney [1968] SASR 411 ...................................................................................... [5.35] Lace v Chantler [1944] KB 368 ............................................................................................... [14.25] Ladies’ Hosiery & Underwear Ltd v Parker [1930] 1 Ch 304 .................................................... [14.60] Ladup Ltd v Williams and Glyn’s Bank [1985] 2 All ER 577 .................................................... [14.355] Laffer v Gillen (1927) 40 CLR 86; [1927] AC 886 .................................................................. [14.335] Lake v Craddock (1732) 3 P Wms 158; 24 ER 1011 ...............................................[12.155], [12.195] Lake v Gibson (1792) 1 Eq Ca Abr 290; 21 ER 1052 ...............................................[12.145], [12.155] Lam v Lam [2016] VSC 298 .................................................................................................... [4.205] Lam Kee Ying SdnBhd v Lamb Shes Tong [1975] AC 247 ...................................................... [14.250] Lambert v Thwaites (1866) LR 2 Eq 151 .................................................................................. [10.45] Lambeth London Borough Council v Blackburn (2001) 82 P & CR 494; [2001] EWCA 912 .................................................................................................[3.130], [3.145] Laming v Jennings [2018] VSCA 335 ..................................................................................... [17.115] Lamos Pty Ltd v Hutchison (1984) NSW ConvR 55-​183, 57,300 ........................................... [17.150] Lamos Pty Ltd v Hutchison (1984) 3 BPR 9350 ..................................................................... [17.195] Lampet’s Case (1612) 10 Co Rep 46b; 77 ER 994 ................................................................. [10.110] Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 .......................................................... [12.275] Lamshed v Lamshed (1963) 109 CLR 440 ............................................................................... [3.225] Lancaster v Lloyd (1927) 27 SR (NSW) 379 ........................................................................... [17.170] Land v Clyne (1968) 92 WN (NSW) 134 ................................................................................. [14.85] Land Settlement Association Ltd v Carr [1944] 1 KB 657 ......................................................... [14.60] Land Transfer Act 1908, Re; Ex parte Matheson (1914) 33 NZLR 838 ................................... [10.105] Landale v Menzies (1909) 9 CLR 89 ......................................................... [14.30], [14.310], [14.365] Landco Albany Ltd v Fu Hao Construction Ltd [2006] 2 NZLR 174 ............................................ [5.35] Lander and Bagley’s Contract, Re [1892] 3 Ch 41 ................................................................. [14.210] Landlush Pty Ltd v Rutherford [2003] 1 Qd R 236 ..................................................................... [5.80] Landorf v Wyndam [2017] QSC 198 ..................................................................................... [16.300] Lane Cove MC v H & W Hurdis Pty Ltd (1955) 72 WN (NSW) 284 ......................................... [18.75] Lang v Asemo Pty Ltd [1989] VR 773 .................................................................................... [14.275] Lang Parade Pty Ltd v Peluso [2006] 1 Qd R 42; [2005] QSC 112 ......................................... [16.135] Langdale Pty Ltd v Sollas [1959] VR 637 ............................................................................... [18.140] Langley v Foster (1909) 10 SR (NSW) 54 .............................................................................. [14.350] Lansen v Olney (1999) 100 FCR 7; 169 ALR 49 .............................................. [2.35], [3.430], [4.320] Lanyon v Carne (1669) 2 WmsSaund 161; 85 ER 910 ............................................................. [14.50] Lanyon Pty Ltd v Canberra Washed Sands Pty Ltd (1966) 115 CLR 342 ................................ [16.245] Lapin v Abigail (1930) 44 CLR 166 ...........................................................................[5.115], [5.145], [5.155], [5.200] Laris v Lin [No 2] [2016] NSWSC 560 ................................................................................... [17.405] Laserbem Pty Ltd v Gainsville Investments Pty Ltd [2004] VSC 62 ......................................... [14.105] Lashbrook v Cock (1816) 2 Mer 70; 35 ER 867 ..................................................................... [12.120] Last v Rosenfeld [1972] 2 NSWLR 923 .................................................................................... [9.110] Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 .............................................................................. [5.40], [5.105], [5.110], [5.255], [5.260], [5.270], [5.275], [5.280], [7.455] Latella v L J Hooker Ltd (1985) 5 FCR 146 ............................................................................... [9.170] lviii

Table of Cases

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 ....................................................................................................[14.390], [14.415] Lavender v Betts [1942] 2 All ER 72 ....................................................................................... [14.225] Lavery v Pursell (1888) 39 Ch D 508 ....................................................................................... [1.275] Lawrance v Lord Norreys (1890) 15 App Cas 210 ................................................................... [3.285] Lawrence v Griffiths (1987) 47 SASR 455 ...............................................................[17.370], [17.385] Lawrence v Jenkins (1873) LR 8 QB 274 ................................................................................ [16.320] Lawrence v South County Freeholds Ltd [1939] Ch 656 ....................................................... [18.155] Lawson v Hartley-​Brown (1995) 71 P & CR 242 .................................................................... [14.220] Lawton v Lawton (1743) 3 Atk 13; 26 ER 811 ......................................................................... [16.90] Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57 .............................................................. [5.35] Layrill Pty Ltd v Furlap Constructions Pty Ltd (2002) V ConvR 54-​659 ....................................... [5.80] Le Neve v Le Neve (1747) Amb 436; 27 ER 291 ...................................................................... [2.640] Lea v Thursby [1904] 2 Ch 57 ................................................................................................. [3.415] Leach v Thomas (1835) 7 C & P 327; 173 ER 145 .................................................................. [16.90] Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd [2000] NSWSC 459 .............................. [14.335] Leake v Bruzzi [1974] 1 WLR 1528 ........................................................................................ [12.290] Leake v Robinson (1817) 2 Mer 363; 35 ER 979 ...................................................................... [11.80] Leaver, Re [1997] 1 Qd R 55 ................................................................................................. [12.120] Lechmere and Lloyd, Re (1881) 18 Ch D 524 ......................................................................... [10.45] Lee v Close (1870) 10 SCR (NSW) 86 ................................................................................... [14.275] Lee v K Carter Ltd [1949] 1 KB 85 ......................................................................................... [14.265] Lee v Ross (No 2) (2003) 11 BPR 20,991 ................................................................................... [5.45] Lee v Smith (1854) 9 Exch 662; 156 ER 284 ........................................................................... [14.65] Lee-​Parker v Izzet [1971] 3 All ER 1099; [1971] 1 WLR 1688 ................................................. [14.450] Leek and Moorlands Building Society v Clark [1952] 2 QB 788 ............................................. [14.380] Legione v Hateley (1983) 152 CLR 406; 46 ALR 1 ......................................... [2.565], [7.25], [8.335], [14.80], [14.335], [14.350] Lehrer and the Real Property Act, Re [1961] SR (NSW) 365 ....................... [4.130], [14.25], [16.120], [16.125] Leigh v Dickeson (1884) 15 QBD 60 .......................................................... [2.170], [12.275], [14.75] Leigh v Jack (1879) 5 Ex D 264 ..................................................................................[3.105], [3.135] Leigh v Taylor [1902] AC 157 ..................................................................................[16.35], [16.115] Leigh’s Settlement Trusts, Re [1938] Ch 39 ............................................................................. [11.85] Leighton Properties (Qld) Pty Ltd [1990] 2 Qd R 230 ................................................................ [5.80] LeitzLeeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544 ............................................... [14.405] Lemmon v Webb [1895] AC 1 ...............................................................................[16.315], [17.115] Lemon v Lardeur [1946] KB 613 ........................................................................................... [14.365] Lemon & Davies’ Contract, Re [1919] VLR 481 ....................................................................... [2.530] Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 ....................................... [14.220] Lennon v Bell [2005] QSC 286 .............................................................................................. [12.365] Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407; 106 ALR 595 ..............................[4.130], [4.155], [4.300], [5.50], [14.140] Leschallas v Woolf [1908] 1 Ch 641 ........................................................................................ [16.95] Leverhulme (No 2), Re [1943] 2 All ER 274 ............................................................................. [11.45] Levy v Watt (2014) 398 ALR 748 ............................................................................................ [3.285] Lewenberg v Direct Acceptance Corporation Ltd [1981] VR 344 ....................................[5.60], [5.90] Lewis, Ex parte (1888) 21 QBD 191 ........................................................................................ [6.200] Lewis v Bell (1985) 1 NSWLR 731 ..............................................................................[14.30], [14.40] Lewis v Keene (1936) 36 SR (NSW) 493 .................................................................................. [3.430] Lewis v Thomas (1843) 3 Hare 26; 67 ER 283 ......................................................................... [3.285] Lewis Securities Ltd (in liq) v Carter (2018) 334 FLR 9 ............................................................. [3.205] Liaweena NSW Pty Ltd v McWilliams Wines Pty Ltd (1991) ASC 56-​038 ................................ [17.230] Liddiard v Waldron [1934] 1 KB 435 ..................................................................................... [17.140]

lix

Australian Real Property Law

Lidsdale Nominees Pty Ltd v Elkharadly [1979] VR 84 ........................................................... [14.325] Life Association of Scotland v Siddal (1861) 3 De GF & J 58; 45 ER 800 .................................. [3.225] Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2007] WASC 88 ...................................................................................................[4.215], [4.300] Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd (2008) 35 WAR 520; [2008] WASCA 23 ...............................................................[4.215], [4.300], [14.70], [14.115] Lin v State Rail Authority of NSW [2004] FCAFC 219 ...............................................[14.60], [14.365] Linden v Staybond Pty Ltd [1986] NSW ConvR 55-​308 ......................................................... [14.215] Lindsay v Miller (No 2) [1949] VLR 154 .................................................................................. [11.85] Lindsay Petroleum v Hurd (1874) LR 5 PC 221 ........................................................................ [3.225] Lintel Pines Pty Ltd v Nixon [1991] 1 VR 287 .................................................................[5.35], [5.50] Liristis v Wallville [2001] NSWSC 428 .................................................................................... [14.270] Little, Re; Ex parte Thorne’s Bankstown Estate Ltd (1929) 29 SR (NSW) 401 .............................. [5.90] Littledale v Liverpool College [1900] 1 Ch 19 ............................................... [3.90], [3.115], [3.135], [3.140], [3.145], [3.160] Liu v Adamson (2004) NSW ConvR 56-​074 ............................................................................ [4.375] Liverpool CC v Irwin [1977] AC 239 ......................................................................[14.110], [14.215] Living and Leisure Australia Ltd v Commissioner of State Revenue (Vic) [2018] VSCA 237 ................................................................................................................. [6.85] Llavero v Shearer (2014) 17 BPR 33,381; [2014] NSWSC 1336 .................................. [16.30016.305] Lloyd v Banks (1868) 3 Ch App 488 ........................................................................................ [2.495] Lloyd v Grace, Smith & Co [1912] AC 716 ............................................................................. [4.240] Lloyd v Mayfield (1885) 7 ALT 48 ........................................................................................... [4.255] Lloyd v Rosbee (1810) 2 Camp 453; 170 ER 1216 ................................................................ [14.435] Lloyd’s Bank v Bullock [1896] 2 Ch 192 .................................................................................. [2.595] Lloyds Bank Plc v Rosset [1989] Ch 350 .................................................................................. [2.515] Lo Giudice v Biviano (No 1) [1962] VR 412 ............................................................[14.330], [14.335] Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] VR 239 ..................................... [14.390] Lock v Abercester Ltd [1939] Ch 861 .................................................................................... [17.335] Lock v Pearce [1893] 2 Ch 271 ............................................................................................. [14.350] Lockett v Norman-​Wright [1925] Ch 56 ............................................................................... [14.110] Lockhart v Hardy (1846) 9 Beav 349; 50 ER 378 ..................................................................... [7.335] Lockwood Buildings Ltd v Trust Bank Canterbury Ltd [1995] 1 NZLR 22 ................................. [16.20] Loclot Pty Ltd v Pullen (2003) 56 NSWLR 592; [2003] NSWSC 67 ........................................ [17.340] Lodge v Wakefield Metropolitan City Council [1995] 2 EGLR 124 ........................................... [3.140] Logue v Shoalhaven SC [1979] 1 NSWLR 537 ......................................................................... [4.355] Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491 ........................ [4.210], [4.215], [4.230] Lolakis v Konistas [2002] NSWSC 889 ................................................................................... [18.225] London & Blenheim Estates v Ladbroke Retail Parks Ltd [1993] 4 All ER 157; [1994] 1 WLR 31 ............................................................................................................. [17.105] London & County (A & D) Ltd v Wilfred Sportsman Ltd [1971] Ch 764 .................[14.165], [14.290] London & North-​Eastern Rly Co v Berriman [1946] AC 278 .................................................. [14.195] London & Northern Estates Co v Schlesinger [1916] 1 KB 20 ............................................... [14.390] London CC v Allen [1914] 3 KB 642 ....................................................................................... [18.20] London CC v Wilkins [1957] AC 362 ....................................................................................... [16.30] Long v Blackall (1797) 7 TR 100; 101 ER 875 .......................................................................... [11.45] Long v Gowlett [1923] 2 Ch 177 .......................................................................................... [17.180] Long v Michie [2003] NSWSC 233 ........................................................ [17.415], [17.420], [18.230] Long v Piper [2001] NSWCA 342 .......................................................................................... [14.110] Long v Tower Hamlets LBC [1998] Ch 197 ................................................................[3.240], [3.250] Longbottom v Berry (1869) LR 5 QB 123 ................................................................................ [16.60] Longhead d Hopkins v Phelps (1770) 2 Wm Bl 704; 96 ER 414 ............................................... [11.80] Longmuir v Kew [1960] 1 WLR 862 ...................................................................................... [11.245] Lonsdale v Gilbert [2006] NSWLEC 30 .................................................................................. [16.300] lx

Table of Cases

Lord, Ex parte [1985] 2 Qd R 75 ............................................................................................... [5.35] Lord v Commissioners (Sydney) (1859) 12 Moo PCC 473; 14 ER 991 ................................... [16.245] Lord Abergavenny’s Case (1607) 6 Co Rep 78b; 77 ER 373 ................................................... [12.410] Lord Advocate v Lord Lovat (1880) 5 AC 273 ................................................................[3.80], [3.90] Lord Bernstein of Leigh v Skyviews & General Ltd [1978] QB 479 ..........................[16.135], [16.140] Lord Chesterfield v Harris [1908] 2 Ch 397 ........................................................................... [17.450] Lord Chesterfield v Harris [1911] AC 623 .............................................................................. [17.455] Lord Chesterfield’s Settled Estates, Re [1911] 1 Ch 237 ........................................................... [16.65] Lord Hastings v Saddler (1898) 79 LT 355 .............................................................................. [3.250] Lord Northbourne v Johnston [1922] 2 Ch 309 .................................................................... [18.100] Lorimer v Lorimer (1820) 5 Madd 363; 56 ER 934 ................................................................ [12.245] Louis Vuitton New Zealand Ltd v Princes Wharf Property Fund Ltd [2005] ANZ ConvR 245 ................................................................................................... [14.265] Louis and the Conveyancing Act, Re [1971] 1 NSWLR 164 .....................................[18.95], [18.125], [18.150], [18.175] Louth v Diprose (1992) 175 CLR 621 .........................................................................[4.375], [9.140] Love v Bloomfield [1906] VLR 723 .......................................................................................... [16.30] Love v Chryssoulis (1977) 16 ACTR 1 .................................................................................... [14.365] Love v Kempton [2010] VSC 252 .............................................................................................. [5.90] Lovell, Re [1920] 1 Ch 122 ..................................................................................................... [2.240] Lowe v Kladis [2018] NSWCA 130 ........................................................................................ [17.330] Luddington v Kime (1697) 1 LdRaym 203; 91 ER 1031 ........................................................... [10.45] Lukacs v Wood (1978) 19 SASR 520 ....................................................................................... [4.360] Luke v Luke (1936) 36 SR (NSW) 310 ....................................................................[12.265], [12.275] Lukies v Reply (1994) 6 BPR 13 ............................................................................................... [8.130] Lurcott v Wakely and Wheeler [1911] 1 KB 905 .................................................................... [14.195] Luther v Milner [2009] VSC 595 ............................................................................................... [5.90] Luton Trade Unionist Club and Institute Ltd’s Application, Re (1969) 20 P & CR 1131 .............................................................................................................. [18.240] Luttrell’s case (1601) 4 Co Rep 86a; 76 ER 1063 ................................................................... [17.435] Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209 ............................................ [14.405] Luxmoore v Robson (1818) 1 Barn &Ald 584; 106 ER 215 .................................................... [14.195] Lyme Valley Squash Club Ltd v Newcastle under Lyme Borough Council [1985] 2 All ER 405 .......................................................................................................... [17.175] Lyon v Reed (1844) 13 M & W 285; 153 ER 118 .................................................................. [14.380] Lyons v Elliott (1876) 1 QBD 210 .......................................................................................... [14.425] Lyons v Lyons [1967] VR 169 .................................................. [12.340], [12.405], [12.410], [12.475] Lysaght v Edwards (1876) 2 Ch D 499 ........................................................ [2.565], [8.130], [8.140], [8.280], [12.385], [12.395] Lyttleton Times Co Ltd v Warners Ltd [1907] AC 476 ............................................................ [17.120]

M MBF Investments Pty Ltd v Nolan [2011] VSCA 144 ................................................................ [7.455] MCA Camilleri Building & Constructions Pty Ltd v H R Walters Pty Ltd [1981] ACLD 396 ............................................................................................................ [17.155] MDN Mortgages Pty Ltd v Caradonna [2010] NSWSC 1298 ......................................[4.170], [4.360] M’Goun v Smith (1886) 12 VLR 244 ..................................................................................... [14.325] MJ Leonard Pty Ltd v Bristol Custodians Ltd (in liq) [2013] NSWSC 1734 .................................. [5.35] MRA Engineering Ltd v Trimster Co Ltd (1988) 56 P&CR 1 ................................................... [17.150] Mabey v Ramsey [1963] NSWR 599 ........................................................................................ [10.60] Mabo v Queensland (No 1) (1988) 166 CLR 186 .......................................................[6.315], [6.335] Mabo v Queensland (No 2) (1992) 175 CLR 1 ....................................... [1.10], [1.20], [2.10], [2.30], [2.35], [2.80], [2.100], [3.45], [3.275], [3.315], [5.35], lxi

Australian Real Property Law

[6.230], [6.315], [6.325], [6.340], [6.415], [6.450], [6.465], [6.475], [6.495] MacIntosh v Bebarfalds Ltd (1922) 22 SR (NSW) 371 ........................................................... [14.315] MacMichael v NHR Forster Pty Ltd (1998) 8 NTLR 16 ............................................................... [5.90] MacPherson v Maund (1937) 58 CLR 341 ............................................................................ [11.220] Macarthy and Collins, Re (1901) 19 NZLR 545 ....................................................................... [4.405] Machu, Re (1882) 21 Ch D 838 .............................................................................................. [2.250] Mack and the Conveyancing Act, Re [1975] 2 NSWLR 623 ...................... [18.20], [18.145], [18.175] Mackrell v Hall and Parker (1913) 32 NZLR 740 ...................................................................... [16.90] Macky v The CaféMonico Ltd (in liq) (1905) 25 NZLR 689 ................................................... [14.115] Macleay, Re (1875) LR 20 Eq 186 ............................................................................[2.245], [11.240] Macpherson v Maund (1937) 58 CLR 341 ............................................................................ [11.220] Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133 ........... [2.490], [2.550], [4.160], [4.205], [4.225], [4.350], [4.355], [4.370], [4.375] Macrocom v City West Centre Pty Ltd [2001] NSWSC 374 ..................................................... [16.50] Maddalozzo v Commonwealth (1979) 22 ALR 561 ............................................................... [17.460] Maddison v Alderson (1883) 8 App Cas 467 .............................................. [8.155], [8.195], [14.115] Maddison v Chapman (1858) 4 K & J 709; 70 ER 294 (V-​C) (affd (1859) 3 De G & J 536; 44 ER 1375) ............................................................................................. [10.40] Magill v Magill (1993) 5 BPR 12,022; NSW ConvR 55-​663 ................................................... [12.340] Magill v Magill (1997) NSW ConvR 55-​795 ...........................................................[12.340], [12.365] Maguire v Browne (1913) 17 CLR 363 .................................................................................... [3.350] Maguire v Makaronis (1997) 188 CLR 449 .............................................................................. [9.145] Mahendran v Chase Enterprises Pty Ltd [2013] NSWCA 280 ..................................................... [5.45] Maher v Bayview Golf Club Ltd [2004] NSWSC 275 ............................................................. [17.220] Maher v Commonwealth Banking Corporation [2002] FCAFC 104 ......................................... [14.75] Mahony v Hosken (1912) 14 CLR 379 .................................................................................... [18.35] Maiden Civil (P & E) Pty Ltd, Re [2013] NSWSC 852 ................................................................. [7.35] Mainwaring v Mainwaring (1923) 23 SR (NSW) 531 .............................................................. [11.80] Maiorana and the Conveyancing Act, Re [1970] 1 NSWR 627 ...................................[17.45], [17.70] Mair v Rio Grande Rubber Estates Ltd [1913] AC 583 ............................................................. [4.240] Malayan Credit Ltd v Jack Chia MPH Ltd [1986] 1 All ER 711 .................................[12.140], [12.160] Malcolmson v O’Dea (1863) 10 HLC 593; 11 ER 1155 ...........................................[16.210], [16.240] Malden Farms Ltd v Nicholson (1956) 3 DLR (2d) 236 ......................................................... [17.340] Maley v Fearn (1947) 176 LT 203 ......................................................................................... [14.310] Malin, In the Will of [1912] VLR 259 ................................................................ [2.360], [8.15], [8.35] Malmsbury Confluence Gold Mining Co Ltd v Tucker (1877) 3 VLR (L) 213 .......................... [14.275] Malsons Pty Ltd, Re [1991] 2 Qd R 61 .....................................................................[4.170], [14.120] Malter v Procopets (2000) V ConvR 54-​624 ...............................................................[3.140], [3.160] Malzy v Eichholz [1916] 2 KB 308 ............................................................................[14.225], [15.70] Manado on behalf of the Bindubur Native Title Claim v State of Western Australia [2018] FCAFC 238; 364 ALR 337 ......................................................................... [6.465] Mancetter Developments Ltd v Garmanson Ltd [1986] QB 1212; 1 All ER 449 ....................... [16.90] Manchester, Sheffield & Lincolnshire Railway Co v Anderson [1898] 2 Ch 394 ..................... [14.225] Mander, Re [1950] Ch 547 ................................................................................................... [11.250] Manfield& Sons Ltd v Botchin [1970] 2 QB 612 ..................................................................... [14.70] Manjang v Drammeh (1991) 61 P & CR 194 ........................................................................ [17.150] Manly Properties Pty Ltd v Castrisos [1973] 2 NSWLR 420 .....................................[17.340], [18.240] Mann, Crossman and Paulin Ltd v Registrar of the Land Registry [1918] 1 Ch 202 ................................................................................................................ [14.45] Manning v Wasdale (1836) 5 Ad & E 758; 111 ER 1353 ....................................................... [17.450] Mantec Thoroughbreds Pty Ltd v Batur [2009] V ConvR 54-​767; VSC 351 ........................................................................................... [17.340], [17.370], [17.375] lxii

Table of Cases

Maoi v City of Stirling [No 2] [2016] WASCA 45 ................................................................... [17.205] Maori Trustee v Kahuroa [1956] NZLR 713 ........................................................................... [14.335] Maori Trustee v Prentice [1992] 3 NZLR 344 ......................................................................... [14.390] Marchant v Capital and Counties Property Co Ltd (1982) 263 EG 661 .................................. [17.180] Marcroft Wagons Ltd v Smith [1951] 2 KB 496 ....................................................................... [14.35] Margil Pty Ltd v Stegul Pastoral Pty Ltd [1984] 2 NSWLR 1; ACLD 554 ...... [3.430], [17.45], [17.445] Maridakis v Kouvaris (1975) 5 ALR 197 .................................................. [14.165], [14.380], [14.405] Markfield Investments Ltd v Evans [2001] 1 WLR 1321 ........................................................... [3.360] Markham v Paget [1908] 1 Ch 697 ....................................................................................... [14.225] Markin, Re [1966] VR 494 ......................................................................................[18.220], [18.235] Markos v O R Autor Pty Ltd [2007] NSWSC 810 ................................................................... [17.325] Marks v Jolley (1938) 38 SR (NSW) 351 .................................................................................. [6.175] Marks v Warren [1979] 1 All ER 29 ........................................................................................ [14.250] Marquess of Zetland v Driver [1939] 1 Ch 1 ........................................................................... [18.15] Marquis Camden, The v Batterbury (1860) 7 CB (NS) 864; 141 ER 1055 .............................. [14.300] Marquis Cholmondeley v Lord Clinton (1820) 2 Jac & W 1 ....................................................... [3.10] Marriott, Re [1968] VR 260 ................................................................................................... [17.415] Marriott v Franklin (1993) 60 SASR 457 .................................................................[12.275], [12.310] Marriott Industries Pty Ltd v Mercantile Credits Ltd (Maesbury Plumbers Pty Ltd Intervening) (1990) 55 SASR 228 ............................................................................. [7.15] Marsden v Campbell (1897) 18 LR (NSW) Eq 33 .......................................................[2.505], [2.640] Marsden v Edward Heyes Ltd [1927] 2 KB 1 ............................................................[13.50], [14.200] Marsden v McAlister (1887) 8 NSWLR (L) 300 ........................................................................ [4.265] Marsh v Gilbert (1980) 256 EG 715 ...................................................................................... [14.250] Marshall v Burman (No 2) [1961] VR 161 ............................................................................. [14.365] Marshall v Taylor [1895] 1 Ch 641 .......................................................................................... [3.100] Marten v Flight Refuelling Ltd [1962] Ch 115 ....................................................................... [18.250] Martin v Elsasser (1878) 4 VLR (L) 481 .................................................................................. [14.250] Martin v Official Trustee in Bankruptcy [1990] Tas R 65 ............................................................. [5.35] Martin v Taylor (1999) 17 ACLC 1,563 ................................................................................... [14.70] Martin and Coles v Roe (1857) 7 El & Bl 237; 119 ER 1235 .................................................... [16.90] Martyn, Re (1965) 65 SR (NSW) 387 .......................................................................[18.30], [18.175] Martyn v Clue (1852) 18 QB 661; 118 ER 249 ...................................................................... [14.275] Martyn v Glennan [1979] 2 NSWLR 234 ................................................................................... [5.90] Mary Portington’s Case (1614) 10 Co Rep 35b; 77 ER 976 ..................................................... [11.05] Mason v Clarke [1955] AC 778 ..............................................................................[17.455], [17.465] Mason v Harris [1921] 1 KB 563 ........................................................................................... [14.245] Massart v Blight (1951) 82 CLR 423 .......................................................................[14.255], [14.315] Masters v Cameron (1954) 91 CLR 353 ...................................................................[8.275], [14.110] Master’s Settlement, Re [1911] 1 Ch 321 ................................................................................ [10.45] Mattey Securities Ltd v Erwin (1998) 34 EG 91 ..................................................................... [14.380] Mattey Securities Ltd v Ervin (1999) 77 P & CR 160 ............................................................. [14.380] Matthews v Smallwood [1910] 1 Ch 777 .............................................................................. [14.320] Matthews v South-​Eastern Drainage Board [1965] SASR 328 .................................................. [6.155] Matthey v Curling [1922] 2 AC 180 ...................................................................................... [14.195] Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293 ................................................[2.455], [7.105], [7.110], [7.115] Maughan, Re (1885) 14 QBD 956 ........................................................................................ [14.115] Maurice Toltz Pty Ltd v Macy’s Emporium Pty Ltd (1969) 91 WN (NSW) 591; [1970] 1 NSWR 474 .....................................................................................[17.75], [17.80] Maxted v LC Smith and Co Pty Ltd [2008] QSC 165 ..................................................[8.210], [15.85] Maxwell v Moorabool Developments Pty Ltd [2004] VSC 392 .............................................. [14.405] May v Ceedive Pty Ltd [2006] NSWCA 369 ................................................. [4.355], [16.20], [16.45] Mayer v Coe (1968) 88 WN (Pt 1) NSW 549 .................................. [4.130], [4.155], [4.450], [5.225] Mayho v Buckhurst (1617) Cro Jac 438; 79 ER 374 ............................................................... [14.275] lxiii

Australian Real Property Law

Mayo v Mayo [1966] NZLR 849 ............................................................................................ [12.295] Mayor of Carlisle v Graham (1869) LR 4 Exch 361 ................................................................ [16.250] Mayor of Colchester v Brooke (1845) 7 QB 339; 115 ER 518 ................................................ [16.240] Mayor of Congleton v Pattison (1808) 10 East 130; 103 ER 725 ........................................... [14.275] Mazzuchelli v Mazzuchelli [2006] WASC 124 ........................................................................ [17.130] McBean v Howey [1958] NZLR 25 ........................................................................................ [16.280] McCallum, Re [1901] 1 Ch 143 .............................................................................................. [3.285] McCarthy v Cunningham (1877) 3 VLR (L) 59 ...................................................................... [17.445] McColl v Bright [1939] VLR 204 ............................................................................................. [7.365] McCormick v McCormick [1921] NZLR 384 ......................................................................... [12.265] McCosker v Lovett (1995) 7 BPR 14,507 ................................................................................... [5.35] McCourt v National Australia Bank (No 2) [2010] WASC 151 .................................................... [5.80] McCourt v National Australia Bank Ltd [2010] WASC 121 ..............................................[5.40], [5.50] McCoy v Estate of Caelli [2008] NSWSC 986 ........................................................................ [12.360] McCulloch v Fern (2000) NSWSC 729 ...................................................................................... [5.80] McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 ............................................................... [7.25] McDonald v Peddle (1923) 42 NZLR 987 ..............................................................[16.280], [17.130] McDonald v Reicht (1984) 36 SASR 299 ................................................................................. [15.30] McDonalds Australia Ltd v Bendigo and Adelaide Bank Ltd [2013] VSC 639 ............................................................................................................... [14.165] McDonald’s Australia Ltd v Chief Commissioner of State Revenue (NSW) (2005) 58 ATR 260; [2005] NSWSC 6 ................................................................................ [16.40] McDrury v Luporini [2000] 1 NZLR 652 ................................................................................ [14.320] McEachern v Colton [1902] AC 104 .......................................................... [5.40], [14.255], [14.275] McFarland v Gertos [2018] NSWSC 1629 ...................................................................[3.90], [3.165], [3.175], [3.255] McGellin and Fuchsbichler v Button [1973] WAR 22 ................................................................. [3.45] McGlade v Native Title Registrar and Others (2017) 251 FCR 172; [2017] FCAFC 10 ............................................................................................................... [6.370] McGrath v Campbell (2006) 68 NSWLR 229; NSW ConvR 56-​159 .........................[4.355], [17.170], [17.200] McGregor v McGregor (1859) 1 De GF & J 63; 45 ER 282 ...................................................... [12.65] McGuinness v Registrar-​General (1998) 44 NSWLR 61 ............................................................ [3.405] McIntosh v Goulburn City Council (1985) 3 BPR 9367 ........................................................... [16.20] McIntyre v Porter (1983) 2 VR 439 ............................................................ [3.90], [17.415], [17.420] McIntyre Bros v McGavin [1893] AC 268 .............................................................................. [17.350] McIvor v Donald [1984] 2 NZLR 487 .................................................................................... [14.350] McKeand v Thomas [2006] NSWSC 1028 ............................................................................. [17.170] McKean’s Caveat, Re [1988] 1 Qd R 524 .............................................. [5.35], [5.40], [5.80], [5.255] McKee v McKee (1986) 10 Fam LR 754 ................................................................................ [12.345] McKenzie v McAllum [1956] VLR 208 ................................................................................... [14.265] McLernon v Connor (1907) 9 WALR 141 .............................................................................. [17.150] McMahon v Ambrose [1987] VR 817 .................................................................................... [14.115] McMahon v McMahon [1979] VR 239; [1981] Qd R 81 ................................................[5.35], [5.90] McMahon v McMahon [2008] VSC 386 ............................................................................... [17.340] McMahon v Public Curator [1952] St R Qd 197 .................................................................... [12.325] McMahon v Swan [1924] VLR 397 ........................................................................................ [11.245] McManus v Fortescue [1907] 2 KB 1 ...................................................................................... [8.255] McMillan v Dunoon [2006] ANZ ConvR 87; [2005] VSC 440 .................................................... [5.35] McNab v Earle [1981] 2 NSWLR 673 .................................................................................... [12.370] McNamara and the Conveyancing Act, Re (1961) 78 WN (NSW) 1068 ................................ [12.455] McPhail v Persons, Names Unknown [1973] Ch 447 ............................................................. [14.315] McPherson v Minister for Natural Resources (1990) 22 NSWLR 671 .......................[14.335], [14.350] McVey v Dennis (1984) 73 FLR 45; FLC 91-​521 .......................................................[5.225], [12.345] McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656 ................................................... [8.140] lxiv

Table of Cases

Medical Benefits Fund of Australia Ltd v Fisher [1984] 1 Qd R 606 ............................[4.170], [4.255], [4.320], [4.360], [4.405] Meehan v Jones (1982) 149 CLR 571 .........................................................................[8.275], [8.280] Meehan v NZ Agricultural Co Ltd (1907) 26 NZLR 766 .......................................................... [16.55] Meiners v Gunn [2018] WASC 123 ........................................................................................... [5.35] Melacare International v Daley Investments [1999] NSWSC 496 ............................[14.335], [14.350] Melden Homes No 2 Pty Ltd Land, Re [1976] Qd R 79 ..........................................[16.295], [16.305] Melksham v Archerfield Airport Corporation [2004] QSC 164 ................................[14.250], [14.350] Mellor v Walmesley [1905] 2 Ch 164 .................................................................................... [17.195] Melluish v BMI (No 3) Ltd [1996] AC 454 ............................................................................... [16.30] Melville v Grapelodge Developments Ltd (1980) 39 P & CR 179 .......................................... [14.450] Melvin, Ex parte [1980] Qd R 391 ........................................................................................ [18.220] Members of the Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422 ................ [6.490] Menniti v Chan [2007] QSC 190 .......................................................................................... [13.305] Menniti v Winn [2008] QCA 66 ............................................................................................ [13.305] Mentech Resources Pty Ltd v MCG Resources Pty Ltd (2012) 188 LGERA 140 ......................... [2.570] Mercantile Credits Ltd v Archbold [1970] QWN 9 ................................................................... [7.270] Mercantile Credits Ltd v Australian & New Zealand Banking Group (1988) 46 SASR 407 .........................................................................................................[7.110], [7.115] Mercantile Credits Ltd v Shell Co (Aust) Ltd (1976) 136 CLR 326 ............... [4.165], [4.170], [14.120] Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32 ......................................................................................... [4.350], [4.360], [4.375] Merhi v New Quay Stage 2 Pty Ltd [2003] VSC 190 ............................................................. [14.335] Meridian Airlie Beach Pty Ltd v Karamist Pty Ltd [2015] QCA 192 ......................................... [14.335] Meriton Apartments Pty Ltd v McLaurin and Tait (Developments) Pty Ltd (1976) 133 CLR 671 .............................................................................................. [5.220] Merrell Associates Ltd v HL (Qld) Nominees Pty Ltd (2010) 241 FLR 49; [2010] SASC 155 ...............................................................................[4.230], [4.370] Mervin, Re [1891] 3 Ch 197 ................................................................................................... [11.50] Metal Manufacturers Ltd v Federal Commissioner of Taxation (1999) 43 ATR 375 ..........................................................................................................[16.20], [16.25], [16.30], [16.80] Metcalfe v Boyce [1927] 1 KB 758 ........................................................................................ [14.380] Metcalfe and Morris Pty Ltd v Reekie [1963] NSWR 459 ......................................................... [14.30] Metropolitan Trade Finance Co Pty Ltd v Coumbis (1973) 131 CLR 396 ............................... [14.247] Metropolitan Water Supply & Sewerage Board v R Jackson Ltd [1924] St R Qd 82 ....................................................................................................................... [17.360] Meux v Cobley [1892] 2 Ch 253 ............................................................................................ [13.50] Meux v Jacobs (1875) LR 7 HL 481 ......................................................................................... [16.60] Meye v Electric Transmission Ltd [1942] Ch 290 ..................................................................... [14.70] Michael v Onisiforou (1977) 1 BPR 9356 ..................................................... [4.260], [4.265], [4.280] Micklethwait v Newlay Bridge Co (1886) 33 Ch D 133 ......................................................... [16.245] Middle Harbour Investments Ltd, Re [1977] 2 NSWLR 652 ....................................................... [2.20] Midland Bank Trust Co Ltd v Green [1981] AC 513 ................................................................. [2.460] Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287; [2002] WASC 248 ....................[5.35], [5.50], [5.70], [18.120] Midland Railway Co v Wright [1901] 1 Ch 738 ....................................................................... [3.100] Mijo Developments Pty Ltd v Royal Agnes Waters Pty Ltd [2007] NSWSC 199 .......................... [5.35] Mildmay’s Case (1605) 6 Co Rep 40a; 77 ER 311 .................................................................... [11.05] Miles v Harford (1879) 12 Ch D 691 ....................................................................................... [11.80] Miles v Jarvis (1883) 24 Ch D 633 ........................................................................................... [10.50] Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141; [1972-​73] ALR 65 ............................[1.225], [2.10], [2.25], [6.240], [6.265], [6.275], [6.315], [6.495] Miller v Cannon Hill Estates Ltd [1931] 2 KB 113 .................................................................. [14.190] lxv

Australian Real Property Law

Miller v Emcer Products Ltd [1956] Ch 304; [1956] 2 WLR 267; [1956] 1 All ER 237 .............................................................................................[17.95], [17.105] Miller v Evans [2010] WASC 127 ............................................................ [18.125], [18.245], [18.255] Miller v Jackson [1977] QB 966 ............................................................................................. [17.115] Miller v Jenner [1921] NZLR 841 ........................................................................................... [14.115] Miller v Martin [2018] VSC 444 .......................................................................................... [12.155A] Miller v Minister of Mines [1963] AC 484 .......................................... [4.325], [4.330], [5.35], [18.40] Mills v Cannon Brewery Co Ltd [1920] 2 Ch 38 .................................................................... [14.265] Mills v Renwick (1901) 1 SR (NSW) (Eq) 173 .............................................................[2.455], [2.500] Mills v Ruthol Pty Ltd (2002) 10 BPR 19,381 ..............................................................[5.275], [5.280] Mills v Silver [1991] 1 All ER 449 ........................................................................................... [17.225] Mills v Stokman (1967) 116 CLR 61 ........................................................................[4.215], [17.460], [17.465], [17.470] Milmo v Carreras [1946] KB 306 ........................................................................................... [14.245] Milne v James (1910) 13 CLR 168 ......................................................................................... [17.225] Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185 .......................................................[8.45], [8.55], [12.390], [12.395] Mimi v Millenium Developments Pty Ltd (2004) V ConvR 54-​687 ........................................... [5.115] Minister of State for the Army v Dalziel (1944) 68 CLR 261 ................................................... [14.390] Minja Properties Ltd v Cussins Property Group PLC [1998] 2 EGLR 52 .................................. [14.195] Minshall v Lloyd (1837) 2 M & W 450; 150 ER 834 ................................................................ [16.15] Mint v Good [1951] 1 KB 517 .............................................................................................. [14.205] Minter v Minter (2000) 10 BPR 18,133 ................................................................................. [12.180] Mischel Holdings Pty Ltd v Mischel [2013] VSCA 375 ........................................................... [12.115] Mischel v Mischel Holdings Pty Ltd (in liq) [2012] VSC 292 ...................................[12.340], [12.365] Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23 ................................. [8.80] Mitcham CC v Clothier (1994) 62 SASR 394; 83 LGERA 431; [1995] ANZ ConvR 313 ...................................................................................................[17.35], [17.40] Mitchell v Arblaster [1964–​65] NSWR 119 ............................................................................ [12.195] Mitchell v Weiriks; Ex parte Weiriks [1975] Qd R 100 .............................................................. [2.160] Mitrovic v Koren [1971] VR 479 ............................................................................................ [12.420] Mittagong SC v Mittagong Anthracite Coal Co (1957) 3 LGRA 290 ...................................... [17.460] Modular Design Group Pty Ltd, Re (1994) 35 NSWLR 76 ........................................................ [7.170] Moffett v Dillon [1999] 2 VR 480 ................................................................ [2.455], [2.590], [5.115], [5.120], [5.185], [5.205], [5.210] Mole v Ross (1950) 1 BPR 9101 .............................................................................[12.180], [12.195] Monash City Council v Melville (2000) V ConvR 54-​621 ................... [3.85], [3.110], [3.120], [3.160] Montagu v Browning [1954] 1 WLR 1039 .............................................................................. [14.50] Montague v Long (1972) 24 P & CR 240 ............................................................................... [16.15] Montagu’s ST, Re [1987] Ch 264 ............................................................................................ [2.495] Monte Carlo Caravan Park Pty Ltd v Curyer [2007] 2 Qd R 57; [2006] QCA 363 ................... [15.155] Monti v Barnes [1901] 1 KB 205 ................................................................................[16.20], [16.60] Monypenny v Dering (1852) 2 De GM & G 145; 42 ER 826 ................................................. [11.220] Moody v Steggles (1879) 12 Ch D 261 .................................................................................. [17.65] Moonking Gee v Tahos (1963) 63 SR (NSW) 935 .................................................................... [2.650] Moore, Re (1888) 39 Ch D 116 .............................................................................................. [2.240] Moore, Re [1901] 1 Ch 936 .................................................................................................... [11.45] Moore v Dimond (1929) 43 CLR 105 .........................................................................[14.60], [14.65] Moore v Stockland South Beach Pty Ltd (No 2) [2012] WASC 468 ........................................ [13.305] Moore v Ullcoats Mining Co Ltd [1908] 1 Ch 575 ................................................................ [14.320] Moore and Hulm’s Contract, Re [1912] 2 Ch 105 ................................................................... [14.85] Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445 ..................................... [17.285] Moraitis Fresh Packaging (NSW) Pty Ltd v Fresh Express (Aust) Pty Ltd (2008) 14 BPR 26,339 ..........................................................................................[2.245], [2.255] Moreland Timber Co v Reid [1946] VLR 237 ......................................................................... [17.470] lxvi

Table of Cases

Morgan v Khyatt [1964] AC 475; NZLR 666; 1 WLR 475 ...................................................... [16.315] Morgan’s Case (1590) 2 And 202; 123 ER 620 ..................................................................... [12.425] Morish, Re [1939] SASR 305 ................................................................................................. [13.245] Morison v Hall [1923] VLR 93 ............................................................................................... [14.255] Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) 169 ALR 419 ...................................................................................................................... [3.205] Morley v Bird (1798) 3 Ves 628; 30 ER 1192 ..........................................................[12.105], [12.150] Morley v Rennoldson (1843) 2 Hare 570; 67 ER 235 ............................................................... [2.240] Mornane v All Red Carrying Co Pty Ltd [1935] VLR 341 ........................................................ [14.365] Morris v Thomas (1991) 73 LGRA 164 .................................................................................. [16.305] Morrison, Jones and Taylor Ltd, Re [1914] 1 Ch 50 ................................................................. [16.70] Mortimer, Re [1905] 2 Ch 502 ................................................................................................ [11.10] Morton v Black (1986) 4 BPR 9164 ......................................................................................... [4.130] Moses v Lovegrove [1952] 2 QB 533 ...................................................................................... [3.240] Motor Auction Pty Ltd v John Joyce Wholesale Cars Pty Ltd (1997) 23 ACSR 647 .................. [12.395] Moule v Garrett (1872) LR 7 Ex 101 ..................................................................................... [14.305] Mounsey v Ismay (1865) 3 H & C 486; 159 ER 621 .................................................[17.85], [17.115] Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 3 All ER 129 ................................. [3.360] Mount Cook National Park Board v Mount Cook Motels Ltd [1972] NZLR 481 ..................... [14.220] Mount Eden Land Ltd v Straudley Investments Ltd (1996) 74 P & CR 306 ............................ [14.260] Mowan v Wandsworth London Borough Council [2001] BLGR 228 ...................................... [14.225] Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376 .......................................... [14.90] Mulcahy v Curramore Pty Ltd [1973] 1 NSWLR 737 ............................................................... [3.300] Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 ................................................... [2.50], [2.80], [3.85], [3.300], [3.305], [3.310], [3.315] Muller v Trafford [1901] 1 Ch 54 .......................................................................................... [14.275] Multiplex Bluewater Mariana Village Pty Ltd v Harbour Tropics Pty Ltd [2017] QCA 202 ....... [17.100] Multi-​Span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd (2001) 10 BPR 19,253 ......................................................................................................... [5.35] Mumford v Stohwasser (1874) LR 18 Eq 556 ............................................... [2.470], [2.475], [7.100] Munchies Management Pty Ltd v Belperio (1989) ASC 40-​926 ................................................. [8.80] Municipality of Waterloo v Hinchcliffe (1866) 5 SCR (NSW) 273 ........................................... [17.105] Munro v Dare [1934] St R Qd 332 .......................................................................................... [14.60] Munro v Stuart (1924) 41 SR (NSW) 203 .....................................................................[4.75], [4.215] Murdoch v Registrar of Titles [1913] VLR 75 ........................................................................... [3.215] Murdoch and Barry, Re (1975) DLR (3rd) 222 ....................................................................... [12.370] Murdock v Kennedy (1952) 69 WN (NSW) 191 .................................................................... [14.430] Murnane v Findlay [1926] VLR 80 .................................................................. [3.90], [3.115], [3.135] Murphy (decd), Re [1958] Qd R 456 ...................................................................................... [11.85] Murphy v Harris [1924] QSR 187 .......................................................................................... [14.305] Murphy v Hudson (1995) 6 BPR 14,061 ................................................................................. [16.15] Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 ................................................ [15.220] Murphy v Wright (1992) NSW ConvR 55-​652 ........................................................................... [5.35] Murray v Hall (1849) 7 CB 441; 137 ER 175 ......................................................................... [12.310] Murray-​Oates v Jjadd Pty Ltd (1999) 76 SASR 38 .................................................................. [14.410] Muschinski v Dodds (1985) 160 CLR 583 ...................................................... [5.35], [5.270], [9.115] Myers v Aquarell Pty Ltd (in liq) [2000] VSC 429 ..................................................................... [4.245] Myers v Catterson (1889) 43 Ch D 470 ................................................................................ [14.220] Myers v Smith (1992) 5 BPR 11,494 ....................................................................................... [2.560]

N NGL Properties Pty Ltd v Harlington Pty Ltd [1979] VR 92 .................................................... [14.320] NH Dunn Pty Ltd v LM Ericcson Pty Ltd (1979) 2 BPR 9241; [1980] ANZ ConvR 300 ...................................................................................................[16.10], [16.50] lxvii

Australian Real Property Law

NLS Pty Ltd v Hughes (1966) 120 CLR 583 ............................................................................. [15.45] NRMA Insurance Ltd v Martin (1988) 84 ACTR 1 ...........................................................[5.55], [5.90] NWC Finance v Borsellino (No 2) [2016] NSWSC 1338 .......................................................... [5.160] Naidoo v RM Naidoo Pty Ltd [2000] WASC 100 ....................................................................... [5.90] Naish and the Conveyancing Act, Re (1960) 77 WN (NSW) 892 ........................................... [18.145] Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VR 184 .................................................... [14.410] Nash, Re [1910] 1 Ch 1 .......................................................................................................... [11.10] National Australia Bank Ltd v Blacker (2000) 104 FCR 288; [2000] FCA 1458 ...........[16.15], [16.20], [16.25], [16.45] National Australia Bank Ltd v Maher [1995] 1 VR 318 ................................................[4.160], [4.200] National Australia Bank Ltd v New South Wales (2009) 260 ALR 115 ........................................ [2.20] National Australia Bank Ltd v Zollo (1992) 59 SASR 76 ........................................................... [7.410] National Bank of Australia v Dyer (1996) V ConvR 54-​533 ........................................................ [5.35] National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 ........................................... [14.390] National Commercial Banking Corporation of Australia Ltd v Hedley (1984) NSW ConvR 55-​211; 3 BPR 9477 .............................................................[4.170], [4.200], [4.225], [4.245] National Dairies WA Ltd v Commissioner of State Revenue (2001) 24 WAR 70; 47 ATR 31 ........................................................................... [16.40], [16.45], [16.50] National Executors & Trustee Co (Tas) v Edwards [1957] Tas SR 182 ......................[17.450], [17.480] National Outdoor Advertising Ltd v Wavon Pty Ltd (1988) 4 BPR 9732 ................................... [14.30] National Trustees, Executors & Agency Co (Australasia) Ltd v Long [1939] VLR 33 .................................................................................. [17.170], [17.185], [17.205] National Trustees, Executors & Agency Co of Australasia Ltd v Attorney-​General for Victoria [1973] VR 610 .................................................................... [13.210] National Trustees, Executors & Agency Co of Australasia Ltd v Boyd (1926) 39 CLR 72 ............................................................................................................ [14.135] National Trustees Co v Hassett [1907] VLR 404 ..........................................................[4.255], [4.270] Natural Forests Pty Ltd v Turner (2004) 13 Tas R 44 ...................................................[3.165], [3.395] Natural Gas & Oil Corporation Ltd (in liq) v Byrne and Boyle (1951) 68 WN (NSW) 207 ............................................................................................................ [14.75] Natwest Markets Pty Ltd v Tenth Vandy Pty Ltd (2008) 21 VR 68; [2008] VSCA 207 ............................................................................................................. [14.405] Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WACA 95 ........................................... [5.90] Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASC 68 ............................................ [5.35] Neale v Mackenzie (1836) 1 M & W 747; 150 ER 635 .............................................[14.85], [14.165] Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 ............................................................ [5.225] Neighbourhood Association DP No 285220 v Moffat [2008] NSWSC 54 .............................. [17.325] Neill v Public Trustee [1978] 2 NSWLR 65 ............................................................................. [13.240] Neilson v Letch (No 2) [2006] NSWCA 254 .......................................................................... [12.155] Nelson v Hughes [1947] VLR 227 ............................................................ [17.65], [17.205], [17.220] Nelson v Nelson (1995) 184 CLR 538 ....................................................................................... [9.90] Nelson v Walker (1910) 10 CLR 450 ..................................................................................... [17.170] Nemesis Australia Pty Ltd v Commissioner of Taxation (2005) 150 FCR 152; [2005] FCA 1273 ..........................................................................[11.30], [11.120] Neoform Developments & Interiors Pty Ltd v Town & Country Marketing Pty Ltd [2002] NSWSC 344 ................................................................................................. [5.35] Neowarra v Western Australia [2004] FCA 1092 ...................................................................... [6.460] Netherby Properties Pty Ltd v Tower Trust Ltd (1999) 76 SASR 9 ..............................[18.35], [18.65], [18.180] Neubacher v Good (2003) 11 BPR 20,877 ............................................................................ [12.430] Never-​Stop Rly (Wembley) Ltd v British Empire Exhibition (1924) Inc [1926] Ch 877 ............ [16.110] Nevill Long & Co (Boards) Ltd v Firmenich& Co (1981) 261 EG 461 .................................... [14.290] Neville v Dale (1990) Vic ConvR 54-​382 ............................................................................... [17.225] New South Wales v Commonwealth (Garden Island Case) (1926) 38 CLR 14 ......................... [6.200] lxviii

Table of Cases

New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2016) 260 CLR 232 ............................................................................... [6.295] New South Wales Aboriginal Land Council v Minister for Natural Resources (1986) 59 LGRA 318 .......................................................................................................... [6.155] New South Wales Co-​operative Ice & Cold Storage Co, Re (1891) 12 LR (NSW) Eq 87 ............................................................................................................ [16.60] New South Wales Crime Commission v Lee [2010] NSWSC 1012 ............................................. [5.35] New South Wales Sports Club Ltd v Solomon (1914) 14 SR (NSW) 340 ................................ [14.210] New Zealand Factors Ltd v Farmers Trading Co Ltd [1992] 3 NZLR 703 ................................ [14.450] New Zealand Government Corporation v HM & S Ltd [1982] QB 1145 .................................. [16.95] Newbolt v Bingham (1895) 72 LT 852 .................................................................................. [14.335] Newcastle-​under-​Lyme v Wolstanton Ltd [1947] 1 Ch 92 ..................................................... [17.275] Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSWLR 273 ............. [2.470], [2.475], [4.215] Newcomen v Coulson (1877) 5 Ch D 133 .............................................................................. [17.70] Newham v Lawson (1971) 22 P & CR 852 ............................................................................ [11.250] Newington v Windeyer [1985] 3 NSWLR 555 ..............................................................[2.80], [3.405] News Ltd v Australian Rugby Football League Ltd (1996) ATPR 41-​568 ..................................... [9.45] News Ltd v South Sydney District Rugby Club (2003) 215 CLR 563 .......................................... [9.45] Newton v Marsden (1862) 2 J & H 356; 70 ER 1094 ............................................................... [2.240] Newton Abbot Co-​operative Society Ltd v Williamson and Treadgold Ltd [1952] Ch 286 .................................................................................. [18.20], [18.70], [18.90] Nguyen v HuyOn (2004) NSW ConvR 56-​065 .......................................................................... [5.35] Nicholas v Andrew [1920] 20 SR (NSW) 178 .......................................................................... [3.310] Nicholls v Lovell [1923] SASR 542 ......................................................................................... [17.460] Nichols v Go-​Tell Nominees Ltd (1997) V ConvR 54-​573 ...............................................[5.60], [5.90] Nichols v Hawkes (1853) 10 Hare 342; 68 ER 958 .................................................................. [2.185] Nichols Constructions Pty Ltd v Henry [1995] ANZ ConvR 192 ................................................. [5.50] Nickells v Atherstone (1847) 10 QB 944; 116 ER 358 ............................................................ [14.380] Nickerson v Barraclough [1981] Ch 426 ............................................................................... [17.145] Nicolls v Sheffield (1787) 2 Bro CC 215; 29 ER 121 .............................................................. [11.250] Nielson-​Jones v Fedden [1975] Ch 222 ................................................................................. [12.365] Nightingale v Courtney [1954] 1 QB 399 ............................................................................. [14.380] Nightingale v Recorder of Titles [2018] TASSC 56 ........................................................[4.80], [4.395] Nime Pty Ltd v Seventh Storey Pty Ltd [1993] V ConvR 54-​491 .............................................. [14.90] Ninubon v Gag Pty Ltd (1998) 9 BPR 16,479 ........................................................................ [14.365] Nisbet and Potts’ Contract, Re [1905] 1 Ch 391 ......................................... [2.455], [2.545], [3.330], [3.335], [3.350], [18.40] Nisbet and Potts’ Contract, Re [1906] 1 Ch 386 ..................................................................... [3.330] Noack v Noack [1959] VR 137 .............................................................................................. [12.325] Noarlunga DC v Coventry [1967] SASR 71 ........................................................................... [16.320] Noble v Centacare (2003) 150 ACTR 12 ................................................................................. [15.30] Nolan v Wilambong SC (1939) 14 LGR (NSW) 89 ................................................................... [6.110] Noone v Traynor (1952) 69 WN (NSW) 33 ............................................................................. [14.85] Nordern v Blueport Enterprises Ltd [1996] 3 NZLR 450 .........................................[14.220], [14.225] Norris v Norris [1985] 1 NSWLR 472 .................................................................................... [12.455] North Ganalanja Aboriginal Corporation v Queensland (The Waanyi People’s Case) (1995) 132 ALR 565 ................................................................. [6.55] North Ganalanja Aboriginal Corporation, Re; Ex parte Queensland (The Waanyi People’s Case) (1996) 70 ALJR 344 ................................................................ [6.440] North Sydney Council, Re (1998) NSW ConvR 55-​828 ........................................................... [3.405] North Sydney Printing Pty Ltd v Sabemo Investment Corp Pty Ltd [1971] 2 NSWLR 150 ....................................................................................................... [17.145] Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482 ........[2.415], [2.420], [2.425], [2.430], [2.435], [2.440], [4.05] lxix

Australian Real Property Law

Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 .........................................[8.85], [8.90], [15.20], [15.80] Northern Territory of Australia v Mr A Griffiths (Deceased) and Lorraine Jones on behalf of the Ngaliwurru and Nungalie Peoples and Anor [2019] HCA 7 ............................ [6.455] Northside Developments v Registrar-​General (1990) 93 ALR 385 ............................................ [4.440] Norton v Dashwood [1896] 2 Ch 497 .................................................................................... [16.65] Noyes v Klein (1985) 3 BPR 9216 ............................................................................[14.80], [14.105] Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 ........................................................................................ [2.255], [12.95], [12.460]

O O’Byrne v Gillett (Real Property) [2006] VCAT 1053 .............................................................. [12.310] O’Dea v Allstates Leasing System (WA) Pty Ltd (1984) 152 CLR 359; 57 ALJR 172 ................... [7.220] O’Donoghue v Gilpin [1976] VR 410 ...................................................................................... [12.85] O’Keefe v Williams (1910) 11 CLR 171 ........................................................... [6.85], [6.145], [6.165] O’Neil v Hart [1905] VLR 107 ....................................................................................[3.165], [3.360] O’Neill v Cottill (1920) 20 SR (NSW) 264 ............................................................................. [13.215] O’Shea, Re [1957] VR 353 .................................................................................................... [13.125] Oak Property Co Ltd v Chapman [1947] KB 886 ................................................................... [14.325] Oakden v Gibbs (1882) 8 VLR 380 .......................................................................................... [4.435] Oakley v Boston [1976] QB 270 ............................................................................................ [17.215] Oastler v Henderson (1877) 2 QBD 575 ............................................................................... [14.380] Oates v Oates [1949] SASR 37 .............................................................................................. [12.310] Ocean Estates v Pinder [1969] 2 AC 19 ........................................................................[3.95], [3.140] Oceana on Broadbeach Community Title Scheme 24163 v Searle [2003] QCA 325 .............................................................................................................. [13.335] Oceanic Village Ltd v ShiraymaShokussan Co Ltd [2001] EGCS 162 ...................................... [14.220] Octra Nominees Pty Ltd v Chipper [2007] FCAFC 92 ................................................................ [5.35] Oertel v Hordern (1902) 2 SR (NSW) (Eq) 37 .......................................................................... [4.215] Official Receiver v Klau; Ex parte Stephenson Nominees Pty Ltd (1987) 74 ALR 67 .................. [4.320] Official Receiver in Bankruptcy v Cameron [2008] QSC 89 .....................................[12.320], [12.415] Official Trustee in Bankruptcy v Mateo (2003) 202 ALR 571 .......................................[5.35], [12.345] Ofulue v Bossert [2009] 1 AC 990 .................................................................. [3.25], [3.360], [3.365] Ogilvie v Littleboy (1897) 13 TLR 399 ................................................................................... [12.385] Oil Basins Ltd v Watson and Others (2017) 252 FCR 420; [2017] FCAFC 103 ......................... [6.495] Old Grovebury Manor Farm Ltd v W Seymour Plant Sales & Hire Ltd (No 2) [1979] 1 WLR 1397 .............................................................................................. [14.255] Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 .......................................................................................................[14.250], [14.255], [14.265], [14.270], [14.300], [14.350] Oleander Nominees Pty Ltd v Owners of Lakeside Villas Strata Plan 14025 [2002] WASC 255 ....................................................................................[17.75], [18.230] Oliver v Hinton [1899] 2 Ch 264 ...............................................................................[2.545], [2.560] Oliver v Lakeside Property Trust Pty Ltd [2005] NSWSC 1040 ............................................... [14.415] Oliver Hume South East Queensland Pty Ltd v Investa Residential Group Pty Ltd [2017] FCAFC 141; (2017) 348 ALR 385 ............................................................................ [6.455] Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd (2005) 35 WAR ............................ [2.455] Omar Parks Ltd v Elkington (1992) 65 P & CR 26 ................................................................. [14.250] On Demand Information PLC v Michael Gerson (Finance) PLC [2001] 1 WLR 155 ................ [14.350] One Step Support Ltd v Morris-​Garner [2018] 3 All RR 659 .................................................. [18.245] Onley v Gardiner (1838) 4 M & W 496; 150 ER 1525 ............................................................. [17.75] Orr v Pond [1988] 2 Qd R 258 ................................................................................................ [6.175] Orr Ewing v Colquhoun (1877) LR 2 App Cas 839 ................................................................ [16.245] lxx

Table of Cases

Osborn, Re (1989) 29 FCR 547 ............................................................................................... [5.270] Osborne v Commonwealth (1911) 12 CLR 321 ...................................................................... [1.145] Osborne Park Co-​operative Society Ltd v Wilden Pty Ltd (1989) 2 WAR 77 ............................. [4.300] Osmanoski v Rose [1974] VR 523 ..............................................................................[5.140], [5.150], [5.175], [5.180], [5.195] Oswald, Re; Ex parte the Official Trustee in Bankruptcy (1985) 1 FCR 276 ............................ [12.415] Otto v Bolton [1936] 2 KB 46 ................................................................................................... [8.85] Ovenden v Palyaris Construction Pty Ltd (1974) 11 SASR 65 ................................................. [13.105] Overland v Lenehan [1901] QLJ 59 ......................................................................................... [4.265] Oversea-​Chinese Banking Corp Ltd (OCBC) v Malaysian Kuwaiti Investment Co (MKIC) [2003] VSC 495 ...............................................................[2.455], [2.490], [2.495] OvidioCarrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6 .......................... [14.430] Owen v Gadd [1956] 2 QB 99 .............................................................................................. [14.225] Owen v O’Connor [1964] NSWR 1312 ................................................................................. [18.255] Owendale Pty Ltd v Anthony (1967) 117 CLR 539 ................................................................ [14.325] Owners Corporation -​-​Strata Plan No 8450 v Owners Corporation – Strata Plan No 54547 [2002] NSWSC 780 .......................................................[17.440], [18.225], [18.230] Owners of Corinne Court 290 Stirling Street Perth Strata Plan 12821 v Shean Pty Ltd (2000) 23 WAR 1; [2000] WASC 181 .........................................[17.340], [17.435], [17.440], [18.230] Owners of East Fremantle Shopping Centre West Strata Plan 8618, The v Action Supermarkets Pty Ltd (2008) 37 WAR 498 ........................................[4.195], [4.335] Owners of Strata Plan 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272 .......................... [13.325] Owners of Strata Plan 48754 v Anderson (1999) 9 BPR 17,119; [1999] NSWSC 580 ............ [17.120] Owners of Strata Plan 5709 v Andrews [2009] NSWCA 189 .................................................. [13.275] Oxley v James (1844) 13 M & W 209; 153 ER 87 .................................................................... [14.60]

P P & A Swift Investments v Combined English Stores Group Plc [1989] AC 632 ..................... [14.275] PCM Nominees (No 2) Pty Ltd v Brighton Bay Developments Pty Ltd [2007] V ConvR 54-​727; [2006] VSC 351 ...................................................................................... [12.95] PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 .....................................................[4.130], [4.170] PW & Co v Milton Gate Investments Ltd [2004] Ch 142 ....................................................... [14.355] Pagels v MacDonald (1935) 54 CLR 519 ............................................................................... [13.250] Palais Parking Station Pty Ltd v Shea (1980) 24 SASR 452 ............................ [4.130], [4.350], [4.360] Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249; 215 ALR 253 ....................................... [7.30] Palm Gardens Consolidated Pty Ltd v PG Properties Pty Ltd [2009] SASC 311 .......................... [5.35] Palmer, Ex parte (1912) 12 SR (NSW) 756 ............................................................................ [14.365] Palmer v Board of Land & Works (1875) 1 VLR (E) 80 ..............................................[17.80], [17.115] Palmer v Hendrie (1859) 27 Beav 349; 54 ER 136 ................................................................... [7.250] Palmer v Holford (1828) 4 Russ 403; 38 ER 857 ...................................................................... [11.40] Palmer v Lincott [1981] WAR 157 ......................................................................................... [16.350] Palmer v Wiley (1906) 23 WN (NSW) 90 .................................................................................. [5.50] Palumberi v Palumberi (1986) 4 BPR 9106; [1986] ANZ ConvR 593 ....................................... [16.40] Pampris v Thanos [1968] 1 NSWR 56 ........................................................................[8.85], [14.190] Pan Australian Credits (SA) Pty Ltd v Kolim Pty Ltd (1981) 27 SASR 353; [1981] ACLD 398 .............................................................................................................. [16.50] Panfili v Lawless [2010] NSWSC 79 ........................................................................[17.325], [17.340] Pannizutti v Trask (1987) 10 NSWLR 531 .............................................................................. [12.455] Papadopoulos v Goodwin [1982] 1 NSWLR 413 ..................................................................... [17.45] Papadopoulos v Goodwin (No 2) [1983] 2 NSWLR 113 ........................................................ [17.270] Paradine v Jane (1647) Aleyn 26; 82 ER 897 ..........................................................[14.195], [14.390] lxxi

Australian Real Property Law

Paradise Beach and Transportation Co Ltd v Price-​Robinson [1968] AC 1072 .......................... [3.270] Paradise Constructors & Co Pty Ltd v Poyser (2007) 20 VR 294 ................... [4.130], [4.225], [4.360] Park v Brady [1976] 1 NSWLR 119 .......................................................................................... [3.260] Park v Brady [1976] 2 NSWLR 329 .......................................................................................... [3.260] Park v Lasrado [2005] QSC 211 .............................................................................................. [16.50] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 .......................... [9.160] Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275 .................................[4.170], [4.375] Parker v Registrar-​General [1977] 1 NSWLR 22 .........................................................[4.345], [4.435], [4.440], [4.450], [4.485] Parker v Webb (1699) 3 Salk 5; 91 ER 656 ............................................................................ [14.275] Parkinson v Braham (1961) 62 SR (NSW) 663 ....................................................................... [14.120] Paroz v Paroz [2010] QSC 203 ................................................................. [12.45], [12.280], [12.310] Parramore v Duggan (1995) 183 CLR 633 ............................................................................ [17.240] Parry v Sullivan (1979) 9 RFL (2d) 349 .................................................................................. [12.355] Parsons v McBain (2001) 192 ALR 772 .........................................................................[5.35], [5.270] Partrche v Paulet (1740) AH 54; 26 ER 430 ........................................................................... [12.360] Partridge v Partridge [1984] 1 Ch 351 .................................................................................... [3.220] Pascale v Sutherland Shire Council (1995) 87 LGERA 30 ....................................................... [16.215] Pascoe v Swan (1859) 27 Beav 508; 54 ER 201 ..................................................................... [12.275] Pascoe v Turner [1979] 1 WLR 431 ......................................................................................... [5.265] Pata Nominees Pty Ltd v Durnsford Pty Ltd [1988] WAR 365 .................................................... [5.35] Patmore v Upton (2004) 13 Tas R 95 ............................................................. [5.40], [5.255], [5.270] Patten, Re; Westminster Bank Ltd v Carlyon [1929] 2 Ch 276 ............................................... [13.135] Patzak v Lytton [1984] WAR 353 ........................................................................................... [12.365] Paul v Nurse (1828) 8 B & C 486; 108 ER 1123 .................................................................... [14.285] Paulet v Stewart [2009] VSC 60 ...................................................................................[9.85], [9.120] Pavick v Bobra Nominees Pty Ltd (1988) ASC 55-​684 ............................................................... [8.80] Pavlou (A Bankrupt), Re [1993] 1 WLR 1046; 3 All ER 955 ...................... [12.290], [12.295], [12.320] Payne v Dwyer [2013] WASC 271 ................................................................................[3.95], [3.270] Payne v Haine (1847) 16 M & W 541; 153 ER 1304 ............................................................. [14.195] Payne v Inwood (1996) 74 P & CR 42 .................................................................................. [17.180] Payne v Webb (1874) LR 19 Eq 26 ........................................................................................ [12.120] Pead v Pead (1912) 15 CLR 510 ............................................................................................. [2.185] Pearce v City of Hobart [1981] Tas R 334 .............................................................................. [17.415] Pearks v Moseley (1880) LR 5 App Cas 714 ............................................................................. [11.85] Pearks v Moseley; Re Lord’s Settlement [1947] 2 All ER 685 .................................................. [11.165] Pearson v Aotea District Maori Land Board [1945] NZLR 542 .................................................. [4.145] Pearson v IRC [1981] AC 753 .................................................................................................. [10.30] Peat v Chapman (1750) 1 Ves Sen 542; 27 ER 1193 ............................................................. [12.120] Peck, Re [1893] 2 Ch 315 ..................................................................................................... [17.175] Peck v Peck [1965] SASR 293 ................................................................................................ [12.445] Peck v Peck [2011] SASCFC 63 ............................................................................................... [4.320] Peckham v Ellison (1999) 77 P&CR 27 .................................................................................. [17.160] Peddie v Stein (1988) NSW ConvR 55-​379 ................................................................[4.200], [4.245] Pedulla v Panetta (2011) 16 BPR 30,229 ................................................................................. [4.420] Pedulla v Panetta (No 2) [2011] NSWSC 1533 ........................................................................ [4.420] Pekel v Humich (1999) 21 WAR 24 ........................................................................[17.220], [17.415] Peldan v Anderson (2006) 227 CLR 471 ................................................................[12.370], [12.415] Pelenoy Pty Ltd v Donovan Oates Hannaford Mortgage Corporation Ltd [2004] NSWSC 4 ......................................................................................................... [5.245] Pells v Brown (1620) Cro Jac 590; 79 ER 504 .......................................................................... [11.10] Pemberton v Dimitrijevic [2001] NSWSC 54 ................................................ [4.130], [14.25], [14.70] Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676 ....................................................................................................................... [7.450] Penn v Gatenex Co Ltd [1958] 2 QB 210 .............................................................................. [14.190] lxxii

Table of Cases

Pennant Hills Golf Club Ltd v Roads & Traffic Authority (NSW) (1999) 9 BPR 17,011 ....................................................................................................... [17.105] Pennell v Payne [1995] QB 192 ............................................................................................ [14.355] Penning, Re; Ex parte State Bank of South Australia (1989) 23 FCR 588; 89 ALR 417 ........................................................................................................................ [7.425] Penny Nominees Pty Ltd v Fountain (No 3) (1991) NSW ConvR 55-​561; (1990) 5 BPR 11,284 .......................................................................................[12.340], [12.345], [12.420] Penton v Barnett [1898] 1 QB 276 ........................................................................................ [14.345] Penton v Robart (1801) 2 East 88; 102 ER 302 ........................................................................ [16.80] Penzikis v Brown [2005] NSWSC 215 .................................................................................... [12.285] Perera v Vandiyar [1953] 1 All ER 1109 ................................................................................. [14.225] Pereroultja v Tickner (1993) 42 FCR 32 ................................................................................... [6.325] Performance Capital Mortgage Pty Ltd v Motive Finance Leasing Pty Ltd (2010) 15 BPR 29,267; [2010] NSWSC 429 ....................................................[2.570], [5.120] Perkins v Baynton (1781) 1 Bro CC 118; 28 ER 1022 ............................................................ [12.135] Perman v Maloney [1939] VLR 376 ....................................................................................... [12.445] Permanent Custodians Ltd v El Ali [2008] NSWSC 1264 ......................................................... [4.170] Permanent Custodians Ltd v Yazgi [2007] NSWSC 279 ........................................................... [4.240] Permanent Trustee Australia Ltd v Shand (1992) 27 NSWLR 426 ................................[5.35], [17.460] Permanent Trustee Co Ltd v O’Donnell [2009] NSWSC 902 .................................................... [4.240] Permanent Trustee Co of New South Wales Ltd v D’Apice (1968) 118 CLR 105 ..................................................................................................................... [10.40] Perpetual Executors & Trustees Association (Australia) Ltd v Hosken (1912) 14 CLR 286 .................................................................................................[4.70], [18.35] Perpetual Ltd v Barghachoun [2010] NSWSC 108 ................................................................... [4.160] Perpetual Trustee Co v Williams (1913) 13 SR (NSW) 209 ..................................................... [11.240] Perpetual Trustee Co Ltd v Gilmour [1979] 2 NSWLR 716 ....................................................... [2.220] Perpetual Trustee Co Ltd v Griffin [1963] NSWR 465 .............................................................. [2.180] Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566; [2010] FCAFC 91 .................[2.455], [2.515], [2.590], [4.75], [4.295], [5.120], [5.205], [5.210] Perpetual Trustee Co Ltd v Valuer-​General (2008) 101 SASR 110 .............................................. [2.55] Perpetual Trustee Co Ltd v Westfield Management Ltd [2006] NSWCA 337 .................................................................................................................... [17.325] Perpetual Trustees v Xiao [2015] VSC 21 ................................................................................... [7.75] Perpetual Trustees Australia v Richards [2008] NSWSC 658 ..................................................... [4.170] Perpetual Trustees Estate & Agency Co (NZ) Ltd v Morrison [1986] 2 NZLR 447 .................... [7.375] Perpetual Trustees Executors & Agency Company of Tasmania Ltd v Walker (1953) 90 CLR 270 ................................................................................................. [2.260] Perpetual Trustees Victoria Ltd v Cipri [2008] NSWSC 1128 .................................................... [4.170] Perpetual Trustees Victoria Ltd v Cox [2014] NSWCA 328 ......................................................... [7.75] Perpetual Trustees Victoria Ltd v English (2010) 14 BPR 27,339; [2010] NSWCA 32 ..................................................................................................[4.170], [7.75] Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281 .................................................... [4.170] Perpetual Trustees Victoria Ltd v Xiao Hui Ying [2015] VSC 21 ................................................ [4.170] Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 ....................................[8.275], [8.280] Perrin v Lyon (1808) 9 East 170; 103 ER 538 .......................................................................... [2.240] Perrot’s Case (1594) Moo KB 368; 72 ER 634 ......................................................................... [11.10] Perry v Clissold [1907] AC 73 ......................................................................................[2.70], [3.315] Perry v Davis (1858) 3 CB (NS) 769; 140 ER 945 .................................................................. [14.325] Perry v Rolfe [1948] VLR 297 .................................................................................................... [7.70] Perry v Saunders (1961) 104 CLR 149 ..................................................................................... [14.45] Perry v Woodfarm Homes Ltd [1975] IR 104 ........................................................................... [3.335] Perry-​Herrick v Attwood (1857) 2 De G & J 21; 44 ER 895 .........................................[2.435], [5.165] lxxiii

Australian Real Property Law

Person-​to-​Person Financial Services Pty Ltd v Sharari [1984] 1 NSWLR 745 ...............[2.570], [5.115], [5.135], [5.140], [5.160], [5.175] Perstoulis v Perstoulis (1980) FLC 90,823 .............................................................................. [12.345] Perth Construction Pty Ltd v Mount Lawley Pty Ltd (1955) 57 WALR 41 ............................... [18.240] Perth Corp v Halle (1911) 13 CLR 393 .................................................................................. [17.275] Peters v Lithgow Forge Pty Ltd [2010] NSWSC 283 .................................................................. [5.35] Peters American Delicacy Co Ltd v Patricia’s Chocolates & Candies Pty Ltd (1947) 77 CLR 574 ............................................................................................................ [7.185] Petra Investments Ltd v Jeffrey Rogers PLC [2001] L&TR 451 ................................................ [14.220] Petre v Petre (1853) 1 Drew 371; 61 ER 493 ........................................................................... [3.285] Peyton v Mayor etc of London (1829) 9 B & C 725; 109 ER 269 .......................................... [17.360] Phillips v Butler [1907] 2 KB 1 ................................................................................................. [8.250] Phillips v Lamdin [1949] 2 KB 33 ............................................................................................ [16.55] Phillips v Low [1892] 1 Ch 47 ............................................................................................... [17.170] Phillips v Marrickville Municipal Council (2002) 11 BPR 20,135 .................................[3.360], [3.365] Phillips v Phillips (1861) 4 De GF & J 208; 45 ER 1164 ............................................................ [5.255] Phillips-​Higgins v Harper [1954] 1 QB 411 .............................................................................. [3.280] Philos Pty Ltd v National Bank of Australasia Ltd (1976) 5 BPR 11,810 .................................... [2.455] Philpot v Bath (1904) 20 TLR 589 ........................................................................................... [3.135] Philpot v Bath (1905) 21 TLR 634 ............................................................................[17.105], [3.135] Phipps v Pears [1965] 1 QB 76; [1964] 2 WLR 996; 2 All ER 35 .................................[17.05], [17.25], [17.115], [17.180] Pianta v National Finance & Trustees Ltd [1964] 180 CLR 146 ................................................ [1.310] Pickering v Rudd (1815) 4 Camp 219; 171 ER 70 ................................................................. [16.315] Picone v Grocery & General Merchants Ltd [1964] NSWR 1018 ........................................... [14.250] Picton-​Warlow v Allendale Holdings Pty Ltd [1988] WAR 107 ................................................ [14.270] Picwoods Pty Ltd v Panagopoulos [2004] NSWSC 978 ............................................................ [14.45] Pieper v Edwards [1982] 1 NSWLR 336 ................................................................................. [18.225] Pigot’s case (1614) 11 Co Rep 26b ......................................................................................... [4.130] Pike v Tighe [2018] HCA 9 ...................................................................................................... [4.335] Pilcher v Rawlins (1872) 7 Ch App 259 ....................................................... [2.450], [2.470], [2.540], [2.625], [4.05], [4.515], [14.115] Pile’s Caveats, Re [1981] Qd R 81 .................................................................. [5.35], [5.255], [8.230] Pindan Pty Ltd v Sunny's Redevelopment Pty Ltd [2001] WASC 104 ......................................... [5.90] Pinewood Estate, Farnborough, Re [1958] Ch 280 ................................................................ [18.110] Pink v Lawrence (1977) 36 P & CR 98 .................................................................................. [12.145] Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9652 .................................................................................................... [14.335] Piper, Re [1946] 2 All ER 503 .................................................................................................. [2.240] Pirie v Registrar-​General (1962) 109 CLR 619 ............................................................[18.15], [18.90] Pirie and the Real Property Act, Re (1961) 79 WN (NSW) 701; [1962] NSWR 1004 ............................................................................................[18.30], [18.175] Piromalli v Di Masi [1980] WAR 173 ..................................................................................... [17.235] Piroshenko v Grojsman [2010] VSC 240 .................................................................................... [5.90] Pitcher v Tovey (1692) 4 Mod 71; 87 ER 268 .......................................................................... [14.50] Pitt v Baxter (2006) 159 A Crim R 293 .................................................................................. [12.375] Pivotal Pty Ltd, Re [2000] VSC 264 ....................................................................................... [18.240] Plaister, Re (1934) 34 SR (NSW) 547 ....................................................................................... [12.80] Platt v Ciriello [1998] Qd R 417 ............................................................................................ [13.315] Platt v Ong [1972] VR 197 .................................................................................................... [14.350] Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266 .................................[2.515], [5.120], [5.145], [5.185] Pleasance v Allen (1889) 15 VLR 601 .........................................................................[4.275], [4.280] Plimmer v Wellington Corporation (1884) 9 AC 699 ..................................................[6.160], [8.195] lxxiv

Table of Cases

Pluim v Willis [2007] WASAT 233 ............................................................................................ [17.40] Plymouth Corp v Harvey [1971] 1 All ER 623; 1 WLR 549 ..................................................... [14.340] Pola v Australian and New Zealand Banking Group Ltd [2015] NSWCA 146 ........................... [7.460] Polden v Bastard (1865) LR 1 QB 156 ................................................................................... [17.170] Poltava Pty Ltd, Re Application of [1982] 2 NSWLR 161 .........................................[18.145], [18.225] Ponderosa International Development Inc v Pengap Securities (Bristol) Ltd (1986) 277 EG 1252 .................................................................................................. [14.260] Poole’s Case (1703) 1 Salk 368; 91 ER 320 ............................................................................. [16.80] Popjak v Finance & General Corporation Ltd [1964] ALR 340 ................................................. [7.210] Popplewell v Hodkinson (1869) LR 4 Ex 248 ......................................................................... [17.360] Port v Griffith [1938] 1 All ER 295 ......................................................................................... [14.220] Porter v Williams (1914) 14 SR (NSW) 83 ............................................................................... [14.25] Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598 .......................................[18.30], [18.200], [18.205], [18.210], [18.230] Post Office v Aquarius Properties Ltd (1986) 281 EG 798 ...................................................... [14.195] Pottinger v Raffone [2007] UKPC 22 ....................................................................................... [4.405] Poulton v Moore [1915] 1 KB 400 ........................................................................................ [17.410] Powell v Cleland [1948] 1 KB 262 ......................................................................................... [14.115] Powell v Hemsley [1909] 1 Ch 680 ......................................................................................... [18.15] Powell v Hemsley [1909] 2 Ch 252 ......................................................................................... [18.15] Powell v Langdon (1944) 45 SR (NSW) 136 .......................................................................... [17.340] Powell v McFarlane (1977) 38 P & CR 452 ..................................................... [3.75], [3.90], [3.105], [3.125], [3.130], [3.140], [3.145] Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (recs and mgers apptd) (2017) 93 NSWLR 765 ....................................................... [16.50] Powercell Pty Ltd v Cuzeno Pty Ltd [2004] NSWCA 51 ......................................................... [14.110] Pownall v Graham (1863) 33 Beav 242; 55 ER 360 ................................................................. [11.45] Pozzi, Re [1982] Qd R 499 .................................................................................................... [12.345] Pratten v Warringah Shire Council [1969] 2 NSWLR 161 ...........................................[4.325], [4.330], [4.335], [8.285] Precious v Reedie [1924] 2 KB 149 ...........................................................................[14.60], [14.365] Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (2007) 13 BPR 24,969 ................................................................................................. [4.215] Price v Murray [1970] VR 782 ............................................................................................... [14.275] Pricewaterhouse Coopers Legal v Perpetual Trustees Victoria Ltd [2007] NSWCA 271 ...................................................................................................................... [16.40] Prior’s Case, The (1368) YB 42 Ed III ..................................................................................... [18.280] Pritchard v Briggs [1980] Ch 388 .............................................................................................. [5.35] Proctor v Bishop of Bath & Wells (1947) 2 H Bl 358; 126 ER 594 ............................................ [11.80] Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 ..................[12.290], [14.390], [14.410] Project Blue Moon Pty Ltd v Fairway Trading Pty Ltd [2000] FCA 127 ................................... [14.220] Propert v Parker (1832) 3 My & K 280; 40 ER 107 .................................................[14.210], [14.215] Property Unit Nominees (No 2) Pty Ltd, Ex parte [1981] Qd R 178 ......................................... [4.195] Proprietors of Strata Plan 30234 v Margiz Pty Ltd (1993) 32 NSWLR 294 ............................. [13.280] Proprietors of Strata Plan No 159 v Blake (unreported, NSW Sup Ct, No 110264, 1986) ........................................................................................................... [13.360] Proprietors of Strata Plan No 6522 v Furney [1976] 1 NSWLR 412 ........................................ [13.330] Proprietors of Strata Plan No 9968 v Proprietors of Strata Plan No 11173 [1979] 2 NSWLR 605 ........................................................................ [17.415], [17.425], [17.430] Proprietors of “Averil Court” Building Units Plan No 2001, Ex parte [1983] 1 Qd R 66 ............................................................................................................ [18.220] Prospect County Council v Cross (1990) 21 NSWLR 601 ...................................................... [17.120] Proudfoot v Hart (1890) 25 QBD 42 ..................................................................................... [14.195] lxxv

Australian Real Property Law

Provident Capital Ltd v Zone Developments Pty Ltd (2002) NSW ConvR 56-​003 ......................................................................... [14.250], [14.260], [14.265] Provident Capital Pty Ltd v Printy (2008) 13 BPR 25,199 ........................................................ [4.170] Prowse v Johnstone [2015] VSC 621 ....................................................................................... [18.30] Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386; 3 All ER 504 .........................................................................................................[2.150], [2.160], [14.25], [14.60] Prudential Assurance Co Ltd v Waterloo Real Estate Inc [1999] 2 EGLR 85 ................................................................................................................ [3.80] Pryce v McGuinness [1966] Qd R 591 ................................................................................... [17.155] Psal Pty Ltd v Raja [2016] WASC 295 ...................................................................................... [5.110] PuaHor Ong v Wu You Yang Pty Ltd (2008) 103 SASR 9 ........................................................... [5.90] Public Curator v L A Wilkinson (Northern) Ltd [1933] QWN 28 ............................................. [14.440] Public Trustee v Bellotti (1986) 4 BPR 9196 ............................................................................... [3.85] Public Trustee v Bennett [2004] NSWSC 955 ........................................................................ [11.100] Public Trustee v Evans [1985] 2 NSWLR 188 ..........................................................[12.430], [12.435] Public Trustee v Fraser (1987) 9 NSWLR 433 ......................................................................... [12.435] Public Trustee v Grivas [1974] 2 NSWLR 316 .........................................................[12.345], [12.435] Public Trustee v Hermann [1968] 3 NSWR 94 ....................................................................... [17.360] Public Trustee v Morrison (1894) 12 NZLR 423 ....................................................................... [7.395] Public Trustee v Paradiso (1995) 64 SASR 387 ..............................................................[4.250], [7.75] Public Trustee v Pfeiffle [1991] 1 VR 19 ................................................................................. [12.345] Public Trustee of the Australian Capital Territory v Hall [2003] ACTCA 27 ....................................................................................................................... [12.370] Pugh v Arton (1869) LR 8 Eq 626 ........................................................................................... [16.95] Pugh v Savage [1970] 2 QB 373 ..............................................................................[17.55], [17.220] Pulleyn v Hall Aggregates (Thames Valley) Ltd (1992) 65 P & CR 276 ..................................... [3.140] Purbrick v Hackney London Borough Council [2004] 2 P & CR 553 ...............................[3.85], [3.90] Purcell, Ex parte [1982] Qd R 613 ......................................................................................... [17.340] Purchase v Lichfield Brewery Co [1915] 1 KB 184 ................................................................. [14.300] Purefoy v Rogers (1671) 2 WmsSaund 380; 85 ER 1181 ...........................................[10.65], [10.80], [10.85], [10.125], [10.130] Putz v Registrar of Titles [1928] VLR 348 ................................................................................... [7.65] Pwllbach Colliery Co Ltd v Woodman [1915] AC 634 ............................................[17.115], [17.160] Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188 .............[4.160], [4.170], [4.205], [4.225], [4.350], [4.370]

Q Quach v Marrickville Municipal Council (Nos 1 and 2) (1990) 22 NSWLR 55 ......................... [3.100], [3.165], [4.330], [4.335] Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1993] BCLC 442 ............................................................................................................. [14.115] Quarmby v Keating [2007] TASSC 65 ..................................................................................... [3.395] Quarmby v Keating [2008] TASSC 71 ........................................................................[3.165], [3.395] Queensland v Beames (2002) 120 LGERA 309; [2002] QCA 209 ............ [16.210], [16.215], [16.240] Queensland v Commonwealth (1987) 162 CLR 74 ................................................................... [1.80] Queensland v Congoo (2015) 320 ALR 1; [2015] HCA 17 ...................................................... [6.425] Queensland Estates Pty Ltd v Collas [1971] Qd R 75 ................................................................. [5.35] Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81 ..................................[4.170], [7.75] Quennell v Maltby [1979] 1 WLR 318 ........................................................................[7.260], [7.265] Quesnel Forks Gold Mining Co Ltd v Ward [1920] AC 222 .................................................... [14.315] Quilter v Mapleson (1882) 9 QBD 672 ................................................................................. [14.350] Quinlan v Avis (1933) 149 LT 214 ........................................................................................... [14.25] lxxvi

Table of Cases

R R v Biggan; Ex parte Fry [1955] VLR 36 ................................................................................... [2.550] R v Commissioners of Sewers for Pagham (Sussex) (1828) 8 B & C 355; 108 ER 1075 .......... [16.225] R v Croydon London Borough Council [1996] 18 HLR 493 ................................................... [14.380] R v Hutchinson; Ex parte Jessell (1884) 10 VLR (L) 332 .......................................................... [16.325] R v Land Registry [2010] 3 WLR 1223 ....................................................................................... [3.85] R v Lord Yarborough (1828) 2 Bli NS 147; 4 ER 1087 ............................................................ [16.215] R v Oxfordshire County Council; Ex parte Sunningwell Parish Council [2000] 1 AC 335 ........ [17.225] R v Phillips (1970) 125 CLR 93 .................................................................................................. [1.80] R v Registrar of Titles; Ex parte Waddington [1917] VLR 603 ................................................... [17.60] R v Robinson [1971] 1 QB 156 ............................................................................................. [14.315] R v Smith (1780) 2 Doug KB 441; 99 ER 283 ........................................................................ [16.240] R v Tao [1977] QB 141 ......................................................................................................... [15.125] R v Tottenham & District Rent Tribunal; Ex parte Northfield (Highgate) Ltd [1957] 1 QB 103 ............................................................................................................... [14.20] R v Ward (1836) 4 Ad & El 384; 111 ER 832 ......................................................................... [16.210] R v Windridge; Ex parte Pacific Coal Pty Ltd [1992] 2 Qd R 180 ............................................ [18.250] R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 310 ......................................................................................................... [14.215] R & L Bell Pty Ltd v Casboult (2003) 6 VR 271 .......................................................................... [5.80] R (Smith) v Land Registry [2009] EWHC 328 ............................................................................. [3.85] R J Finlayson Ltd v Elder, Smith & Co Ltd [1936] SASR 209 ................................................... [17.160] R M Hosking Properties Pty Ltd v Barnes [1971] SASR 100 ........................................[4.215], [4.220], [4.300], [14.160] RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164 ....................... [9.160] RK Roseblade and VM Roseblade and the Conveyancing Act, Re [1964-​5] NSWR 2044 ...................................................................................[18.220], [18.240] RW Jaksch & Associates Pty Ltd v Hawks [2005] VSCA 307 .................................................... [14.415] Radaich v Smith (1959) 101 CLR 209 .......................................................................[14.30], [14.35], [14.40], [15.195] Radio Theatres Pty Ltd v City of Coburg [1948] VLR 84 ........................................................... [14.30] Radonich v Radonich [1999] WASC 165 ......................................................................[3.85], [3.270] Raffaele v Raffaele [1962] WAR 29 ........................................................................................... [8.190] Railway Commissioners (NSW), Ex parte (1941) 41 SR (NSW) 92 ......................................... [12.375] Rains v Buxton (1880) 14 Ch D 537 .............................................................................[3.75], [3.85], [3.100], [3.285] Rakita’s Application, Re [1971] Qd R 59 ................................................................................ [14.275] Ramnarace v Lutchman (Trinidad and Tobago) [2001] 1 WLR 1651 .............................[3.85], [3.235] Ramsden v Dyson (1866) LR 1 HL 129 .....................................................................[8.195], [16.280] Ramsey v Trustees Executors and Agency Co Ltd (1948) 77 CLR 321 ...................................... [2.240] Rance v Elvin (1985) 50 P & CR 9 ......................................................................................... [17.105] Randall v Stevens (1853) 2 E & B 641; 118 ER 908 ................................................................. [3.360] Rands Developments Pty Ltd v Davis (1975) 133 CLR 26 ........................................................ [5.225] Randwick MC v Rutledge (1959) 33 ALJR 367 ......................................................................... [6.200] Rangeley v Midland Railway Co (1868) LR 3 Ch App 306 ....................................................... [17.95] Rankin v Danby (1883) 9 VLR (L) 278 ................................................................................... [14.285] Ransome, Re [1957] Ch 348 ................................................................................................. [11.170] Raphael, Re; Permanent Trustee Co of New South Wales Ltd v Lee (1903) 3 SR (NSW) 196 ..................................................................................................... [11.40] Rapley v Martin (1832) 4 SCR 173 .......................................................................................... [6.200] Rasch Nominees Pty Ltd v Bartholamaeus [2012] SASC 70 ...................................................... [8.145] Rasch Nominees Pty Ltd v Bartholomaeus [2013] SASCFC 23 ....................................[8.145], [9.160] Rasmanis v Jurewitsch [1968] 2 NSWR 166; affd (1969) 70 SR (NSW) 407 .............[12.430], [12.435] Rasmussen v Rasmussen [1995] 1 VR 613 .................................................... [3.205], [4.160], [4.320] lxxvii

Australian Real Property Law

Ratcliffe v Watters (1969) 89 WN (Pt 1) NSW 497 .....................................................[4.130], [4.155] Ratto v Trifid Pty Ltd [1987] WAR 237 ................................................................................... [14.110] Ray v Fairway Motors (Barnstaple) Ltd (1968) 20 P & CR 261 ............................................... [17.435] Red House Farms (Thorndon) Ltd v Catchpole [1977] 244295; 121 Sol J 136 ........................... [3.90] Reddacliffe v Strickland [2010] NSWSC 1028 ............................................................................ [5.35] Redglove Projects v Ngunnawal Local Aboriginal Council (2004) 12 BPR 22,319 ..................................................................................................................... [5.35] Redland Bricks Ltd v Morris [1970] AC 652 ............................................................................. [1.270] Redmond v Dainton [1920] 2 KB 256 ................................................................................... [14.195] Rees v Rees [1931] SASR 78 .................................................................................................. [12.265] Reeve v Berridge (1888) 20 QBD 523 ..................................................................................... [2.540] Reeve v Long (1695) 1 Salk 227; 91 ER 202 ............................................................................ [10.65] Refina Pty Ltd v Binnie [2010] NSWCA 192 ................................................................[3.385], [3.405] Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] 3 WLR 1603 ..........................................................................................................[17.35], [17.80] Regent v Millett (1976) 133 CLR 679 ........................................................................[8.165], [8.190], [14.115] Regis Property Co Ltd v Dudley [1959] AC 370 ..................................................................... [14.200] Registrar-​General v Behn [1980] 1 NSWLR 589 ..........................................................[4.460], [4.485] Registrar-​General (NSW) v Lee (1990) 19 NSWLR 240 .............................................................. [4.70] Registrar-​General of NSW v Wood (1926) 39 CLR 46 .............................................................. [12.20] Registrar-​General of New South Wales v Jea Holdings [2015] NSWCA 74 ..................[4.285], [17.90], [17.100] Registrar-​General of New South Wales v Lawcover Insurance Pty Ltd (2014) 17 BPR 33,235 ..........................................................................................[4.420], [4.470] Registrar of Titles v Esperance Land Company [1899] WAR 118 .............................................. [4.270] Registrar of Titles v Fairless [1997] 1 VR 404 ........................................................................... [4.470] Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 ..............................................[4.400], [4.440] Registrar of Titles (WA) v Spencer (1909) 9 CLR 641 ................................................[4.485], [16.115] Registrar of Titles and Esperance Land Co (1899) 1 WALR 118 ................................................ [4.255] Reid v Bickerstaff [1909] 2 Ch 305 ........................................................................................ [18.130] Reid v Queensland [2010] QSC 212 ........................................................................................ [3.280] Reid v Smith (1905) 3 CLR 656 ..................................................................................[16.25], [16.30] Reid v Zoanetti [1943] SASR 92 ............................................................................................ [17.190] ReihanaTerekuku v Kidd (1885) NZLR 4 SC 140 .................................................................... [14.200] Reilly v Booth (1890) 44 Ch D 12 ............................................................................[16.120], [17.95] Reilly v Liangis Investments Pty Ltd [2000] NSWSC 47 .......................................................... [14.195] Reliance Corporation Ltd v Swindon Nominees Pty Ltd [1989] ACLD 41 ................................. [16.70] Remely v O’Shea [2008] QCA 78 .............................................................................[15.55], [15.170] Renals v Cowlishaw (1878) 9 Ch D 125; affd (1879) 11 Ch D 866 .......................................... [18.65] Renshaw v Maher [1907] VLR 520 ........................................................................................ [14.285] Renwarl Pty Ltd v Birky (1998) V ConvR 54-​578 ...........................................................[5.35], [5.255] Reschke v Trevor Reschke Nominees Pty Ltd [2019] SASCFC 27 ................................................ [5.70] Residential Tenancies Tribunal (NSW), Re; Ex parteDefence Housing Authority (1997) 190 CLR 410 ........................................................................................... [4.335] Resumed Properties Department v Sydney MC (1937) 13 LGR (NSW) 170 ........................... [16.120] Reuthlinger v MacDonald [1976] 1 NSWLR 88 ........................................................................ [2.255] Reynolds v Ashby & Son [1904] AC 466 ....................................................................[16.10], [16.70] Rhone v Stephens [1994] 2 AC 310; 2 WLR 429 ...................................................[18.310], [18.320], [17.380] Rice v Rice (1853) 2 Drew 73; 61 ER 646 .................................................... [2.565], [2.570], [2.575], [2.580], [5.110], [5.115], [5.150], [5.240], [5.255], [5.280], [14.115] Richard Clarke & Co Ltd v Widnall (1976) 33 P & CR 339 ..................................................... [14.310] lxxviii

Table of Cases

Richards v Golden Fleece Petroleum Pty Ltd (1983) 49 ALR 337 ........................................... [14.435] Richardson v Graham [1908] 1 KB 39 ................................................................................... [17.445] Richardson v Landecker (1950) 66 WN (NSW) 236 ............................................................... [14.245] Richardson v Richardson (1845) 14 Sim 526; 60 ER 462 ....................................................... [12.120] Richmond v Savill [1926] 2 KB 530 ....................................................................................... [14.380] Ricketts v Enfield Churchwardens [1909] 1 Ch 544 ............................................................... [14.275] Riddiford v Foreman (1910) 29 NZLR 781 ............................................................................ [17.150] Riddle v Riddle (1952) 85 CLR 202 ....................................................................................... [13.210] Ridgeway, Re (1900) 26 VLR 254 ............................................................................................ [2.185] Ridgeway and Smith’s Contract, Re [1930] VLR 111 .................................... [4.130], [8.100], [17.40] Ridley v Taylor [1965] 2 All ER 51 .......................................................................................... [18.235] Riggs, Re; Ex parte Lovell [1901] 2 KB 16 .............................................................................. [14.250] Riley v Penttila [1974] VR 547; (1974) 30 LGRA 79 ......................................... [3.80], [3.90], [3.105], [3.115], [3.120], [3.135], [3.140], [3.160], [17.35], [17.80], [17.430] Riley and the Real Property Act, Re (1965) 82 WN (NSW) 373 and 381 .................................... [3.85] Rimmer v Rimmer [1953] 1 QB 63 ........................................................................................ [12.165] Rimmer v Webster [1902] 2 Ch 163 ...........................................................................[2.435], [5.115] Ripka Pty Ltd v Maggiore Bakeries Pty Ltd [1984] VR 629 ..................................................... [14.405] Rising Developments Pty Ltd v Hoskins (1996) 39 NSWLR 157 ................................................. [5.35] Roach v Electoral Commissioner (2007) 223 CLR 162 ............................................................... [3.30] Road Australia Pty Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 327 ............................. [5.10] Road Chalets Pty Ltd v Thornton Motors Pty Ltd (1986) 47 SASR 532 ....................................... [7.65] Roads Corporation v Pearse [2012] VSC 527 ............................................................................. [3.45] Roads and Traffic Authority v Swain (1997) 41 NSWLR 452 .................................................... [15.55] Roake v Chadha [1984] 1 WLR 40 ..........................................................................[18.120], [18.190] Robbins v Jones (1863) 15 CB (NS) 221 .................................................................................... [8.85] Robert John Pty Ltd v Fostar’s Shoes Pty Ltd [1963] NSWR 419 ............................................... [14.30] Roberts v Birkley (1888) 14 VLR 819 ..................................................................................... [14.120] Roberts v Davey (1833) 4 B & Ad 664; 110 ER 606 ............................................................... [14.315] Roberts v Karr (1809) 1 Taunt 495; 127 ER 926 .................................................................... [17.195] Roberts v Swangrove Estates [2008] Ch 439 ............................................................................. [3.55] Robertson, Re (1943) 44 SR (NSW) 103 .....................................................................[12.75], [12.90] Robertson v Butler [1915] VLR 31 ........................................................................................... [3.360] Robertson v Fraser (1871) 6 Ch A 696 .................................................................................. [12.120] Robinson, Re [1972] VR 278 ................................................................................................. [18.240] Robinson v Hardcastle (1788) 2 TR 241; 100 ER 131 ...............................................[11.50], [11.220] Robinson v Kilvert (1889) 41 Ch D 88 .................................................................................. [14.220] Robinson v Kingsmill (1954) 71 WN (NSW) 127 ................................................................... [14.380] Robinson v Learoyd (1840) 7 M & W 48; 151 ER 673 ........................................................... [14.440] Robinson v Preston (1858) 4 K & J 505; 70 ER 211 ............................................................... [12.145] Robson-​Paul v Farrugia (1969) 20 P & CR 820 ...................................................................... [12.375] Roche and the Conveyancing Act, Re (1960) 77 WN (NSW) 431 ............................................ [18.75] Rochford v Hackman (1852) 9 Hare 475; 68 ER 597 ............................................................... [10.50] Rock v Todeschino [1983] 1 Qd R 356 .....................................................................[4.130], [17.195] Rockett v Evans [2008] QSC 227 .............................................................................................. [5.40] Roclin Investments Pty Ltd v Makris (1974) 7 SASR 485 ............................................................ [5.50] Roddy v Fitzgerald (1858) 6 HLC 823; 10 ER 1518 ................................................................. [10.55] Roe v Siddons (1888) 22 QBD 224 ..........................................................................[17.75], [17.445] Roe and Eddy’s Contract, Re [1933] VLR 427 .......................................................................... [8.100] Roe d Wilkinson v Tranmer (1757) 2 Wils KB 75; 95 ER 694 .................................................... [10.75] Roe ex d Dean and Chapter of Rochester v Pierce (1809) 2 Camp 96; 170 ER 1093 .................................................................................................................... [14.365] Rogers v Body Corporate for Waterloo Crest CTS 25235 [2007] QSC 369 ............................. [13.335] lxxix

Australian Real Property Law

Rogers v Hosegood [1900] 2 Ch 388 ........................................................ [18.65], [18.70], [18.190], [18.245], [18.290], [18.295] Rogers v Moonta Town Corporation (1981) 37 ALR 49 ......................................................... [14.360] Rogers v Resi-​Statewide Corporation Ltd (1991) 29 FCR 219 .................................................. [4.250] Rogers v Rice [1892] 2 Ch 170 ............................................................................................. [14.350] Romulus Trading Co Ltd v Comet Properties Ltd [1996] 2 EGLR 70 ....................................... [14.220] Rose, Re [1952] Ch 499 ............................................................................................................ [8.55] Rose (decd), Re [1962] QWN 4 ..............................................................................[12.110], [12.130] Rose v Spicer [1911] 2 KB 234 .............................................................................................. [14.350] Rose Bay Bowling and Recreation Club Ltd, Re (1935) 52 WN (NSW) 77 .............................. [18.225] Roseville Estate Pty Ltd v Bouris [2006] VSC 49 ....................................................................... [4.375] Rosher, Re (1884) 26 Ch D 801 .............................................................................................. [2.245] Rosher, Re; Corbett v Corbett (1888) 14 PD 7 ........................................................................ [2.245] Rosling v Pinnegar (1986) 54 P & CR 124 ............................................................................. [17.340] Rotter v Canadian Exploration Ltd (1959) 23 DLR (2d) 136 .................................................. [16.245] Routledge, Re [1942] Ch 457 ................................................................................................. [10.60] Routledge v Dorril (1794) 2 Ves Jun 357; 30 ER 671 ................................................[11.50], [11.220] Rowlands Quarries (Katherine) Pty Ltd v E A Witte Pty Ltd (1992) 109 FLR 38 ....................... [14.110] Rowston v Sydney CC (1954) 92 CLR 605 .............................................................................. [14.65] Roy v Lagona [2010] VSC 250 ................................................................................................ [3.310] Roy v Waterton [1989] V ConvR 54-​334 ................................................................................... [8.70] Royal Bank of Canada v Saskatchewan Telecommunications (1985) 20 DLR (4th) 415 ............ [16.50] Royal Bank of Scotland v Etridge (No 2) [2002] AC 773 .......................................................... [4.375] Royal Brunei Airlines SdnBhd v Tan [1995] 2 AC 378 .............................................................. [4.370] Royal College of Nursing of the United Kingdom v Department of Health & Social Security [1981] 1 All ER 545 .............................................................................................. [11.45] Royal College of Surgeons of England v National Provincial Bank Ltd [1952] AC 631 ................................................................................................................. [11.250] Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469; [2007] VSCA 162 ............................................................................... [13.35], [13.115], [13.120], [13.130], [13.145], [13.210] Royal Victoria Pavilion (Ramsgate), Re [1961] Ch 581 ............................................................. [18.50] Royalene Pty Ltd v Registrar of Titles (2008) Q Conv R 54-​689 ................................................ [4.170] Rozenblit v Vainer [2019] VSC 316 .......................................................................................... [9.185] Rudd v Bowles [1912] 2 Ch 60 ............................................................................................. [17.195] Rufa Pty Ltd v Cross [1981] Qd R 365; [1981] ANZ ConvR 33 ...............................[17.105], [17.160], [17.380], [18.275] Rugby School (Governors) v Tannahill [1934] 1 KB 695 ........................................................ [14.345] Rule v Mallon (2000) 10 BPR 18,005 .................................................................................... [12.180] Rural View Developments Pty Ltd v Fastfort Pty Ltd [2009] QSC 244 ......................[17.380], [18.15], [18.275], [18.320] Russel v Russel (1783) 1 Bro CC 269; 28 ER 1121 ..................................................................... [4.50] Russell v Watts (1883) 25 Ch D 559 ...................................................................................... [16.280] Russo v Bendigo Bank Ltd [1999] 3 VR 376 ...............................................................[2.455], [4.225], [4.240], [4.245] Ruthol Pty Ltd v Mills (2003) 11 BPR 20,793 ..............................................................[5.270], [5.275] Ryal v Rich (1808) 10 East 48; 103 ER 693 .............................................................[14.435], [14.440] Ryan v Brain [1994] 1 Qd R 681 ................................................................................[1.125], [4.350] Ryan v Dries (2002) 10 BPR 19,497 ...................................................... [12.250], [12.255], [12.275], [12.285], [12.290], [12.320] Ryan v Nothelfer (1983) NSW ConvR 55-​119 ......................................................................... [5.140] Ryan v O’Sullivan [1956] VLR 99 ............................................................................................. [7.240] Ryan v Starr [2005] NSWSC 170 ............................................................................................. [4.230] Rye v Purcell [1926] 1 KB 446 ............................................................................................... [14.290] Rye v Rye [1962] AC 496; 2 WLR 361 .................................................... [12.370], [14.385], [17.175] lxxx

Table of Cases

S S & D International Pty Ltd (in liq) v Malhotra [2006] VSC 280 ................................................. [5.90] S & D International Pty Ltd (in liq) (No 4), Re (2010) 79 ACSR 595; [2010] VSC 388 ...................................................................................... [5.180], [5.185], [5.195] S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637 ...................[8.200], [17.130] Saade v Registrar-​General (1993) 179 CLR 58 ......................................................................... [4.440] Sabri, Re (1996) 137 FLR 165 ................................................................................................. [5.270] Sabri, Re; Ex parte Brien (1997) FLC 92-​732 ............................................................................. [5.35] Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5 .............. [18.270] Sackville v Mansard Developments Pty Ltd (1981) ATPR 40-​222 ............................................. [9.170] Sahade v BP Australia Pty Ltd (2005) NSW ConvR 56,113 ......................................................... [5.35] St Albans Investment Ltd's Application, Re (1958) 9 P & CR 536 ........................................... [18.240] St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2) [1973] 1 WLR 1572 ......................................................................................................... [17.330] St Vincent de Paul Society v Ozcare Ltd (2009) 74 ACSR 676 .................................................. [4.370] Salter v Clarke (1904) 4 SR (NSW) 280 ................................................................................... [3.305] Saltoon v Lake [1978] 1 NSWLR 52 ......................................................................................... [2.425] Salvin’s Indenture, Re [1938] 2 All ER 498 ............................................................................... [17.45] Sames v District Council of Mount Barker [2004] SASC 374 .....................................[1.125], [18.260] Sampi on behalf of the Bardi and Jawi People v Western Australia (2010) 266 ALR 537 ...................................................................................................................... [6.480] Samuel v District Land Registrar [1984] 2 NZLR 673 ............................................................. [12.370] Sandbrook, Re [1912] 2 Ch 471 ............................................................................................. [2.240] Sanders v Cooper [1974] WAR 129 ....................................................................................... [14.430] Sanders v Wadham (1870) 4 SALR 73 ................................................................................... [14.310] Sanderson v Mayor of Berwick-​on-​Tweed (1884) 13 QBD 547 .............................................. [14.225] Sandgate Corporation Pty Ltd (in liq) v Ionnou Nominees Pty Ltd (2000) 22 WAR 172 .........................................................................................................[4.565], [7.325] Sandhu v Farooqui [2004] 1 P & CR 3 ...................................................................................... [3.85] Sandhurst Mutual Permanent Investment Building Society v Gissing (1889) 15 VLR 329 ...................................................................................................................... [14.135] Sandhurst Trustees Ltd v 72 Seventh Street Nominees Pty Ltd (in liq) (1998) 45 NSWLR 556 .......................................................................................................[2.20], [6.165] Sandilands, Re (1871) LR 6 CP 411 ......................................................................................... [8.105] Sandill v Franklin (1875) LR 10 CP 377 ................................................................................... [14.45] Sandy and Others v Queensland and Others (2017) 254 FCR 107; [2017] FCAFC 108 ........................................................................................................................ [6.490] Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365 .......................... [14.405] Sansom v Westpac Banking Corporation (1996) 7 BPR 14,615 ............................................... [4.170] Sanwa Australia Leasing Ltd v National Westminster Finance Australia (1988) 4 BPR 9514 ............................................................................................................ [16.70] Sardon Pty Ltd v Registrar of Titles [2004] WASC 56 ..................................................[3.265], [3.360] Sargent v ASL Developments Ltd (1974) 131 CLR 634 .......................................................... [14.320] Sarson v Roberts [1895] 2 QB 395 ........................................................................................ [14.190] Saunder v Twigg (1887) 13 VLR 765 ....................................................................................... [2.605] Saunders v Dehew (1692) 2 Vern 271; 23 ER 775 ......................................................[2.470], [2.480] Saunder’s Case (1599) 5 Co Rep 12a; 77 ER 66 ...................................................................... [13.50] Sawyer v Starr [1985] 2 NZLR 540 ........................................................................................ [18.160] Saxby Soft Drinks Pty Ltd v George Saxby Beverages Pty Ltd [2009] NSWSC 1486 ..................................................................................................................... [11.25] Say-​Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309 ........................................ [4.370] Scala House & District Property Co Ltd v Forbes [1974] QB 575 ............................[14.250], [14.345] Scallan v Registrar-​General (1988) 12 NSWLR 514 .................................................................. [4.405] Scanlon v Campbell (1911) 11 SR (NSW) 239 .........................................................[3.360], [14.375] lxxxi

Australian Real Property Law

Scapinello v Scapinello [1968] SASR 316 ................................................................[12.275], [12.320] Schmidt v 28 Myola Street (2006) 14 VR 447; [2006] VSC 343 ........................ [2.370], [5.35], [5.90] Scholes v Blunt (1917) 17 SR (NSW) 36 .................................................................................. [2.640] Schultz v Corwill Properties Pty Ltd (1969) 90 WN (Pt 1) (NSW) 529; [1969] 2 NSWR 576 .............................................................................. [2.550], [4.125], [4.155], [4.240], [4.245] Scmeling v Stankovic (1984) NSW ConvR 55-​193 ................................................................. [12.375] Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793 ........................................... [2.20] Scott v Pape (1886) 31 Ch D 554 ......................................................................................... [17.415] Scottsdale Homes v Gemkip [2008] QSC 326 ........................................................................... [5.35] Scratton v Brown (1825) 4 B & C 485; 107 ER 1140 ............................................................. [16.215] Seaforth Land Sales Pty Ltd’s Land, Re [1976] Qd R 190 ....................................................... [17.285] Seaforth Land Sales Pty Ltd’s Land (No 2), Re [1977] Qd R 317 ............................................ [17.285] Secretary of State (India) v Chelikani Rama Rao (1916) LR 43 Ind App 192; 85 LJPC 222 ..................................................................................................................... [16.230] Secure Funding Pty Ltd v Doneley [2010] QSC 91 .................................................................. [5.190] Secure Parking (WA) Pty Ltd v Wilson [2005] WASC 264 ........................................[14.245], [14.250] Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268 ..................................................... [14.220] Secured Income Real Estate (Australia) Ltd v St Martin’s Investments Pty Ltd (1979) 144 CLR 596 ............................................................................................ [14.265] Seddon v North Eastern Salt Co Ltd [1905] 1 Ch 326 ............................................................... [8.80] Seddon v Smith (1877) 36 LT 168 .............................................................................[3.120], [3.160] Segal v Barel [2013] NSWCA 92 ............................................................ [12.280], [12.440], [12.455] Segal v Osborne [2016] NSWSC 941 ...................................................................................... [16.50] Segal Securities Ltd v Thoseby [1963] 1 QB 887 ................................................................... [14.325] Seidler v Schallhofer [1982] 2 NSWLR 80 ................................................................................ [2.240] Selby v Aston (1797) 3 Ves 339; 30 ER 1042 ......................................................................... [12.185] Selby v Nettlefold (1873) LR 9 Ch App 111 .......................................................................... [17.340] Selous, Re [1901] 1 Ch 921 .................................................................................................. [12.185] Selous Street Properties Ltd v Oronel Fabrics Ltd (1984) 270 EG 643 .................................... [14.270] Selwyn v Garfit (1888) 38 Ch D 273 ..................................................................................... [14.325] Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324 .................................... [17.325] Sexton v Horton (1926) 38 CLR 240 ..........................................................................[2.180], [2.210] Seymour v Seymour (1996) 40 NSWLR 358 ............................................................................ [3.285] Shadbolt v Wise (2005) 143 LGERA 88; [2005] QCA 443 ...................................................... [16.300] Shanahan v Fitzgerald [1982] 2 NSWLR 513 ........................................................................... [8.140] Shanly v Ward (1913) 29 TLR 714 ........................................................................................ [14.265] Shannon’s Transfer, Re [1967] Tas SR 245 ..............................................................[12.345], [12.410] Sharp v Milligan (No 2) (1857) 23 Beav 419; 53 ER 165 ....................................................... [14.210] Shaw v Garbutt (1996) 7 BPR 14,816 .........................................................................[3.85], [3.165], [3.305], [3.360], [3.365] Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd (2000) 9 Tas R 444 .................[5.35], [5.40] Shaw’s Application, Re (1995) 68 P & CR 591 ...................................................................... [18.270] Shawyer v Amberday Pty Ltd (2001) 10 BPR 18,869 ..................................................[5.245], [5.275] Shead Real Estate Pty Ltd (In the matter of EA & F Shead (Chatswood) Trust) [2018] NSWSC 614 ................................................................................................ [11.100] Sheehy v Edwards, Dunlop & Co (1897) 13 WN ....................................................................... [1.90] Shelbina Pty Ltd v Richards [2009] NSWSC 1449 .................................................................... [17.50] Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd [1996] AC 102 ................................. [3.285] Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 .............................................. [18.255] Shell Co Ltd v Kenpark Pty Ltd (1985) 38 SASR 297 ................................................................ [15.30] Shell Co of Australia Ltd v Zanelli [1973] 1 NSWLR 216 ...........................................[3.430], [14.385] Shelley v Kraemer 334 US 1 (1948) ........................................................................................ [1.285] Shelley’s Case (1581) 1 Co Rep 93b; 76 ER 206 .......................................... [2.215], [10.55], [10.60], [10.100], [10.115] lxxxii

Table of Cases

Shelmerdine v Ringen Pty Ltd [1993] 1 VR 315 ........................................................[3.305], [17.420] Shepherd v Ingram (1764) Amb 448; 27 ER 296 .................................................................. [11.170] Shepherd Homes Ltd v Sandham (No 2) [1971] 2 All ER 1267 ................................................ [18.15] Sheppard v Gibbons (1742) 2 Atk 441; 26 ER 666 .................................................................. [10.55] Sherrard v Registrar of Titles [2004] 1 Qd R 558 ..................................................................... [3.400] Shevill v Builders’ Licensing Board (1982) 149 CLR 620 ........................................[14.390], [14.405], [14.410] Short v Gill (1892) 13 LR (NSW) Eq 155 ................................................................................. [2.505] Shropshire Union Railways and Canal Co v The Queen (1875) LR 7 HL 496 ..............[2.425], [2.595], [5.145] Shurey, Re [1918] 1 Ch 263 .................................................................................................... [11.30] Siddons Pty Ltd v Stanley Works Pty Ltd (1991) 29 FCR 14 ..................................................... [9.160] Sidebotham v Holland [1895] 1 QB 378 ................................................................[14.310], [14.365] Sidhu v Van Dyke [2014] HCA 19 ................................................................ [8.180], [8.195], [8.215] Siemenski v Brooks Nominees Pty Ltd [1990] Tas R 236 .............................................[4.195], [18.25] Sifton v Sifton [1938] AC 656; [1938] 3 All ER 425 ................................................................. [2.260] Siggers v Scott (1951) 68 WN (NSW) 131 ............................................................................ [14.380] Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 .......................................... [4.355], [8.230], [17.130] Silvan Properties Ltd v Royal Bank of Scotland PLC [2004] 1 WLR 997 .................................... [7.455] Silvester d Law v Wilson (1788) 2 TR 444; 100 ER 239 ............................................................ [10.80] Simmons v Dobson [1991] 1 WLR 720 ................................................................................. [17.220] Simmons v Midford [1969] 2 Ch 415 ..................................................................................... [16.15] Simonova v Department of Housing and Public Works [2019] QCA 10 ................................... [15.95] Simons v Body Corporate of Strata Plan No 5181 [1980] VR 103 ...........................[13.325], [13.330] Simpson v Forrester (1973) 132 CLR 499 ................................................................................ [7.250] Simpson v North West County District Council (1978) 4 BPR 9277 ..............................[3.45], [3.360] Sina Holdings Ltd v Westpac Banking Corporation [1995] 1 NZLR 1 ..................................... [14.270] Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870 ..............................................[5.35], [5.40] Sinclair v Registrar-​General [2010] NSWSC 173 ...................................................................... [3.280] Sinn v National Westminster Finance Ltd [1985] VR 363 ....................................................... [12.410] Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd (2017) 52 VR 664 ......................................... [4.240] Sino-​Resource Imp & Exp Co Ltd v Oakland Investment Group Limited (No 2) [2018] QSC 133 ................................................................................................................ [4.380] Sir Walter Scott, Re [1911] 2 Ch 374 ...................................................................................... [10.65] Sistrom v Urh (1992) 40 FCR 550 ......................................................................................... [12.415] Site Developments Ltd v Cuthbury Ltd [2011] Ch 226 ............................................................ [3.305] Sitnovski v Trpkoski [1999] NSWSC 1247 .............................................................................. [12.100] Sixty-​Fourth Throne Pty Ltd v Macquarie Bank (1996) 130 FLR 411; V ConvR 54-​546 ...................................................................................................[4.160], [4.375] Skinner v Crabb (1878) 5 QSR 131 ......................................................................................... [7.395] Slack v Hancock (1912) 107 LT 14 ........................................................................................ [17.190] Slan v Edgerly (2008) 14 BPR 26,369 ...................................................................................... [2.565] Slater v Slater (1987) 12 Fam LR 1 ........................................................................................ [12.365] Slough Picture Hall Co Ltd v Wade (1916) 32 TLR 542 ............................................................ [16.95] Small v Gray [2004] NSWSC 97 .............................................................................................. [4.170] Small v Tomasetti (2001) 12 BPR 22,253 ................................................................................ [4.170] Smallwood v Sheppards [1895] 2 QB 627 .............................................................................. [14.25] Smedley v Chumley and Hawke Ltd (1982) 126 SJ 33 ........................................................... [14.195] Smirk v Lyndale Developments Ltd [1975] Ch 317 ........................................ [3.90], [3.245], [3.250] Smith (dec’d), Re [1967] VR 341 ...............................................................................[6.10], [11.240] Smith v Advanced Electrics Pty Ltd [2005] 1 Qd R 65 ............................................................. [3.280] Smith v Australian Real Estate & Investment Co Ltd [1964] WAR 163 .................................... [18.230] Smith v Callegari (1988) V ConvR 54-​300 ................................................................................. [5.90] Smith v Christie (1905) 24 NZLR 561 ....................................................................[17.150], [17.225] Smith v City Petroleum Co Ltd [1940] 1 All ER 260 ....................................................[16.90], [16.95] lxxxiii

Australian Real Property Law

Smith v Deane (1889) 10 LR (NSW) (Eq) 207 ......................................................................... [2.655] Smith v Jones [1954] 1 WLR 1089; 2 All ER 823 .......................................... [1.260], [2.510], [5.250], [5.275], [14.115] Smith v Lloyd (1854) 9 Exch 562; 156 ER 240 .......................................................................... [3.65] Smith v Longden (1997) 7 Tas R 194 ........................................................................................ [5.50] Smith v Marrable (1843) 11 M & W 5; 152 ER 693 ....................................................[8.85], [14.190] Smith v Northside Developments Ltd (1987) 283 EG 1211 ..................................................... [14.35] Smith v Render (1857) 27 LJ Ex 83 ....................................................................................... [16.105] Smith v Scott [1973] Ch 314 ................................................................................................ [14.225] Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500 ............................................................................... [18.245], [18.280], [18.300] Smith d Dormer v Packhurst (1740) 3 Atk 135; 26 ER 881 .........................................[10.40], [10.70] Smith’s Lease, Re [1951] 1 All ER 346 .................................................................................... [14.250] Smouha v Fleming (1997) 8 BPR 15,419 ............................................................................... [17.340] Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198 .......................................................[4.210], [4.230] Sodhi v Stanes [2007] NSWSC 177 ....................................................... [17.280], [17.285], [17.295], [17.305], [17.310] Sogelease Australia Ltd v Boston Australia Ltd (1991) 26 NSWLR 1 ......................................... [2.590] Solak v Bank of Western Australia Ltd [2009] VSC 82 ...................................................[4.170], [7.75] Solling, Ex parte (1893) 14 NSWLR (L) 399 ............................................................................. [4.265] Solomon v Bray (1873) 7 SALR 128 ........................................................................................ [14.65] Somma v Hazelhurst [1978] 2 All ER 1011 .............................................................................. [14.35] Sonenco (No 77) Pty Ltd v Silvia (1989) 24 FCR 105 ................................................................ [5.35] Sorensen and Sorensen, Re (1977) 90 DLR (3d) 26 ............................................................... [12.385] South-​Eastern Drainage Board (South Australia) v Savings Bank of South Australia (1939) 62 CLR 603 ......................................................................[4.325], [4.335], [4.565], [8.280], [8.285] South Australian Co v Port Adelaide CC [1914] SALR 16 ........................................................... [3.45] South Coast Oils (Qld & NSW) Pty Ltd v Look Enterprises Pty Ltd [1988] 1 Qd R 680 .......................................................................................................... [14.110] South Eastern Rly Co v Cooper [1924] 1 Ch 211 ................................................................... [17.340] Southern Centre of Theosophy Inc v South Australia [1982] AC 706 .....................[16.215], [16.235], [16.260] Southern Estates v New South Wales Aboriginal Land Council (1991) 24 NSWLR 300 .................................................................................................................... [6.90] Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138 ........................................... [7.455] Southlink Holdings Pty Ltd v Morerand Pty Ltd [2010] VSC 214 ............................................. [2.255] Southwark London Borough Council v Baxter [2001] 1 AC 1; [1999] 4 All ER 449; [1999] 3 WLR 939 ....................................................................................... [14.225] Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144 ..................................................................................................[17.170], [17.180] Spark v Meers [1971] 2 NSWLR 1 ................................................................................[3.385], [8.20] Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd (1970) 92 WN (NSW) 1087 ................................................................................. [2.80], [3.385], [3.405] Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd [2002] WASC 54 ..................[14.195], [14.350] Spathis v Hanave Investment Co Pty Ltd [2002] NSWSC 304 .................................[14.225], [14.325] Spear v Rowlett [1924] NZLR 801 ..........................................................................[17.340], [17.370] Specialist Diagnostic Services Pty Ltd v Healthscope Pty Ltd [2012] VSC 175 ........................ [14.220] Specktor v Lees [1964] VR 10 ............................................................................................... [14.430] Spence v Federal Commissioner of Taxation (1967) 121 CLR 273 ......................................... [12.155] Spencer’s Case (1583) 5 Co Rep 16a; 77 ER 72 ......................................................[14.285], [14.290] Spina v Conran Associates Pty Ltd (2008) NSW Conv R 56-​218 .............................................. [4.130] Spinks v Mundy [1957] St R Qd 234 ..................................................................................... [14.380] Sportoffer Ltd v Erewash Borough Council [1999] L&TR 433 ................................................ [14.260] Spotswood v Hand (1874) 5 AJR 85 ........................................................................................ [13.50] lxxxiv

Table of Cases

Sprott v Harper (2000) Q ConvR 54-​545 .............................................................................. [12.345] Spunter Pty Ltd v Hall [2006] WASC 6 ...................................................................................... [5.35] Spyer v Phillipson [1931] 2 Ch 183 .............................................................. [16.20], [16.35], [16.90] Squire v Rogers (1979) 39 FLR 106; 27 ALR 330 ................................................................... [12.325] St George Bank –​A Division of Westpac Banking Corporation v Zhang [2013] NSWSC 1455 ......................................................................................................... [7.225] Stacey v Meagher [1978] Tas SR 56 ...................................................................................... [16.350] Stafford v Lee (1992) 65 P&CR 172 ...................................................................................... [17.160] Staffordshire & Worcestershire Canal Navigation v Bradley [1912] 1 Ch 91 ........................... [17.455] Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410 ..................................................... [7.455] Standard and the Conveyancing Act 1919, Re (1967) 92 WN (NSW) 953 .............................. [3.430] Stanhill Pty Ltd v Jackson [2005] VSC 169 ..............................................................[18.215], [18.230] Stanhope v Earl Verney (1761) 2 Ed 81; 28 ER 826 ................................................................. [2.485] Stanhope v Haworth (1886) 3 TLR 34 ................................................................................... [14.335] Staples & Co Ltd v Corby and District Land Registrar (1900) 19 NZLR 517 ............................. [18.40] Stapleton v Cheales (1711) Prec Ch 317; 24 ER 150 ............................................................... [11.85] Star v Rookesby (1710) 1 Salk 335; 91 ER 295 ...................................................................... [16.320] Starline Furniture Pty Ltd, Re (1982) 6 ACLR 312 .................................................................... [16.35] State Bank of NSW v Chia (2000) 50 NSWLR 587 ................................................................... [4.375] State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398 ......................................................................................................[4.320], [4.350], [4.360], [4.405] State Electricity Commission (Vic) and Joshua’s Contract, Re [1940] VLR 121 .........[17.105], [17.160] State Transit Authority of NSW v Australian Jockey Club [2003] NSWSC 726 ........................ [17.220] State of New South Wales v Koumdjiev (2005) 63 NSWLR 353 ............................................. [12.375] Staughton v Brown (1875) 1 VLR (L) 150 ......................................................................[3.80], [3.95] Steadman v Steadman [1976] AC 536 .................................................................................... [8.160] Steindlberger v Mistroni (1992) 29 NSWLR 351 ...................................................................... [7.360] Stening v Abrahams [1931] 1 Ch 470 ................................................................................... [14.250] Stent v Monmouth DC (1987) 282 EG 705 .......................................................................... [14.195] Step v Crown Land Manager of the Department of Lands and Planning of the Northern Territory (2011) 251 FLR 443 ................................................................................ [3.45] Stephens v Anglian Water Authority [1987] 3 All ER 379; 1 WLR 1381 .................................. [17.360] Stephens v Debney (1959) 60 SR (NSW) 468 ....................................................................... [12.455] Stephens v Hide (1734) Talb 27; 25 ER 641 .......................................................................... [12.120] Stephenson Developments Pty Ltd v Finance Corporation of Australia Ltd [1976] Qd R 826 ............................................................................................................... [7.415] Stern, Re [1962] Ch 732 ......................................................................................................... [11.45] Stern v McArthur (1988) 165 CLR 489; 81 ALR 463 ....................................... [2.565], [7.25], [8.335] Steve Christenson & Co Ltd v Furs & Fashions (NZ) Ltd [1971] NZLR 129 ............................ [14.380] Stevens v Williams (1886) 12 VLR 152 .................................................................................... [4.255] Stevens and Evans v Allan and Armanasco (1955) 58 WALR 1 ............................................... [17.170] Stevenson v Myers (1929) 47 WN (NSW) 94 ........................................................................ [13.120] Stewart Fitzsimmons Projects Pty Ltd’s Caveats, Re [1976] Qd R 187 ...................................... [7.435] Stieper v Deviot Pty Ltd (1977) 2 BPR 9602 .......................................................................... [14.335] Stilwell v Blackman [1968] Ch 508 ....................................................................................... [18.105] Stockdale v Charles Sturt (2000) 76 SASR 225 ...................................................................... [15.250] Stockland Macquarie Pty Ltd v Australia and New Zealand Banking Group (1991) Q ConvR 54-​371 ...................................................................................................... [7.85] Stolyar v Towers (2018) 19 BPR 38, 287 ............................................................................... [17.100] Stone, Re [1989] 1 Qd R 351 .................................................................................[12.430], [12.435] Stone v Owen [2001] 1 Qd R 419 ......................................................................................... [12.285] Story v Advance Bank of Australia Ltd (1993) 31 NSWLR 722 ...................... [4.350], [4.355], [4.360] Stow v Mineral Holdings (Australia) Pty Ltd (1977) 51 ALJR 672 ..................................[6.10], [6.190] Stoyles v Job (1954) 73 WN (NSW) 41 ................................................................................. [14.250] lxxxv

Australian Real Property Law

Strand and Savoy Properties Ltd, Re [1960] Ch 582 ................................................................ [14.45] Stratheden and Campbell, Re [1894] 3 Ch 265 ........................................................[11.75], [11.250] Street v Mountford [1985] AC 809; [1985] 2 WLR 877 ............................................[14.35], [15.195] Streets v Lucas [2013] TASSC 45 ........................................................................................... [15.110] Strelly v Winson (1685) Vern 297; 23 ER 480 ........................................................................ [12.250] Stuart v Joy [1904] 1 KB 362 ................................................................................................. [14.270] Stugwell v Walker (1993) DFC 75-​134 ...................................................................................... [9.70] Stump v Gaby (1852) 2 De GM & G 623; 42 ER 1015 ............................................................ [5.255] Sturges v Bridgman (1879) 11 Ch D 852 .................................................................[17.75], [17.115] Sullivan v Bishop (1826) 2 Car & P 359; 172 ER 162 ............................................................. [14.435] Sullivan v McMahon [1999] WASC 84 ...................................................................................... [5.50] Sundell & Sons Pty Ltd v Yannoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323 ............................................................................................................... [4.375] Sunlea Investments Pty Ltd v New South Wales (1998) 9 BPR 16,707 ...................[16.210], [16.215], [16.240] Sunny Corporation Pty Ltd v Elkayess Nominees Pty Ltd [2006] VSC 314 ............................................................................................................................ [3.140] Sunset Properties Pty Ltd v Johnston (1985) 3 BPR 9185 ....................................................... [17.200] Sunshine Retail Investments Pty Ltd v Wulff [2000] V ConvR 54-​618; (2000) V ConvR 64,377; [1999] VSC 415 .......................................... [17.80], [17.205], [17.220], [17.225], [17.230] Super 1000 v Pacific General Securities (2008) 221 FLR 427 ................................................... [4.370] Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 ......................................... [18.245] Surtees v Surtees (1871) LR 12 Eq 400 .................................................................................. [12.125] Sutcliffe v Holmes [1947] KB 147 .......................................................................................... [16.320] Sutherland SC v Heyman (1985) 59 ALJR 564 ........................................................................... [8.85] Sutton v Shoppee (1963) 63 SR (NSW) 853; 80 WN (NSW) 1550 ........................[18.110], [18.145], [18.190] Svedala Australia Ltd v Pegasus Gold Australia Ltd (2001) 16 NTLR 35; 165 FLR 59 ........................................................................................................................ [16.10] Swain v Ayres (1888) 21 QBD 289 ........................................................................................ [14.115] Swan v Sinclair [1925] AC 227 .............................................................................................. [17.420] Swan v Uecker [2016] VSC 313 .............................................................................................. [14.40] Swansborough v Coventry (1832) 9 Bing 305; 131 ER 629 ................................................... [17.200] Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd (1993) V ConvR 54-​487 ................................................................................................................... [7.465] Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672 ..................[5.35], [5.40], [5.255], [5.270] Swanville Investment Pty Ltd v Riana Pty Ltd [2003] WASCA 121 ............................[14.65], [14.105], [14.410] Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 ...................[14.210], [14.250] Swift v Macbean [1942] 1 KB 375 ............................................................................[14.45], [14.390] Swordheath Properties v Tabbet [1979] 1 WLR 285 .............................................................. [12.290] Sydney & Suburban Mutual Permanent Building & Land Investment Assoc v Lyons [1894] AC 260 ............................................................................................[2.640], [2.645] Sydney Diagnostic Services Pty Ltd v Hemlena Pty Ltd (1990) 5 BPR 11,436 ................................................................................................................... [13.365] Sydney Real Estate & Investment Co Pty Ltd v Rich (1957) 74 WN (NSW) 427 ..................... [14.375] Sykes, Re [1973] 1 NSWLR 597 ............................................................................................. [13.210] Symbion Pathology Pty Ltd v Healthscope Ltd [2006] ANZ ConvR 347; VSC 191 ................... [4.365] Symes v Pitt [1952] VLR 412 ................................................................................................... [3.360] Symmons Plains Pastoral Holdings Pty Ltd v Tasmanian Motor Racing Co Pty Ltd (1996) 6 Tas R 284 .......................................................................................................... [14.335] Szabo v Boros (1967) 64 DLR (2d) 48 ................................................................................... [12.350] Sze Tu v Lowe (2014) 89 NSWLR 317 ..................................................................................... [3.205] lxxxvi

Table of Cases

T TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 .......................................................................................... [16.15], [16.85], [16.95] Tabor v Godfrey (1895) 64 LJ QB 245 ..................................................................................... [3.250] Taddeo v Catalano (1975) 11 SASR 492 ....................................................... [5.145], [5.185], [5.205] Talbot v Blindell [1908] 2 KB 114 .......................................................................................... [14.350] Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489 ..................................................... [2.570] Tallon v Proprietors of Metropolitan Towers Building Units Plan No 5157 [1997] 1 Qd R 102 .......................................................................................................... [16.300] Tanner v Stocks & Realty (Premises) Pty Ltd [1972] 2 NSWLR 722 .......................................... [14.50] Tannos v Cipolla [2001] NSWSC 496 ...................................................................................... [9.195] Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 ..................[2.565], [5.10], [5.35], [7.25], [8.125], [8.130], [9.205], [9.210], [12.385], [12.395] Tanzone Pty Ltd v Westpac Banking Corp (1999) NSW ConvR 55-​908 ......... [4.230], [4.360], [4.365] Tara Shire Council v Garner [2003] 1 Qd R 556 .........................................................[4.350], [4.370] Tarjomani v Panther Securities Ltd (1983) 46 P & CR 32 ....................................................... [14.380] Taylor v Beal (1591) Cro Eliz 222; 78 ER 478 ......................................................................... [14.450] Taylor v Browning (1885) 11 VLR 158 ................................................................................... [17.170] Taylor v Bydall (1677) 1 Freem KB 243; 89 ER 173 .................................................................. [10.75] Taylor v Deputy Federal Commissioner of Taxation (1969) 123 CLR 206 ....................[8.55], [12.390] Taylor v Joye [2018] NSWCATAP 309 .................................................................................... [16.355] Taylor v Lawrence [2001] EWCA Civ 119 ................................................................................ [3.130] Taylor v London & County Banking Co [1901] 2 Ch 231 ........................................................ [2.485] Taylor v Russell [1891] 1 Ch 8 (CA) ......................................................................................... [2.475] Taylor v Russell [1892] AC 244 ..................................................................... [2.475], [2.470], [2.580] Taylor v Twinberrow [1930] 2 KB 16 ............................................................ [3.320], [3.340], [3.345] Taylor v Webb [1937] 2 KB 283 ............................................................................................ [14.210] Taylor Farms (Aust) Pty Ltd v A Calkos Pty Ltd [1999] NSWSC 186 ....................................... [14.245] Teague v Trustees, Executors & Agency Co Ltd (1923) 32 CLR 252 ......................................... [11.60] Teasdale v Sanderson (1864) 33 Beav 534; 55 ER 476 .......................................................... [12.325] Tecbild Ltd v Chamberlain (1969) 20 P & CR 633 ........................................................[3.90], [3.125] Tegg, Re [1936] 2 All ER 878 .................................................................................................. [2.260] Tehidy Minerals Ltd v Norman [1971] 2 QB 528 ................................................................... [17.505] Teller Home Furnishers Pty Ltd, Re [1967] VR 313 ..................................................[14.270], [14.375] Telstra Corporation v Commonwealth (2008) 234 CLR 210 .................................................... [1.150] Telstra Corporation Ltd v Sicard Pty Ltd [2009] NSWSC 827 ................................................. [14.225] Telstra Corporation Ltd v Worthing (1999) 197 CLR 61 .......................................................... [4.335] Templeton v The Leviathan Pty Ltd (1921) 30 CLR 34 ................................................[4.110], [5.215] Tenstat Pty Ltd v Permanent Trustee Aust Ltd (1992) 28 NSWLR 625 .......................[4.170], [14.120] Teparyl Pty Ltd v Willis [2009] VSC 259 ................................................................................. [14.305] Terry v O’Connell [2010] NSWSC 255 ...................................................................................... [5.35] Terry v Tindale (1882) 3 LR (NSW) 444 ................................................................................... [14.45] Tessari v Bais Pty Ltd (1993) 60 SASR 59 ..................................................................[4.170], [14.120] Tettell, Re (1952) 52 SR (NSW) 221 ...................................................................................... [12.455] Texaco Antilles Ltd v Kernochan [1973] AC 609 .................................................................... [18.210] Thatcher’s Trusts, Re (1859) 26 Beav 365; 53 ER 939 ............................................................ [11.220] Thellusson v Woodford (1805) 11 Ves Jun 112; 32 ER 1030 .................................................... [11.45] Theodore v Mistford Pty Ltd (2005) 221 CLR 612; [2005] HCA 45 ................... [4.50], [7.45], [7.245] Thetford Corporation v Tyler (1845) 8 QB 95; 115 ER 810 .................................................... [14.430] Thirsty Mack’s Pty Ltd v Hasbeen Pty Ltd [2008] FCA 32 ......................................................... [4.170] Thomas v Hayward (1869) LR 4 Ex 311 ................................................................................ [14.275] Thomas W Ward Ltd v Alexander Bruce (Grays) Ltd [1959] 2 Lloyd’s Rep 472 ....................... [17.105] lxxxvii

Australian Real Property Law

Thomopoulos v Faulks [2006] VSC 262 ................................................................................. [17.225] Thompson v Whittard (1925) 25 SR (NSW) 430 ................................................................... [17.490] Thomson v Cross [1954] VLR 635 ......................................................................................... [14.295] Thomson v McInnes (1911) 12 CLR 562 ................................................................................. [8.120] Thorndike v Hunt (1859) 3 De G & J 563; 44 ER 1386 ............................................................ [2.465] Thorp and Real Property Act, Re [1962] NSWR 889 .............................................................. [12.430] Thorpe v Brumfitt (1873) LR 8 Ch App 650 ............................................................................ [17.60] Thrift v Thrift (1975) 10 ALR 372 .......................................................................................... [12.265] Thurgood, Re (1987) Q ConvR 54-​239 ................................................................................. [12.275] Thwaites v Brahe (1895) 21 VLR 192 .....................................................................[17.215], [17.345] Thynne v Petrie [1975] Qd R 260 ........................................................................................... [17.20] Tichborne v Weir (1892) 67 LT 735 .........................................................................[3.335], [14.285] Tickner v Buzzacott [1965] Ch 426 ..........................................................................[3.340], [14.350] Tidex v Trustees Executors & Agency Co Ltd [1971] 2 NSWLR 453 ..........................[11.85], [11.165] Tierney v Loxton (1891) 12 LR (NSW) 308 ............................................................................ [16.270] Tiltwood, Sussex, Re [1978] 1 Ch 269 .................................................................................. [18.200] Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 ............. [14.320], [14.335], [14.390] Timmins v Rowlison (1765) 1 Wm Bl 533; 96 ER 309 ............................................................ [14.435] Timpar Nominees Pty Ltd v Archer [2001] WASCA 430 ......................................................... [17.340] Tipler v Fraser [1976] Qd R 272 ............................................................................................ [17.290] Tito v Waddell (No 2) [1977] Ch 106 ....................................................... [3.285], [18.245], [18.320] Tjungarrayi & Ors v State of Western Australia (2019) HCA 12 ................................................ [6.425] Todorovic v McWatt [1927] Tas SR 9 ..................................................................................... [17.360] Tolman’s Estate, Re (1928) 23 Tas LR 29 ............................................................................... [12.245] Toma Sevices Pty Ltd v Kusido Hospitality & Property Group Pty Ltd [2008] NSWSC 492 ............................................................................................................. [5.90] Tomlinson v Cut Price Deli Pty Ltd (1992) 38 FCR 490 .......................................................... [14.450] Toogood v Mills (1896) 23 VLR 106 .........................................................................[8.120], [14.325] Toohey v Gunther (1928) 41 CLR 181 .......................................................................[7.160], [7.165] Tooth & Co Ltd v Barker (1960) 77 WN (NSW) 231 ................................................................. [5.35] Torrance v Bolton (1872) LR 8 Ch A 118 ................................................................................. [8.255] Torrisi v Magame Pty Ltd [1984] 1 NSWLR 14 ........................................................[17.150], [17.155] Tottenham Hotspur Football & Athletic Co Ltd v Princegrove Publishers Ltd [1974] 1 WLR 113 ..................................................................................................... [14.105] Tower Hamlets LBC v Barrett [2006] 1 P & CR 9 ..................................................................... [3.250] Town and Country Marketing Ltd v McCallum (1998) 3 NZ ConvC 192,698 .......................... [4.195] Tracy v Bifield (1998) 23 Fam LR 260 .................................................................................... [12.320] Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 ......................................... [9.50] Trafford v Thrower (1929) 45 TLR 502 .................................................................................. [16.260] Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 .................... [14.405] Transfer of Land Statute, Re; Ex parte Mutual Trust & Investment Society Ltd (1885) 11 VLR 166 ...................................................................................................... [4.410] Transfield Properties (Kent St) Pty Ltd v Amos Aked Swift Pty Ltd (1994) 36 NSWLR 321 .................................................................................................................... [5.35] Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 .............................................[4.170], [4.330], [14.120] Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 ................. [14.410] Traykof v Shanco Holdings Pty Ltd [2001] VSCA 56 .................................................................. [3.75] Tredegar v Harwood [1929] AC 72 ....................................................................................... [14.255] Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845 .......................................................... [17.285] Treloar v Nute [1976] 1 WLR 1295 ...............................................................................[3.75], [3.105] Trevlind v BMP Manufacturing Pty Ltd [2008] NSWSC 603 ..................................................... [17.40] Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274 .................... [17.420], [17.425], [17.430] Trident General Insurance v McNiece (1988) 165 CLR 107 ..................................................... [4.365]

lxxxviii

Table of Cases

Trieste Investments Pty Ltd v Watson (1963) 64 SR (NSW) 98 ....................................[4.345], [4.450] Trivett v Hurst [1937] St R Qd 265 ........................................................................................ [14.440] Troja v Troja (1994) 33 NSWLR 269 ...................................................................................... [12.435] Troncone v Aliperti (1994) 6 BPR 13,291; NSW ConvR 55-​703 ................................................. [4.75] Truefilm Pty Ltd v JR Investments Holdings Ltd (2004) NSW Conv R 56-​096 ............................. [5.45] Trust Company Ltd v Chief Commissioner of State Revenue (2007) 13 BPR 25,019 ..........................................................................................................[2.55], [2.85] Trustees Executors & Agency Co Ltd v Peters (1960) 102 CLR 537 ........................................ [11.245] Trustees Executors & Agency Co Ltd v Short (1888) 13 App Cas 739 ...................................... [3.310] Trustees of Hollis’ Hospital and Hague’s Contract, Re [1899] 2 Ch 540 ................................. [11.240] Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278; 224 ALR 280; [2006] HCA 6 .......................................... [9.60], [12.155], [12.165], [12.335], [12.415] Trusts of the Will of Foss, Re (1868) 7 SCR (NSW) Eq 68 ....................................................... [17.490] Tsirikolias v Oakes (1993) 169 LSJS 249 .................................................................................. [4.250] Tuckett v Brice [1917] VLR 36 ............................................................................................... [17.215] Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143 ..............................................................[2.315], [5.35], [14.270], [18.05], [18.10], [18.55], [18.130] Turner v Bladin (1951) 82 CLR 463 ......................................................................................... [1.265] Turner v Collins (1871) 7 Ch App 329 .................................................................................... [3.225] Turner v Doe d Bennett (1842) 9 M & W 643; 152 ER 271 ..................................................... [14.70] Turner v Jackson (1856) 1 VLT 127 ......................................................................................... [13.50] Turner v Kostoglou [2009] SASC 204 .................................................................................... [14.425] Turner v York Motors Pty Ltd (1951) 85 CLR 55 .......................................................[14.60], [14.365] Turney, Re [1899] 2 Ch 739 .................................................................................................... [11.85] Tutt v Doyle (1997) 42 NSWLR 10 .............................................................................[4.355], [4.360] Twentieth Century Banking Corporation Ltd v Wilkinson [1976] 2 WLR 489 ........................... [7.335] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 ......................................... [14.335] Tyler, Re [1891] 3 Ch 252 ..................................................................................................... [11.250] Tyre Marketers (Aust) Ltd v Martin Alstergren Pty Ltd (1989) V ConvR 54-​335 ...........[4.130], [4.155] Tyrrell’s Estate, Re [1907] 1 IR 292 ........................................................................................ [11.240] Tyrrel’s Case (1557) 2 Dyer 155a; 73 ER 336 .......................................................................... [2.345]

U UBC Corporate Services Ltd v Kohli [2004] EWHC 1126 ......................................................... [3.260] Unic SA v Quartermain Holdings Pty Ltd [2002] 2 Qd R 660 ................................................... [4.225] Unimin Pty Ltd v Commonwealth (1974) 2 ACTR 71 ............................................[17.455], [17.460], [17.465] Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 .......................[17.150], [17.160], [17.225] Union of London and Smith’s Bank Ltd’s Conveyance, Re [1933] Ch 611 ..................[18.55], [18.85], [18.100] United Scientific Holdings Ltd v Burnley BC [1978] AC 904 .......................................[2.365], [14.50] United Starr-​Bowkett Co-​operative Building Society v Clyne [1968] 1 NSWR 134 ................. [14.145] Upton v Baron (2000) 9 Tas R 178 .......................................................................................... [4.130] Upton v Tasmanian Perpetual Trustees Ltd [2007] FCAFC 57 .................................................. [7.455] Uratemp Ventures Ltd v Collins [2002] 1 AC 301 .................................................................. [15.205] Urban v Urban (1994) 21 Alta LR (3d) 405 ............................................................................. [3.365]

V VT Engineering Ltd v Richard Barland& Co Ltd (1968) 19 P & CR 890 .................................. [17.340] Valbirn Pty Ltd v Powprop Pty Ltd [1991] Qd R 295 ................................................................ [4.365] lxxxix

Australian Real Property Law

Valerica Pty Ltd v Global Minerals Australia Pty Ltd (2001) NSW ConvR 55-​963 .......................................................................................... [5.35], [5.245], [5.255] Valliant v Dodemede (1742) 2 Atk 546; 26 ER 728 ............................................................... [14.285] Valoutin Pty Ltd v Furst (1998) 154 ALR 119 ........................................................................... [4.320] Van Den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 .......................[4.170], [4.485] Van Grutten v Foxwell [1897] AC 658 ........................................................................[10.55], [10.60] Van Schaik Organic Soils & Bark Supplies Pty Ltd v Woakwine Industries Pty Ltd [2001] SASC 297 ................................................................................................. [14.115] Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 ..................................... [4.170] Vanderplank v King (1843) 3 Hare 1; 67 ER 273 ..................................................................... [11.50] Vane v Barnard (1716) 2 Vern 738; 23 ER 1082 ...................................................................... [13.50] Vane v Vane (1873) LR 8 Ch App 383 ..................................................................................... [3.285] Vanstone v Malura Pty Ltd (1988) 50 SASR 110 .....................................................[17.460], [17.465] Varma v Varma [2010] NSWSC 786 ........................................................................................ [5.270] Vasilou v Westpac Banking Corporation (2008) 19 VR 214 ............................... [5.35], [5.40], [5.255] Vassos v State Bank of South Australia [1993] 2 VR 316 ............................... [4.135], [4.160], [4.350], [4.355], [4.360] Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74 ...........................................[16.25], [16.60] Vedejs v Public Trustee [1985] VR 569 ................................................................................... [12.165] Veitch v Director of Housing [2008] VSC 442 .......................................................................... [15.95] Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343 .....................................[4.170], [4.360] Vella v Wah Lai Investment (Australia) [2004] NSWSC 748 ...................................................... [14.80] Vercorp Pty Ltd v Lin [2007] 2 Qd R 180 ................................................................................. [2.255] Verebes v Verebes (1995) 6 BPR 14,408 .................................................................................... [5.90] Vernon v Smith (1821) 5 B &Ald 1; 106 ER 1094 .................................................................. [14.275] Verrall v Nott (1939) 39 SR (NSW) 89 ....................................................................[16.210], [16.220] Vesco Nominees Pty Ltd v Stefan Hair Fashions Pty Ltd [2001] QSC 169 ....................[16.80], [16.90] Victoria v Rossignoli (1983) 2 VR 1 .......................................................................................... [6.160] Videon v Barry Burroughs Pty Ltd (1981) 53 FLR 425 .............................................................. [9.170] Villar, Re [1929] 1 Ch 243 ....................................................................................................... [11.45] Voice v Bell (1995) 68 P & CR 441 .......................................................................................... [17.40] Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd [2009] FCA 742 ..................................................................................... [16.15], [16.20], [16.45], [16.85], [16.95] Voudouris v Registrar-​General (1993) 30 NSWLR 195 ............................................................. [4.345] Vrakas v Mills [2006] VSC 463 .................................................................................[18.80], [18.140], [18.145], [18.160] Vrakas v Registrar of Titles [2008] VSC 281 ........................................................................... [18.215]

W W G Clark (Properties) Ltd v Dupre Properties Ltd [1992] Ch 297 ........................................... [14.80] W H Marsh, Re (1941) 42 SR (NSW) 21 ................................................................................ [16.300] W H Tuckett & Sons v Ransom [1914] VLR 8 ......................................................................... [14.365] Wade v NSW Rutile Mining Co Pty Ltd (1969) 121 CLR 177 ................................................. [16.150] Wadi Wadi, Re (1995) 129 ALR 167 .......................................................................................... [6.50] Waige & Co Constructions Pty Ltd v Suburban Timbers Pty Ltd [1976] ACLD 387 .................. [16.50] Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137 ..................... [4.225] Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1926] AC 101 ..............[4.215], [4.230] Wakefield &Barnsley Union Bank Ltd v Yates [1916] 1 Ch 452 ...................................[3.255], [10.20] Waker v Snowe (1621) Palm 359; 81 ER 1123 ........................................................................ [10.60] Waldron, Re (1893) 3 LCC 144 ............................................................................................. [16.240] Waldron v Sloper (1852) 1 Drew 193; 61 ER 425 .................................................................... [2.580] Walker v Bridgewood [2006] NSWSC 149 ............................................. [17.120], [17.330], [17.335] Walker v Espie [2003] NSWSC 559 ....................................................................................... [17.340] xc

Table of Cases

Walker v Linom [1907] 2 Ch 104 ................................................................ [2.380], [2.420], [2.425], [2.440], [2.595], [4.05] Walker Corporation v W R Pateman (1990) 20 NSWLR 624 ...................................................... [5.35] Wallis v Downard Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 ............................ [8.90] Wallis v Hands [1893] 2 Ch 75 .............................................................................................. [14.380] Wallis v Moreton (1932) 32 SR (NSW) 659 ............................................................................... [8.65] Wallis’s Cayton Bay Holiday Camp Ltd v Shell-​Mex and BP Ltd [1975] 1 QB 94 ...................... [3.105] Walmsley, In the Will of (1922) 18 Tas LR 32 ......................................................................... [17.490] Walpole v Orford (1797) 3 Ves Jun 402; 30 ER 1076 ............................................................. [14.110] Walsh v Elson [1955] VLR 276 ................................................................................[17.360], [17.365] Walsh v Lonsdale (1882) 21 Ch D 9 .............................................................. [7.65], [7.235], [7.275], [7.325], [7.350], [8.135], [12.385], [14.60], [14.105], [14.110], [14.115], [14.160], [14.380], [17.125], [17.130], [17.465], [17.495] Walsh v Minister for Lands (NSW) (1960) 103 CLR 240 .......................................................... [6.155] Walter v Yalden [1902] 2 KB 304 ............................................................................................ [3.340] Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; 76 ALR 513 ..................[5.35], [8.200], [8.205], [8.235], [9.200], [14.80], [14.115], [14.335], [17.130] Wandsworth District Board of Works v United Telephone Co Ltd (1884) 13 QBD 904 ......................................................................................................... [16.315] Wang v Copko [2008] NSWSC 736 ........................................................................................ [5.225] Wanner v Carvana [1974] 2 NSWLR 301 ................................................................................. [7.215] Warburton v Loveland (1832) 2 Dow & Cl 480; 6 ER 806; 6 Bligh NS 1; 5 ER 499 .................................................................................................................. [2.655] Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 ..................... [4.130] Ward v Griffiths (1987) 9 NSWLR 458 ................................................................................... [16.300] Ward v Kirkland [1967] Ch 194; [1966] 1 WLR 601; 1 All ER 609 ............................[17.80], [17.105], [17.170] Ward v Van der Loeff [1924] AC 653 ....................................................................................... [11.60] Ward v Western Australia (1998) 159 ALR 483 .......................................................................... [6.75] Ward, Re; Gillet v Ward [1968] WAR 33 .....................................................................[8.55], [12.390] Ware v Cann (1830) 10 B & C 433; 109 ER 511 ..................................................................... [2.245] Waring v Foden [1932] 1 Ch 276 .......................................................................................... [16.150] Warlow v Harrison (1859) 1 El & El 295; 120 ER 925 .............................................................. [8.255] Warner v Sampson [1958] 1 QB 404 .....................................................................[14.350], [14.375] Warnford Investments Ltd v Duckworth [1979] Ch 127 ........................................................ [14.270] Warren v Keen [1954] 1 QB 15 ............................................................................................. [14.200] Warren v Nut Farms of Australia Pty Ltd [1981] WAR 134 ..................................................... [17.460] Water Wine and Juice Pty Ltd v Konstantopoulos [2010] NSWSC 312 ................................... [14.335] Waterhouse v Waugh [2003] NSWCA 139 ............................................... [14.85], [14.235], [14.290] Waters v Weigall (1795) 2 Anst 575; 145 ER 971 .................................................................. [14.450] Watson Holdings Pty Ltd v Hodinott (1957) 75 WN (NSW) 168 ............................................ [14.250] Watson’s Settlement Trusts, Re [1959] 1 WLR 732 ................................................................... [11.55] Watt v Lord (2005) 62 NSWLR 495 ..........................................................................[5.225], [12.395] Watt v State Bank of New South Wales [2003] ACTCA 7 ......................................................... [4.375] Watts v Kelson (1871) 6 Ch App 166 .................................................................................... [17.170] Waverley Borough Council v Fletcher [1996] QB 334 ................................................................ [2.50] Wayella Nominees Pty Ltd v Cowden Ltd [2003] WASC 210 ..................................[17.225], [17.235] We Are Here Pty Ltd v Zandata Pty Ltd [2010] NSWSC 262 .................................................... [4.360] Webb v Bird (1861) 10 CB (NS) 268; 142 ER 455 ................................................................... [17.80] Webb v Frank Bevis Ltd [1940] 1 All ER 247 ............................................................................ [16.90] xci

Australian Real Property Law

Webb v Plummer (1819) 2 B & Ad 746; 106 ER 537 ............................................................. [14.210] Webber v Lee (1882) 9 QBD 315 .......................................................................................... [17.455] Webb’s Lease, Re; Sandom v Webb [1951] Ch 808 ............................................................... [17.140] Webeck v Foley (1992) NSW ConvR 59,717 ................................................ [3.270], [3.365], [3.405] Weber v Ankin (2008) BPR 25,231 .......................................................................................... [3.405] Websdale v S & J D Investments Pty Ltd (1991) 24 NSWLR 573 .............................................. [7.420] Webster v Strong [1926] VLR 509 ..........................................................................[17.415], [17.430] Weeks v Bond [1999] Qd R 34 ................................................................................................ [15.95] Weeks’ Caveat, Re [1971] QWN 4 ............................................................................................. [5.35] Weeton v Woodcock (1840) 7 M & W 14; 151 ER 659 ........................................................... [16.95] Weg Motors Ltd v Hales [1961] Ch 176 ................................................................................ [14.275] Weg Motors Ltd v Hales [1962] 1 Ch 49 ................................................................................. [14.45] Weitmann v Katies Ltd (1977) 29 FLR 336 .............................................................................. [9.160] Weld v Bradbury (1715) 2 Vern 705; 23 ER 1058 .................................................................. [11.170] Weld-​Blundell v Wolseley [1903] 2 Ch 664 ............................................................................. [13.50] Weller v Spiers (1872) 26 LT 866 .......................................................................................... [14.360] Weller v Williams [2010] NSWSC 716 ..................................................................................... [5.220] Wellesmore v Ratford (1973) 23 FLR 295 ................................................................................ [16.50] Wenczel v Commonwealth Bank of Australia [2006] VSC 324 ....................................[4.375], [9.152] Wengarin Pty Ltd v Byron SC (1999) BPR 16,985; [1999] NSW ConvR 55-​903; NSWSC 485 ............................................................................................ [17.295] Wernher, Re [1961] 1 All ER 184 ........................................................................................... [11.170] Wessex Reserve Forces & Cadets Association v White [2005] EGLR 127 ................................... [16.45] West v Weston (1998) 44 NSWLR 657 .................................................................................. [12.200] West v Williams [1899] 1 Ch 132 ...............................................................................[7.110], [7.115] Western Australia v Brown (2014) 88 ALJR 461; 306 ALR 168; [2014] HCA 8 ...............[2.35], [6.425] Western Australia v Ward (1996) 70 FCR 265 .............................................................[6.470], [6.485] Western Australia v Ward (2002) 213 CLR 1; 76 ALJR 1098; 191 ALR 1; [2002] ANZ ConvR 446; HCA 28 .............................................................. [2.35], [6.425], [6.455] Western Australia v Willis (2015) 239 FCR 175; [2015] FCAFC 186 ......................................... [6.495] Western Electric Ltd v Welsh Development Agency [1983] 2 All ER 629 ................................ [14.215] Western Metal Resources Ltd v Murrin Murrin East Pty Ltd [1999] WASC 257 ......................... [2.255] Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194 .............. [7.160] Westfield Management Ltd v Perpetual Trustee Co Ltd [2006] NSWSC 716 .......................... [17.440] Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528; [2007] HCA 45 .................................................................................... [4.195], [17.50], [17.120], [17.325], [17.440], [18.125] Westhoughton UDC v Wigan Coal and Iron Co Ltd [1919] 1 Ch 159 .......................[18.15], [18.300] Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305 ................................................. [4.375] Westminster Bank Ltd v Lee [1956] Ch 7 ................................................................................. [5.275] Westpac v Clark [2010] NZLR 82 .............................................................................................. [7.75] Westpac Banking Corp v Tanzone Pty Ltd (2000) 9 BPR 17,521; (2000) NSW ConvR 55-​939 ............................................................................... [4.230], [4.360], [4.365] Westpac Banking Corporation v Dimopoulos [2006] VSC 10 .................................................... [5.35] Westpac Banking Corporation v Dunn [2011] WASC 7 ............................................................. [5.70] Westpac Banking Corporation v Mousellis (1985) 37 NTR 1 .................................................... [7.455] Westpac Banking Corporation v Ollis [2008] NSWSC 824 .........................................[2.565], [5.220], [5.245], [5.260], [5.280] Westpac Banking Corporation v Rabaiov [1991] ANZ ConvR 560 ........................................... [16.25] Westpac Banking Corporation v Sansom (1995) NSW ConvR 55-​733 ........................[4.200], [12.40] Westpac Banking Corporation Ltd v Kingsland (1991) 26 NSWLR 700 .................................... [7.455] Westpoint Corp Pty Ltd v Registrar of Titles [2004] WASC 189 ................... [5.245], [18.15], [18.310] Whaley, Re [1908] 1 Ch 615 ................................................................................................... [16.65] Whall v Bulman [1953] 2 QB 198 ......................................................................................... [14.310] Wheaton v Maple & Co [1893] 3 Ch 48 ................................................................[17.220], [17.345] xcii

Table of Cases

Wheeldon v Burrows (1879) 12 Ch D 31 ................................................................[3.425], [17.165], [17.170], [17.185], [17.270], [17.465] Wheeler v JJ Saunders Ltd [1996] Ch 19 ................................................................................ [17.170] Wheeler v Mercer [1957] AC 416 ...............................................................................[14.70], [14.75] Whitby v Mitchell (1890) 44 Ch D 85 ..................................................................................... [11.10] White v Betalli [2007] NSWCA 243 ........................................................................[13.285], [13.365] White v Bijou Mansions Ltd [1938] Ch 351 ........................................................................... [18.270] White v Cariste [2004] NSWCA 460 ........................................................................................ [14.65] White v Commissioner for Stamps (1908) 8 SR (NSW) 287 ..................................................... [11.85] White v Grand Hotel, Eastbourne [1913] 1 Ch 113 ............................................................... [17.340] White v Kenny [1920] VLR 290 ..............................................................................[14.245], [14.275] White v McLean (1890) 24 SALR 97 .......................................................................[17.210], [17.215] White v Neaylon (1886) 11 AC 171 ........................................................................................ [2.635] White v Summers [1908] 2 Ch 256 .............................................................. [10.50], [10.80], [10.85] White v Taylor (No 2) [1969] 1 Ch 160 ..................................................................[17.220], [17.500] White v Tomasel [2004] 2 Qd R 438 ..........................................................................[4.355], [4.380] White Rose Cottage, Re [1965] Ch 940 ................................................................................... [7.330] Whiteford, Re [1915] 1 Ch 347 ............................................................................................. [11.165] Whitfield v De Lauret and Co Ltd (1920) 29 CLR 71 ............................................................... [1.230] Whitlock v Brew (1968) 118 CLR 445 ........................................................................[14.45], [14.50] Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 ............................... [3.30], [3.75], [3.80], [3.90], [3.110], [3.130], [3.135], [3.140], [3.145], [3.160], [3.165] Wicklow Enterprises Pty Ltd v Doysal Pty Ltd (1986) 45 SASR 247 ..............................[4.150], [4.250] Wicks v Bennett (1921) 30 CLR 80 .......................................................................................... [4.205] Wigg v Wigg (1739) 1 Atk 382; 26 ER 244 ............................................................................. [2.470] Wik Peoples v Queensland (1996) 187 CLR 1 .................................................. [1.20], [1.315], [2.10], [2.25], [2.30], [2.35], [2.85], [3.275], [6.85], [6.345], [6.350], [6.390], [6.400], [6.425], [6.430], [14.40] Wilchick v Marks and Silverstone [1934] 2 KB 56 .................................................................. [14.190] Wilcox v Richardson (1997) 43 NSWLR 4 ................................................................[17.55], [17.105], [17.120], [17.170] Wilford’s Estate, Re; Taylor v Taylor (1879) 11 Ch D 267 ....................................................... [12.350] Wilkes v Bodington (1707) 2 Vern 599; 23 ER 991 .................................................................. [2.485] Wilkes v Spooner [1911] 2 KB 473 ............................................................................[2.455], [2.555], [5.225], [18.40] Wilkinson v Duncan (1861) 30 Beav 111; 54 ER 831 ............................................................. [11.165] Wilkinson v Hall (1837) 3 Bing NC 508; 132 ER 506 ............................................................. [14.435] Wilkinson v Haygarth (1847) 12 QB 837; 116 ER 1085 ......................................................... [12.310] Wilkinson v Proud (1843) 11 M & W 33; 152 ER 704 ........................................................... [16.150] Wilkinson v Rogers (1864) 2 De GJ & S 62; 46 ER 298 .......................................................... [14.275] Wilkinson v Spooner [1957] Tas SR 121 ................................................................................ [17.225] Williams v Attorney-​General (1913) 16 CLR 404 ..........................................................[6.10], [6.195] Williams v Carlyle Villages Pty Ltd [2009] QCA 301 ............................................................... [15.320] Williams v Central Bank of Nigeria [2014] AC 1189 ................................................................ [3.205] Williams v Earle (1868) LR 3 QB 739 ..................................................................................... [14.275] Williams v Hensman (1861) 1 J & H 546; 70 ER 862 .............................................[12.110], [12.335], [12.340], [12.345], [12.365] Williams v Marac Australia Ltd (1985) 5 NSWLR 529 ....................................................[5.65], [5.220] Williams v Papworth [1900] AC 563 ....................................................................................... [4.435] Williams v Perpetual Trustee Co Ltd (1913) 17 CLR 469 ........................................................ [11.240] xciii

Australian Real Property Law

Williams v State Transit Authority of NSW (2004) 60 NSWLR 286; [2004] NSWCA 179 ...........................................................................................[8.110], [17.205], [17.230], [17.345] Williams v Usherwood (1981) 45 P & CR 235 ............................................................[3.100], [3.140] Williams v Wilcox (1838) 8 Ad & E 314; 112 ER 857 ............................................................. [16.240] Williams Bros Direct Supply Ltd v Raftery [1958] 1 QB 159 .......................................[3.105], [3.115], [3.130], [3.245] Williams and Glyn’s Bank Ltd v Boland [1981] AC 487 .............................................[2.515], [14.115] Williamson v Bars (1900) 21 NSWLR (Eq) 302 ......................................................................... [2.495] Williamson v Scarano [2010] NSWSC 975 ................................................................................. [5.70] Williamson v Wootton (1855) 3 Drew 210; 61 ER 883 .......................................................... [16.150] Willis v Earl Howe [1893] 2 Ch 545 ......................................................................................... [3.305] Willmott v Barber (1880) 15 Ch D 96 ..................................................................................... [8.225] Wills v Wills [2004] 1 P & CR 37 ............................................................................................. [3.270] Willshire v Dalton (1948) 65 WN (NSW) 54 .............................................................[14.65], [14.365] Wilmer’s Trusts, Re [1903] 2 Ch 411 ....................................................................................... [11.45] Wilson v Anderson (1830) 1 B & Ad 450; 109 ER 855 ............................................................. [14.80] Wilson v Anderson (2002) 213 CLR 401 ........................................................... [2.25], [2.35], [4.160] Wilson v Finch Hatton (1877) 2 Ex D 336 ............................................................................. [14.190] Wilson v Graham (1997) 10 BPR 19,051 ................................................................................... [5.35] Wilson v Kelly [1957] VR 147 ................................................................................................ [14.315] Wilson v Meudon Pty Ltd [2004] NSWSC 1183 .....................................................[13.280], [13.365] Wilson v Stewart (1889) 15 VLR 781 ..................................................................................... [14.325] Wiltshear v Cottrell (1853) 1 El & Bl 674; 118 ER 589 ............................................................. [16.20] Wimbledon & Putney Commons Conservators v Dixon (1875) 1 Ch D 362 ............................ [17.80] Wincant Pty Ltd v South Australia (1997) 69 SASR 126 ..........................................[14.195], [16.110] Windella (NSW) Pty Ltd v Hughes (1999) NSW ConvR 55-​926 ................................................. [5.50] Winn v Ingilby (1822) 5 B &Ald 625; 106 ER 1319 ................................................................. [16.90] Winter, In Re (1893) 14 NSWLR 389 ......................................................................................... [3.45] Winter Garden Theatre (London) Ltd v Millenium Productions Ltd [1948] AC 173 ................................................................................................................... [1.215] Wirth v Wirth (1956) 98 CLR 228 ..................................................................................[9.70], [9.80] Wisbech St Mary Parish Council v Lilley [1956] 1 WLR 121 ................................................... [14.375] Wiscot’s Case; Giles v Wiscot (1599) 2 Co Rep 60b; 76 ER 555 ............................................. [12.425] Wlodarczyk, Re [2000] 2 Qd R 216 ....................................................................................... [12.455] Wogama Pty Ltd v Harris (1968) 89 WN (NSW) 62 ................................................................. [3.310] Woking UDC (Basingstoke Canal) Act 1911, Re [1914] 1 Ch 300 ............................................ [2.180] Wolfe v Freijahs’ Holdings Pty Ltd [1988] VR 1017 .................................................[17.415], [17.420] Wolverhampton &Walsall Rly Co v London & North Western Rly Co (1873) LR 16 Eq 443 .......................................................................................................... [1.265] Wolverhampton Corporation v Emmons [1901] 1 KB 515 ....................................................... [1.265] Wolveridge v Steward (1833) 1 Cr & M 644; 149 ER 557 ..................................................... [14.305] Wombat Nominees Pty Ltd v De Tullio (1990) 98 ALR 307 ...................................................... [4.245] Wood, Re [1894] 2 Ch 310 (first instance); [1894] 3 Ch 381 .................................................. [11.75] Wood v Browne [1984] 2 Qd R 593 ........................................................................................ [6.180] Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 ..................................[14.390], [14.410] Woodall v Clifton [1905] 2 Ch 257 ....................................................................................... [11.245] Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 All ER 571; [1980] 1 WLR 277 ............................................................................ [14.420] Woodbury v Gilbert (1907) 3 Tas LR 7 .................................................................................... [18.40] Woodhouse v Ah Peck (1900) 16 WN (NSW) 166 ................................................................. [14.430] Woodhouse v Walker (1880) 5 QBD 404 ................................................................................ [13.55] Woodward v Wesley Hazell Pty Ltd (1994) ANZ ConvR 624 ......................... [3.110], [3.125], [3.395] Woollerton and Wilson Ltd v Richard Costain Ltd [1970] 1 WLR 411 ..................................... [16.130] Woolley, Re [1903] 2 Ch 206 ................................................................................................ [12.140] xciv

Table of Cases

Woolley v Attorney-​General (Vic) (1877) LR 2 App Cas 163 .................................................. [16.150] Woolley v Dunford (1972) 3 SASR 243 .................................................................................... [1.230] Woolworths Ltd v About Life Pty Ltd (2017) 18 BPR 36,983 .................................................... [2.575] Woolworths Ltd v About Life Pty Ltd [2017] NSWLR 1117 .................................................... [14.105] World Tech Pty Ltd v Yellowin Holdings Pty Ltd (1993) ANZ ConvR 121 ........................[7.20], [7.45] Worrall v Commissioner for Housing for the Australian Capital Territory [2002] FCAFC 127 ............................................................................................................. [15.65] Worssam v Vandenbrande (1858) 17 WR 53 ........................................................................... [3.360] Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR 89 ...................................................... [1.80] Worthing Corporation v Heather [1906] 2 Ch 532 ................................................................ [11.245] Worthington v Morgan (1849) 16 Sim 547; 60 ER 987 ........................................................... [2.545] Wretham v Ross [2005] EWHC 1259 ....................................................................................... [3.140] Wright v Gibbons (1949) 78 CLR 313 ..................................................... [12.45], [12.220], [12.335], [12.340], [12.380], [12.410] Wright v Macadam [1949] 2 KB 744 ......................................................................[17.175], [17.180] Wright v New Zealand Farmers Co-​operative Assoc of Canterbury Ltd [1939] AC 439 ............................................................................................................. [7.425] Wright v Registrar of Titles [1979] Qd R 523 ............................................................................. [7.65] Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [2007] WASC 118 ......................... [3.285] Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 2 All ER 321 ................................. [18.245] Wu v Glaros (1991) 55 SASR 408 ................................................................. [5.110], [5.120], [5.155] Wykes v Samilk Pty Ltd (No 2) [1998] NSW ConvR 56,821 ........................................[14.65], [14.80] Wyllie v Pollen (1863) 3 De GJ & S 596; 46 ER 767 ................................................................. [2.550] Wynsix Hotels (Oxford St) Pty Ltd v Toomey [2004] NSWSC 236 .......................................... [14.335] Wynstanley v Lee (1818) 2 Swan 333; 36 ER 643 .................................................................. [17.215]

Y Xenos v Wickham (1867) LR 2 HL 296 .................................................................................... [8.105] Xenou v Katsaras (2002) 7 VR 335 ........................................................................................ [12.155] Xiao v Perpetual Trustee Co Ltd [2008] VSC 412 ................................................................... [14.335]

Y Yallingup Beach Caravan Park v Valuer-​General (1994) 11 SR (WA) 355 .....................[16.20], [16.40] Yammouni v Condidono [1959] VR 479 .................................................................................. [8.280] Yanner v Eaton (1999) 201 CLR 351; 166 ALR 258 ............................. [1.20], [1.200], [2.35], [6.460] Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171 .............................................. [5.35] Yared v Spier [1979] 2 NSWLR 291 ....................................................................................... [14.265] Yateley Common (Hampshire), Re [1977] 1 WLR 840 ............................................[17.500], [17.505] Yazgi v Permanent Custodians Ltd (2007) NSW Conv R 56-​195 .................................[4.170], [4.240] Yerkey v Jones (1939) 63 CLR 649 ............................................................... [2.520], [4.375], [9.150] Yonge-​Rosedale Developments Ltd v Levitt (1978) 82 DLR (3d) 263 ..................................... [14.440] Young v Clarey [1948] Ch 191 ................................................................................................ [3.260] Young v Hoger (2001) Q ConvR 54-​548 ................................................................................... [4.40] Young v Hoger (2001) Q ConvR 54-​557 ....................................................................[4.205], [4.225] Young v Owners of Strata Plan 3529 [2001] NSWSC 1135 ............. [8.75], [8.80], [13.280], [13.315] Young Rydalmere Credits Pty Ltd (1963) 80 WN (NSW) 1463 .................................................. [5.45] Youssef v Victoria University of Technology [2005] VSC 223 ...................................................... [5.35]

Z Zachariah v Morrow and Wilson (1915) 34 NZLR 885 ...............................................[3.400], [4.260] Zafiropoulos v Recchi (1978) 18 SASR 5 .........................................................................[5.35], [7.90] xcv

Australian Real Property Law

Zanzoul v Westpac Banking Corporation (1995) 6 BPR 4 ........................................................ [7.275] Zapletal v Wright [1957] Tas SR 211 ............................................... [2.220], [2.225], [2.230], [2.240] Zappullo, Re [1967] VR 390 .................................................................................................... [12.80] Zarb v Parry [2012] 1 WLR 1240 ..................................................................................[3.25], [3.360] Zdrojkowski v Pacholczak (1959) 59 SR (NSW) 382 .............................................................. [17.190] Zhuoying Yu v Kunshan Yi [2018] SADC 69 .............................................................................. [5.35] Ziel Nominees Pty Ltd v VACC Insurance Co Ltd (1975) 180 CLR 173 ..................................... [8.130] Zisti v Ryde Joinery Pty Ltd (1997) NSW ConvR 56,372 ........................................................ [14.105] Zobory v FCT (1995) 95 ATC 4215 ......................................................................................... [5.270] Zombolas v LRG Credit & Finance Pty Ltd (1988) V ConvR 54-​302 ........................................... [5.90] Zurcas v Zurcas [2008] VSC 379 ............................................................................................... [5.80]

xcvi

TABLE OF STATUTES COMMONWEALTH Aboriginal Land Grant (Jervis Bay Territory) Act 1986: [6.295] Aboriginal Land (Lake Condah and Framlingham Forest) Act 1987: [6.300] Aboriginal Land Rights (Northern Territory) Act 1976: [6.280], [6.380] Aboriginal and Torres Strait Islander Commission Act 1989: [4.330] Aboriginal and Torres Strait Islander Commission Amendment Act 2005: [4.330] Acts Interpretation Act 1954 s 36: [5.35] Atomic Energy Act 1953: [16.195] Pt I: [16.205] s 5(1): [16.205] s 34: [16.205] s 35: [16.205] s 41: [16.205] s 41(1): [16.205] s 41(3): [16.205] s 42: [16.205] Australian Consumer Law: [1.115], [9.15], [15.220] s 1: [8.90], [9.190] s 2: [8.90], [9.170], [15.220] s 4: [9.165] s 18: [9.155], [9.165], [9.170] ss 20–​22: [7.205] s 20: [7.205], [9.180] s 21: [9.180] s 21(2): [9.180] s 22: [7.205], [9.185] s 23: [9.190] s 24: [9.190] s 25: [9.190] s 29: [9.170] s 30: [1.110], [9.170] s 31: [8.80] s 61: [8.90] s 232: [9.180], [15.220] s 236: [9.180], [15.220]

s 237: [8.80] s 243: [9.180], [15.220] Bankruptcy Act 1924: [1.80] Bankruptcy Act 1966: [2.20] s 58(1): [12.415] s 58(2): [12.415] ss 115–​116: [4.320] ss 120–​123: [4.320] s 121: [7.35], [12.75], [12.370] Commission Amendment Act 2005: [4.330] s 21A(1): [4.330] Commonwealth Places (Application of Laws) Act 1970: [1.80] s 51(i): [1.80] s 51(xii): [1.80] s 51(xvi): [1.80] s 51(xvii): [1.80] s 51(xviii): [1.80] s 51(xx): [1.80] s 108: [1.80] s109: [1.80] Competition and Consumer Act 2010: [1.80], [1.110], [1.310], [4.225], [9.15], [9.30], [9.35], [9.40] Pt IV: [9.30] s 2(2): [9.27], [9.155] s 4: [7.190] s 4(1): [9.40] s 5: [9.27], [9.155] s 6: [9.27], [9.30], [9.155] s 18: [9.25] s 20: [9.25] s 23: [9.25] s 45: [9.40], [9.45], [7.180], [7.190] s 45(5): [7.190], [9.40] s 45B: [7.180], [7.190], [9.40], [9.45] s 45B(2): [9.40] s 45B(3): [9.40] s 45B(9): [9.40], [9.50] s 47: [9.50] s 47(1): [9.50] s 47(8): [9.50] s 47(9): [9.50] s 47(10): [9.50] s 47(11): [9.50] s 50: [9.25] xcvii

s 52: [9.25] s 80: [9.30] s 80A: [9.30] s 82: [9.27], [9.30] s 87: [9.30] s 131: [9.27], [9.155] s 218: [9.27] s 219: [9.27] s 224: [9.27] s 232: [9.27] s 236: [9.27] s 243: [9.27] Sch 2: [1.110], [1.115], [9.15], [9.155] Corporations Act 2001: [2.20], [4.335] s 262: [7.35] s 265: [2.490] s 271: [2.490] s 1047(9): [7.180] s 1055(1): [7.180] Family Law Act 1975: [8.340], [8.355], [8.360], [8.385], [12.305] Pt IV: [12.305] s 4AA: [2.240] s 4AA(1): [8.360] s 4AA(2): [8.360] s 4AA(5): [2.240] s 4AA(51): [8.360] s 74: [8.385] s 78: [8.385] s 79: [5.35], [12.165], [12.345] s 79(4): [8.385] s 86: [12.345] s 87: [12.345] s 90B: [8.360] s 90C: [8.360] s 90D: [8.360] s 90G: [8.360] s 90K: [8.380] s 90SE: [8.385] s 90SL: [2.240], [8.385] s 90SM: [2.240], [8.385], [12.165] s 90UB: [8.360] s 90UC: [8.360] s 90UJ: [8.360] s 90UM: [8.380] s 90UDJ: [8.365] s 234C(4): [12.305] s 234C(5): [12.305] s 234D: [12.305]

Australian Real Property Law

Income Tax Assessment Act 1997 s 108.7: [12.85] Indigenous Affairs Legislation Amendment Act 2008 ss 2–​13: [6.380] Insurance Contracts Act 1984: [8.320] s 50: [8.320] Judiciary Act 1903 s 18: [6.315] s 23(2): [6.425] Marriage Act 1961 s 5: [2.240], [8.340] Marriage Amendment (Definition and Religious Freedoms) Act 2017: [2.240] Matrimonial Causes Act 1959: [8.355] National Consumer Credit Protection Act 2009: [1.115], [7.120] s 14: [7.125] s 17: [7.125] s 29: [7.130] s 35: [7.130], [7.158] s 45: [7.155] s 47(1)(h): [7.155] s 80: [7.158] s 133DB: [7.88] s 186: [7.155] s 274: [7.158] s 275: [7.158] s 288J: [7.158] National Credit Code: [7.88], [7.120], [7.405] s 6(1): [7.205] s 14: [7.135] s 15: [7.135] s 16: [7.135] s 17: [7.135] s 17(15A): [7.88] s 18A: [7.88] s 18B: [7.88] s 31: [7.135] s 45: [7.130] s 72: [7.145] s 76: [7.205] s 76(1): [7.140] s 76(2): [7.140] s 77: [7.140], [7.205], [7.350] s 80(2): [7.150] s 80(2)(b): [7.150]

s 80(3): [7.150] ss 86A–​86D: [7.88] s 88: [7.405] s 88(1): [7.88] National Security Act 1939: [6.425] Native Title Act 1993: [5.35], [6.340], [6.345], [6.355], [6.365], [6.385], [6.390], [6.395], [6.410], [6.415], [6.430], [6.440], [6.460], [6.470], [6.495] Pt 2, div 3: [6.370], [6.410] s 3: [6.340] s 11: [6.415] ss 14–​16: [6.400] s 14: [6.390] s 17: [6.400] s 19: [6.390] s 24BA: [6.370] s 24CA: [6.370] s 24GB: [6.360] s 24GC: [6.360] s 26: [6.375] s 28: [6.375] s 29: [6.375] s 30: [6.375] s 31: [6.375] s 36: [6.375] s 38: [6.375] s 47B: [6.425] s 61: [6.430] s 62: [6.430] s 81: [6.445] s 82: [6.445] s 84: [6.435] s 86B: [6.445] s 87: [6.445] s 169(1): [6.375] s 190A: [6.355] ss 190A–​190C: [6.435] s 190B: [6.355] s 199A: [6.370] s 223: [6.340], [6.460], [6.465], [6.495] ss 228–​232: [6.400] s 232A: [6.365] s 242: [6.425] s 246B: [6.365] Native Title Amendment Act 1998: [6.350], [6.400] s 4(6): [6.390] Native Title Amendment (Indigenous Land Use Agreements) Act 2017: [6.370] xcviii

Northern Territory (Self-​ Government) Act 1978 s 69(4): [16.195] Personal Property Securities Act 2009: [7.30], [7.35] Racial Discrimination Act 1975: [6.315], [6.335], [6.395], [6.495] s 10: [6.315] Seas and Submerged Lands Act 1973: [6.465] Seat of Government (Administration) Act 1910: [6.20] Trade Practices Act 1974: [1.80], [1.85], [1.110], [4.225], [8.90] Pt V: [9.25] s 30: [1.110] s 52: [9.155], [9.160], [9.165] s 52(1): [9.165] s 53A: [1.110] s 74: [8.90]

AUSTRALIAN CAPITAL TERRITORY Administration and Probate Act 1929: [2.20] s 39: [8.15] s 45: [8.10] s 49: [2.20] Sch 6: [2.20] Civil Law (Property) Act 2006: [2.55], [8.65], [14.115] s 103(2): [7.335] s 200: [13.110] s 201: [7.45], [8.105], [14.105], [14.110], [17.125], [18.85] s 201(2): [8.25] s 203: [14.105] s 204: [8.65], [8.105] s 206: [14.385] s 207: [13.55] s 208: [12.370] s 209: [12.75] ss 210–​211: [12.175], [12.185] s 213(1): [12.80] s 213(2): [12.80] s 213(3): [12.80] ss 215–​218: [2.135] s 223: [2.360], [10.135] s 224: [12.65] s 225: [10.110]

Table of Statutes

Civil Law (Property) Act 2006 — cont s 225(a): [2.50] s 225(b): [2.270] s 226: [2.50] ss 239–​240: [2.395] s 243: [12.450] s 244: [12.450] s 301(1)(b): [7.310] s 400: [14.290] s 401: [14.290] s 422: [14.290] s 423: [14.255], [14.320] s 425(1): [14.340] s 426: [14.340], [14.345] s 426(5): [14.340] s 428: [14.350], [14.355] Civil Law (Sale of Residential Property) Act 2003: [8.90] Pt 2: [6.25] s 9: [8.285] s 10: [8.285], [8.290], [8.295] s 11(1)(h): [8.290] s 12(3): [8.300], [8.305] s 14: [8.305] s 22: [8.85] s 23: [8.85] s 28: [8.265] s 29: [8.265] s 30: [8.265], [8.270] s 31A: [8.265] s 32: [8.265] Common Boundaries Act 1981: [16.320] s 2: [16.330] s 4: [16.325] s 4(3): [16.325] s 5: [16.355] s 6: [16.355] s 10(2): [16.325], [16.330] s 10(3): [16.325] s 11: [16.350] s 12: [16.350] s 22(4): [13.345] s 27: [17.365] Fair Trading (Australian Consumer Law) Act 1992: [8.80], [9.15], [9.25], [9.180] Family Provision Act 1969: [8.15] Human Rights Act 2004: [3.30] Imperial Acts (Substituted Provisions) Act 1986 Sch 2, Pt 2: [2.20]

Land (Planning and Environment) Act 1991: [6.25] Land Titles Act 1925: [1.120], [4.30], [8.20], [8.110] Pt 14: [4.65] s 2: [4.55] s 14(1)(a): [4.70] s 14(1)(b): [4.70] s 14(1)(e): [5.25] s 14(1)(f): [3.430], [14.385] s 17: [4.60], [6.170] s 18: [16.125] s 18(2)(b): [4.55] s 30: [5.25] s 43: [4.40] s 43(1): [4.45] s 43(2): [4.45] s 43(2)(a): [4.45] s 43(2)(b): [4.45] s 47: [4.45] s 48(4): [5.235] s 48(5): [5.235] s 48(8): [8.110], [17.125] s 54(1): [12.210] s 54(2): [12.220] s 54(3): [4.60] s 54(4): [4.60] s 55: [4.65], [8.40], [12.70] s 56: [4.55] s 57: [8.105], [14.105], [14.160] s 57(1): [5.10] s 58: [4.105] s 58(1): [4.190] s 58(1)(a): [4.255] s 58(1)(b): [4.285] s 58(1)(c): [4.260] s 58(1)(d): [8.110] s 58(1)(d)(e): [4.295] s 58(1)(f): [4.305] s 58(d): [14.150] s 59: [4.110] s 60: [5.220] s 60(2): [4.110] s 69: [3.05], [3.385], [5.25] ss 70–​72C: [4.60] s 79: [10.100] s 80: [4.490] s 81: [17.335] s 82(1): [14.120] s 83: [4.170] s 84: [7.295] s 86(1): [14.380] s 86(5): [14.380] s 86(6): [14.380] s 87: [14.338] s 88: [14.125] s 91: [14.230] xcix

s 92: [7.80] s 92(2): [17.485], [17.495] s 92A: [5.235] s 93: [7.60] s 94(3): [7.475] s 95: [7.470] s 96: [7.275] s 97: [7.345], [18.35] s 100: [7.85] s 101: [7.370], [17.535] s 103B: [17.125], [17.240] s 103C: [17.40] s 103D: [17.75] s 103E(3): [17.410] s 103G: [4.60], [7.15], [17.470], [17.480] s 104: [5.30], [18.40] s 104(1)(a): [5.25] s 104(2): [5.50] s 104(3): [5.50] s 104(4): [5.65] s 104(4)(c): [5.60] s 104(5): [5.65] s 104A(1): [5.30] s 104A(2): [5.45] s 104B: [5.85] s 105(1): [5.55] s 105(2): [5.90] s 106: [5.35] s 106(1): [5.30] s 107: [5.100] s 107A(1)(b): [5.55] s 107A(2): [5.65] s 107C: [5.80] s 108: [5.45] s 109: [18.82] s 112: [14.230], [14.310] s 117(1): [18.35] s 119(a): [14.165], [14.330] s 119(b): [14.195] ss 119–​120: [14.310] s 120(1)(c): [14.205] s 120(1)(d): [14.170], [14.230] s 124: [4.85] s 124(3): [5.25] s 124(4): [5.25] s 126(2): [12.90] s 127: [12.90] s 135: [8.35] s 143(a): [4.460] s 143(b): [4.460] ss 143–​151: [4.435] s 147(a): [4.470] s 147(b): [4.470] s 152: [4.105], [4.245] s 154: [4.435] s 154(1)(a): [4.440], [4.460]

Australian Real Property Law

Land Titles Act 1925 — cont s 154(1)(b): [4.440] s 154(1)(d): [4.450] s 154(2): [4.470] s 154(3): [4.460] s 154(5): [4.460] ss 154–​155: [4.425] s 155: [4.435], [4.460], [4.465] s 160(6): [4.400] ss 160–​161: [4.400] ss 160–​162A: [4.400] s 180: [12.90] Sch 1: [17.335] Land Titles (Amendment) Act 1995: [1.120], [4.30] Law Reform (Abolitions and Repeals) Act 1996: [2.20] s 3: [2.135] s 5: [14.425] Law Reform (Miscellaneous Provisions) Act 1999: [2.135] Leases (Commercial and Retail) Act 2001: [14.15], [14.90] s 7(2): [14.90] s 12: [14.90] Legislation Act 2001 Pt 1: [16.125], [16.150] s 2: [16.125] Limitation Act 1985: [3.05], [4.480] s 5(a): [3.05], [8.20] s 13: [14.165], [14.400] s 24(1): [3.05] s 33: [3.285] s 43: [3.05] Married Persons Property Act 1986: [8.345] s 3(1): [12.20] Married Women’s Property Act 1935: [8.345] Native Title Act 1994: [6.385], [6.390] s 5: [6.405] s 8: [6.405] s 9: [6.405] Parentage Act 2004 s 39(3): [11.90] Perpetuities and Accumulations Act 1985: [11.20] s 3: [11.20] s 4: [11.15]

s 5: [11.95] s 6: [11.180] s 8(1): [11.95] s 8(3): [11.95] s 8(4): [11.95] s 9: [11.100], [11.180] s 9(1): [11.180] s 10: [11.150], [11.180] s 10(1): [11.180] s 10(2): [11.180] s 11: [11.180] s 15: [11.255] s 15(3): [11.260] s 16: [11.260] s 18: [11.225] Planning and Land Act 2002: [6.25] Real Property Act 1925: [1.120], [4.30], [16.245] Registration of Deeds Act 1957: [2.600] Residential Tenancies Act 1997: [14.15], [15.25], [15.55], [15.60], [15.65], [15.70], [15.80], [15.85], [15.90], [15.95], [15.100], [15.110] s 5: [15.30] s 6: [15.30] s 8: [15.65] s 9: [15.40] s 16: [15.45] s 17: [15.45] s 20: [15.45] s 29: [15.40] s 37: [14.315] s 39: [15.100] s 49: [15.95] s 64A: [15.55] s 65: [15.55] s 68: [15.60] s 73: [15.110] s 78: [15.110] Sch 1: [15.65], [15.70], [15.80], [15.85], [15.90] Sch 1, cl 39: [15.43] Sch 1, cl 54: [15.80], [15.90] Sch 1, cl 55: [15.85] Sch 1, cl 58: [15.85] Sch 1, cl 59: [15.85] Sch 1, cl 60: [15.85] Sch 1, cl 63: [15.80] Sch 1, cl 65: [15.90] Sch 1, cl 70: [15.70] Sch 1, cl 82: [15.65] c

Retirement Villages Act 2012: [15.180], [15.190], [15.200], [15.210], [15.215], [15.225], [15.230], [15.235], [15.250] s 3: [15.230] s 10: [15.200] s 12: [15.190] s 23: [15.230] s 35: [15.210] s 39: [15.240] s 42: [15.210] s 47: [15.225] s 48: [15.225] s 53: [15.215] s 83: [15.230] ss 90–​98: [15.235] s 137: [15.250], [15.255] s 176: [15.345] s 184: [15.300] ss 185–​190: [15.300] s 192: [15.300] s 223: [15.335] s 237: [15.330] Retirement Villages Industry Code of Practice 1999: [15.200], [15.215], [15.225], [15.230] s 13: [15.230] s 13(2): [15.245] s 14: [15.245] s 16: [15.215], [15.225] s 18: [15.215] s 33: [15.345], [15.350] s 34: [15.345], [15.350] Statute Law Amendment Act 2000: [2.135] Trustee Act 1925: [13.195] s 9(1): [12.60] s 27B: [13.245] s 36: [13.260] s 62: [2.495] s 81: [13.205] s 82: [13.225] Unit Titles Act 2001: [13.90] s 7(1): [13.98] s 8: [13.285] s 9: [13.285] s 12: [13.345] s 13: [13.285] s 14: [13.320] s 15: [13.320] s 17: [13.100] s 24: [13.85] ss 34–​37: [13.285] s 46: [13.265]

Table of Statutes

Unit Titles Act 2001 — cont s 47: [13.312] s 49: [13.312] s 58: [13.265] s 81: [13.268] s 87: [13.268] s 128: [13.295] Unit Titles (Management) Act 2011: [13.95] s 10: [13.270] s 17: [13.270] s 19: [13.360] s 24: [12.360] s 49: [13.275] s 59: [13.275] s 66: [13.275] s 73: [13.355] s 74: [13.355] s 106: [13.340], [13.365], [13.370] s 107: [13.365] s 109: [13.340] s 110: [13.340] s 152: [13.390] s 161: [13.385] s 161A: [13.385] Wills Act 1968 s 7(2): [10.110] s 7(2)(c): [2.270] s 27: [2.185]

NEW SOUTH WALES Aboriginal Land Rights Act 1983: [6.155], [6.270], [6.295] s 45(2): [16.160] Aborigines (Amendment) Act 1973: [6.270] Agricultural Tenancies Act 1990: [14.15], [16.100] s 4: [16.100] s 10: [16.100] s 10(1): [16.100] s 10(1)(2): [16.100] s 10(4): [16.100] s 10(5): [16.100] ss 15–​19A: [16.100] Boarding Houses Act 2012 s 5: [15.123] s 5(2): [15.123] s 9: [15.123] s 16: [15.123] s 16(2): [15.123] s 36: [15.123] s 37: [15.123]

s 41: [15.123] s 45: [15.123] Church and School Lands Dedication Act 1880: [6.200] Civil Liability Act 2002 s 72(1): [16.130] Civil Procedure Act 2005: [2.55] s 20: [2.55] s 112(1): [5.20] Sch 5.47[5]‌: [2.55] Coal Acquisition Act 1981 s 5: [16.160] Coal Acquisition Legislation Repeal Act 2007 s 4(a): [16.160] Community Land Development Act 1989: [13.90], [13.95] Conveyancing Act 1919: [2.55], [4.40], [4.550], [5.205], [8.65], [8.105] Pt 7, div 1: [7.325] Pt IV, div 6: [12.455] s 6: [12.225] s 6(1): [4.550], [5.205] s 7(1): [14.115], [16.60], [17.175] s 9: [13.55] s 10: [3.415], [14.385] s 12: [18.295] s 16(1): [10.130] s 17: [2.215], [10.115] s 18: [17.535] s 19: [2.125] s 19(1): [2.180] s 19(3): [4.550] s 19A: [2.125] s 19A(3): [4.550] s 23A: [11.10] s 23B: [7.45], [17.125] s 23B(1): [8.105], [14.105], [14.380] s 23B(2)(c): [14.380] s 23C: [8.25], [17.135], [18.85] s 23D: [8.25], [8.105] s 23D(2): [14.105] s 23E: [8.25] s 24: [12.370] s 25: [12.75] s 26: [12.175], [12.190], [12.195], [12.200], [12.225] ci

s 26(1): [12.175], [12.180], [12.185], [12.195], [12.225] s 26(2): [12.175], [12.180], [12.195], [12.225] s 27: [12.175], [12.190] s 27(1): [12.185] s 29B(1): [10.140] s 29B(2): [10.140] s 35: [12.80] s 36C: [18.270] s 37A: [2.395] s 37B: [2.395] s 38: [8.105] s 38(1): [8.105] s 38(3): [14.105] s 40: [2.600] s 43: [7.80] s 44(1): [9.70] s 44(2): [2.360], [10.135], [12.65] s 44(2A): [12.65] s 46: [17.470] s 47: [17.470] s 47(1): [2.180] s 47(2): [2.180] s 47(3): [2.180] s 50(1): [2.50], [2.270], [10.110] s 50(2): [2.50], [2.55], [3.300] s 52A: [8.285] s 52A(6): [8.290] s 52A(7): [8.290] s 53(1): [2.530] s 53(3): [2.530] s 54A: [8.65], [8.105] s 54A(1): [14.110] s 55(5): [4.550] s 56(3): [4.550] s 60(2): [4.550] s 65: [8.265] s 66F(2): [12.455] s 66G(1): [12.455] s 66G(4): [12.455] s 66H: [12.455] ss 66J–​66O: [8.130] s 66K: [8.310] s 66L: [8.310] s 66M: [8.310] s 66N: [8.310] s 66O: [8.310] ss 66Q–​66W: [8.300] s 66R: [8.285], [8.290] s 66S: [8.300], [8.305] s 66T: [8.305] s 67: [14.115], [16.55], [17.175], [18.190] s 67(5): [17.185]

Australian Real Property Law

Conveyancing Act 1919 — cont s 70: [18.82], [18.300] s 70(1): [18.82] s 70A: [14.285], [18.50] s 74(2): [14.230] s 74: [14.310] s 81(3): [4.550] s 82(2): [4.550] s 84: [7.285], [14.310] s 84(1)(a): [14.165], [14.330] s 84(1)(b): [14.195] s 84(1)(d): [14.330] s 85: [14.310] s 85(1)(a): [14.205] s 85(1)(c): [14.205] s 85(1)(d): [14.170], [14.330], [14.230] s 85(2): [4.550], [14.330] s 86(3): [4.550] s 87A: [4.60], [17.460], [18.45] s 88(1): [17.45], [18.95], [18.175] s 88(1)(a): [18.65], [18.95] s 88(1)(c): [18.195] s 88(1A): [17.45] s 88(3): [18.175] s 88(3)(a): [18.25], [18.195] s 88(3)(b): [18.25] s 88A: [17.315] s 88A(1A): [17.40] s 88A(3): [4.550] s 88AB: [4.60] s 88AB(1): [17.460] s 88AB(a): [17.460] s 88B: [17.265], [18.150], [18.205] s 88B(2)(c1): [17.400] s 88B(3): [17.75] s 88B(3)(c): [3.430], [18.205] s 88B(3AA): [17.400] s 88BA(1): [17.380] s 88BA(3): [18.20] s 88BB: [17.365] s 88BB(1): [17.365] s 88E: [18.20] s 88EA: [17.460] s 88F: [18.45] s 88F(2): [18.45] s 88K: [17.280], [17.315] s 88K(2)(a): [17.290] s 89(1): [17.395], [17.430], [17.520], [18.215] s 93: [7.360] s 96A: [12.150] s 97(3): [4.550] s 99: [12.150] s 100: [7.335]

s 102: [7.250] s 103(2): [7.335] s 106: [7.285] s 106(17): [4.550] s 107(12): [4.550] s 109(1)(c): [7.310] s 109(2): [7.405] s 111: [7.405] s 111A: [7.460] ss 116–​141: [14.15] s 117: [14.290] s 118: [14.290] s 119: [14.290] s 120: [14.255], [14.320] s 120A(3): [14.45] s 120A(5): [14.85] s 122: [14.385] s 123: [14.255], [14.320] s 127(1): [14.65], [14.250] s 128: [14.295] ss 128–​131: [14.335] s 129: [2.160] s 129(1): [14.340], [14.345] s 129(2): [14.350] s 129(8): [14.340] s 129(6)(d): [14.340] s 129(6)(e): [14.340] s 129(10): [14.340] s 130: [14.355] s 132: [14.265] s 133: [14.250] s 133B(1): [14.255] s 134: [14.55] s 146: [17.525] s 164: [2.490], [14.115] s 164(1)(b): [2.550] s 164(1A): [2.490] s 177: [17.357] s 177(2): [17.357] s 177(4): [17.357] s 177(5): [17.357] s 177(7): [17.357] s 177(8): [17.357] s 177A: [14.425] s 178: [17.345] s 179: [17.25] s 181A(1): [17.335] s 181B(1): [17.365] s 181B(3): [17.365] s 184: [4.130] s 184A–​184J: [2.395], [2.600] s 184D: [2.620] s 184G: [2.620] s 184G(1): [2.625] Sch 8: [17.335] Conveyancing (Amendment) Act 1930 s 88(4): [17.45] cii

Conveyancing Amendment (Law of Support) Act 2000: [17.357] Conveyancing (Covenants) Amendment Act 1986: [18.45] Conveyancing and Law of Property Act 1898 Pt IV: [13.110] s 8: [2.125] s 26(2): [2.120] s 37: [13.115] s 37(7): [13.115], [13.120] s 37(8): [13.120] ss 38–​47: [13.180] s 46: [13.115] s 48: [13.170] ss 48–​53: [13.175] s 54: [13.120] s 55: [13.110], [13.120] ss 57–​60: [13.110] s 61: [13.120] s 68: [13.180] s 69: [13.180] s 111A: [7.460] Conveyancing Legislation Amendment (E-​Plan) Act 2002: [4.40] Criminal Assets Recovery Act 1990 s 10A: [5.35] s 15(3): [5.35] Crown Land Management Act 2016: [6.35], [16.160] Pt 5: [6.175] s 3(1): [16.160] s 13.1: [3.45] s 13.2: [16.160] s 13.3(1): [16.260] s 13.3(2): [16.260] s 13.3(4): [16.255] s 13.3(5): [16.255] s 13.3(6): [16.255] Crown Lands Act 1861: [6.200] Crown Lands Act 1884: [16.160], [16.190] Crown Lands Act 1989: [16.255] s 170: [3.45], [3.50] s 172: [16.255] s 172(4): [16.260] Crown Lands Alienation Act 1861: [16.160], [16.190]

Table of Statutes

Crown Lands Consolidation Act 1913: [6.80], [6.110] s 136K: [6.90] Crown Lands (Continued Tenures) Act 1985: [6.165] Crown Lands (Continued Tenures) Act 1989: [16.255] Dividing Fences Act 1991: [16.320] s 4(b): [16.330] s 4(d): [16.330] s 6: [16.350] s 7: [16.325], [16.350] s 9: [16.355] s 11: [16.325], [16.335] s 11(1): [16.355] s 14: [16.330] s 15: [16.330] s 17: [16.335] s 20: [13.345] s 26: [16.320] Electronic Conveyancing (Adoption of National Law) Act 2012: [1.120] Encroachment of Buildings Act 1922: [3.405], [16.295] s 2: [16.300] s 3: [16.300] s 3(1): [16.295] s 3(2): [16.300] s 3(3): [16.300] s 4(1): [16.305] s 5(1): [16.305] s 9: [16.310] Environmental Planning and Assessment Act 1979: [4.335], [18.45] s 3.16: [18.260] Fair Trading Act 1987: [8.80], [9.25], [9.180] Forfeiture Act 1995: [12.435] s 3: [12.435] s 4: [12.435] s 5(2): [12.435] s 5(3): [12.435] Holiday Parks (Long-​term Casual Occupation) Act 2002: [15.160] Imperial Acts Application Act 1969 s 8: [2.125], [2.360], [10.145] s 8(1): [14.435]

s 18: [14.315] s 32(1): [14.200] s 36: [2.20] s 37: [2.20] Interpretation Act 1987 s 21(1): [16.125] s 21(e): [16.125] Land and Property Information (Authorised Transactions) Act 2016: [4.45] Landlord and Tenant Act 1899: [14.15] s 2AA: [14.315] s 8: [14.330] ss 8–​10: [14.335] Land Sales Act 1964 s 13: [8.330] s 14: [8.330] Law Reform (Law and Equity) Act 1972 s 5: [2.365] Limitation Act 1969: [3.05], [3.65], [3.260] s 10(1): [3.55] s 11(1): [3.200], [3.205], [3.330], [14.165], [14.400] s 11(2): [3.365] s 11(2)(a): [3.70] s 11(2)(b): [3.265] s 11(3): [3.280] s 23: [3.220] s 24: [3.230] s 27(1): [3.45] s 27(2): [3.45], [3.70], [14.165], [14.400] s 28: [3.65] s 29: [3.175] s 30: [3.180] s 31: [3.185], [3.255] s 32(1): [3.230] s 33: [3.260] s 34(1)(a): [3.240] s 34(1)(b): [3.235] s 34(2): [14.70] s 34(2)(a): [3.240] s 34(2)(b): [3.235] s 36: [3.200] s 37: [3.210] s 37(1): [3.210] s 37(2): [3.215] s 37(3): [3.215] s 38(1): [3.65] s 38(2): [3.305] s 38(3): [3.290] s 38(5): [3.270] ciii

s 39: [3.260] s 39(a): [3.360] s 41: [3.260] s 42(1)(a): [3.265] s 47: [3.205] s 48: [3.205] s 51(1): [3.280] s 52: [3.280] s 54: [3.260], [3.365] s 54(1): [3.365] s 54(4): [3.365] s 54(6): [3.370] s 54(7): [3.370] s 55(4): [3.285] s 56: [3.280] s 65: [3.35], [3.260] s 67: [3.195] Sch 4: [3.260] Local Government Act 1919: [4.330], [16.125] Local Government Act 1993: [4.335] s 3: [16.240] s 45(1): [4.335] Local Government (Covenants) Amendment Act 1986: [18.45] Local Land Services Act 2013 Pt 6, div 6: [16.365] Married Persons (Equality of Status) Act 1996: [8.345], [12.20] Married Persons (Property and Torts) Act 1901: [12.20] Married Women's Property Act 1893: [12.20] Mining Act 1992: [16.160], [16.200] s 4: [16.160] Minors (Property and Contracts) Act 1970: [10.140] Pt II: [10.140] National Electronic Conveyancing (Adoption of National Law) Act 2012: [4.40] Native Title (New South Wales) Act 1994: [6.385] s 4: [6.405] ss 10–​12: [6.405] s 15: [6.405]

Australian Real Property Law

Perpetuities Act 1984: [11.20] s 3(2): [11.95] s 3(3): [11.180] s 4(1): [11.20] s 5(1): [11.15] s 7(1): [11.95] s 8: [11.100], [11.180] s 8(1): [11.180] s 9: [11.150] s 9(4): [11.180] s 10: [11.190] s 14(2): [11.255] s 14(4): [11.260] s 15: [11.260] s 17: [11.225] Petroleum (Onshore) Act 1991 s 3: [16.200] s 6: [16.200] Powers of Attorney Act 2003 s 52: [2.605] Probate Act 1890: [14.10] Probate and Administration Act 1898 s 44: [2.360], [8.15] s 61B(7): [2.20] Property, Stock and Business Agents Act 1941 s 20: [8.272] Real Estate of Intestates Distribution Act 1862: [14.10] Real Property Act 1862: [4.25] Real Property Act 1900: [2.605], [4.30], [4.40], [4.170], [4.330], [4.420], [4.550], [5.35], [5.205], [8.105] Pt 6A: [3.405], [8.20] Pt 8A: [18.215] Pt 7B: [5.230] Pt 11: [4.65] s 3: [4.150], [14.125], [18.30] s 3(1): [16.125] s 3(1)(a): [4.65], [16.150] s 3A: [4.40], [4.50] s 12(1)(a): [4.70] s 12(1)(b): [4.70] s 12(1)(d): [4.395], [4.400] s 12(1)(e): [5.25] s 12(1)(f): [5.25] s 12(1)(i): [3.430], [14.385] s 12(3): [4.400] s 12(3)(a)–​(d): [4.400]

s 12(3)(b): [4.400] s 12(3)(c): [4.400] s 12(3A)(a)–​(c): [4.400] s 12(3A)(b): [4.400] s 12(3A)(c): [4.400] s 12AA: [4.40] s 13A: [6.170] s 14(2): [4.495], [16.125] s 14(2)(b): [4.55] s 14(4): [4.495] s 28A: [4.515] s 28B: [4.515] s 28C: [4.525] s 28E: [4.540] s 28EA: [4.515], [4.525], [4.540] s 28I: [4.565] s 28J: [4.565] s 28P(1)(d): [4.515] ss 28M–​28MH: [4.515] s 28S(1): [4.515] s 28T: [4.515] s 28V: [4.515] s 28X: [4.40] s 31A: [4.470] s 31A(2): [4.490] s 31A(4): [4.345] s 31B: [4.45], [4.50] s 31B(1): [4.45] s 31B(3): [4.40], [4.45] s 32(1): [4.45], [4.50] s 32(3): [4.55] s 33(1): [4.45] s 33(5): [4.45] s 34(1): [5.235] s 36(1): [5.240] s 36(4): [5.235], [5.240] s 36(5): [5.235], [5.240], [8.110] s 36(9): [8.110] s 36(11): [8.110], [17.125] s 40(1B): [4.195] s 41: [8.105], [14.105], [14.160] s 41(1): [5.10] s 42: [4.335] s 42(1): [4.105], [4.190], [4.195], [4.225] s 42(1)(a): [4.255] s 42(1)(a1): [4.285], [4.355], [17.260] s 42(1)(b): [17.260], [17.270], [17.475] s 42(1)(c): [4.260] s 42(1)(d): [4.295], [8.110], [14.145] s 42(3): [4.335] s 43: [5.240] s 43(1): [4.110], [5.205] civ

s 43A: [2.455], [5.105], [5.205], [5.225], [5.240], [14.145] s 43A(1): [5.220], [5.225] s 43A(2): [5.220] s 45(1): [4.110] s 45(2): [4.110] s 45B(1): [3.405] s 45D(1): [3.405] s 45D(2): [3.405] s 45D(2A): [3.405] s 45D(3): [3.45], [3.405] s 45D(4): [3.405] s 45D(6): [3.405] s 45E(4): [3.405] s 46: [17.240] s 46(1): [4.60] s 46A: [17.75], [17.240] s 46C: [3.405] s 47: [17.240] s 47(1): [17.125] s 47(6): [17.410] s 47(7): [3.430], [17.445], [18.205] s 47(10): [18.205] s 48: [17.365] s 49: [4.415] s 49(2): [17.420] s 49(3): [17.420] s 53: [7.300] s 53(1): [4.55], [14.125] s 53(3): [4.170] s 53(4): [7.295] s 54(1): [14.380] s 54(3): [14.380] s 54(5): [14.380] s 55: [14.338] s 56(2): [7.15], [17.485], [17.495] s 56A: [5.235], [7.90] s 56C: [4.160], [4.225], [7.75] s 57: [7.80], [7.405] s 57(1): [7.60] s 58: [17.530] s 58A: [7.405] s 60: [7.275] s 61: [7.345] s 65(1): [7.370] s 74: [7.85] s 74B: [5.25] s 74F: [3.35], [5.25] s 74F(1): [4.75], [5.30] s 74F(2): [5.40] s 74F(3): [3.405] s 74F(5): [5.50] s 74F(6): [5.55] s 74G: [5.30], [5.165] s 74H(1)(a): [5.55] s 74H(1)(b): [5.60]

Table of Statutes

Real Property Act 1900 — cont s 74H(4): [5.65] s 74H(5): [5.65] s 74H(5)(a): [5.65] s 74H(5)(g): [5.60] s 74I: [5.30] s 74I(1): [5.70] s 74J: [5.100] s 74K: [5.90] s 74K(2): [5.70] s 74L: [5.50] s 74LA: [5.70] s 74MA: [5.90] s 74M(1)(a): [5.85] s 74O: [5.80] s 74O(2)(a)(b): [5.80] s 74P: [5.45] s 74Q: [5.45], [5.50] ss 81I–​81L: [4.415] s 81I: [18.215] s 81J(1)(e): [18.215] s 82(1): [4.85] s 82(2): [4.85], [5.25] s 82(3): [5.25] s 88F(4): [18.45] s 88H(1): [18.45] s 88I(1): [18.45] s 88I(3): [18.45] s 88I(4): [18.45] s 93: [8.35] s 97: [12.370] s 100(1): [12.220], [12.225] s 100(2): [4.55], [4.60], [10.105] s 100(3): [10.105] s 101: [8.40] s 101(1): [4.65], [12.70] s 105: [5.20] s 109: [4.335] s 112: [7.470], [7.475] s 118: [4.105], [4.245] s 118(1)(d): [3.65], [4.150] s 120: [4.435], [4.460], [4.465] s 120(1): [4.435], [4.465] s 120(1)(b): [4.450] s 120(1)(c): [4.445] s 120(2): [4.460] ss 128–​135: [4.435], [4.460] s 129ff: [4.465] s 129(1): [4.435], [4.465] s 129(1)(c): [4.450] s 129(1)(d): [4.445] s 129(1)(e): [4.440] s 129(2): [4.470] s 129(2)(b)(ii): [4.470] s 129(2)(e): [4.470] s 129(2)(f)(i): [4.470] s 129(2)(f)(ii): [4.470] s 129(2)(g): [4.470]

s 129(3): [4.470] s 129A: [4.485] s 129B: [4.470] s 129B(3): [4.435] s 130: [4.470] s 131: [4.460] s 131(2): [4.480] s 132(2A): [4.480] s 133: [4.460] s 134: [4.425] s 136: [4.400] s 137: [4.400] s 138: [7.225] s 138A: [4.460] s 164: [5.205] s 196: [4.460] Real Property Act 2000: [7.460] Real Property Amendment (Compensation) Act 2000: [4.430], [4.460] Real Property (Covenants) Amendment Act 1986: [18.45] Real Property (Possessory Titles) Amendment Act 1979: [3.405] Real Property and Conveyancing Legislation Amendment Act 2009: [4.335], [4.470] s 129B: [4.485] Real Property Regulation 2003 reg 6: [12.210] Real Property Regulation 2008 cl 7], [Sch 3: [5.50] Registration of Deeds Act 1825: [2.600] s 8: [2.120] Residential (Land Lease) Communities Act 2013: [15.155], [15.160], [15.165], [15.170], [15.175] Pt 5: [15.170] Pt 8: [15.175] s 4: [15.160] s 21: [15.165] s 26: [15.165] s 27: [15.165] Residential Parks Act 1998: [15.155] s 3: [15.160] s 6A: [15.160] cv

Residential Tenancies Act 1995 s 56(1): [15.60] Residential Tenancies Act 2010: [14.15], [15.25], [15.50], [15.55], [15.60], [15.65], [15.70], [15.75], [15.80], [15.85], [15.90], [15.95], [15.100], [15.105], [15.110] s 4: [15.23] ss 5–​6: [15.30] s 14: [15.40] s 15: [15.40] s 17: [15.40] s 24: [15.50], [15.65] s 25: [15.50] s 31A: [15.40] s 35: [15.55] s 35A: [15.75] s 36: [15.23] s 37: [15.23] s 38: [15.55] s 39: [15.55] s 40: [15.55] s 41: [15.55] s 44: [15.60] s 44(5): [15.60] s 51(2): [15.90] s 52: [15.90] s 52(1A): [15.80] s 59: [15.65] s 63: [15.80] s 63(4): [15.80] s 64: [15.85] s 65: [15.85] s 65C: [15.85] s 81: [15.100] ss 84–​107: [15.95] s 136: [15.23] s 138: [15.23] s 162: [15.45] s 162(2): [15.45] s 415: [15.43] Retail Leases Act 1994: [14.14], [14.90] s 3: [14.90] s 5: [14.90] s 44(1): [14.360] s 44(2): [14.360] s 44(3): [14.360] s 44(5): [14.360] Retirement Villages Act 1999: [15.180], [15.190], [15.200], [15.210], [15.215], [15.220], [15.225], [15.230], [15.235], [15.240], [15.245], [15.250], [15.345]

Australian Real Property Law

Retirement Villages Act 1999 — cont Pt 12A: [15.340] s 5: [15.200] s 13: [15.220] s 18: [15.215], [15.225] s 18(5): [15.225] ss 19–​20: [15.225] s 23: [15.240] s 24A: [15.210] s 51(3): [15.230] s 54: [15.230] s 58: [15.255] s 58A: [15.225], [15.235], [15.255] s 58A(2): [15.255] s 58A(2)(c)(a): [15.255] s 58B: [15.255] s 70: [15.230] s 73: [15.230], [15.245] s 92: [15.255] s 93: [15.250], [15.255] ss 103–​107: [15.245] ss 122–​128: [15.350] s 123: [15.345] s 129: [15.270] s 133: [15.270] s 134: [15.270] s 135: [15.270] s 136: [15.270] s 167: [15.325] ss 180–​181: [15.330] s 181: [15.190] s 182B: [15.210], [15.310] s 193: [15.340]

Strata Schemes Management Act 1996 s 5: [13.365] s 5(2): [13.320] s 16: [13.268] s 26: [13.275] s 27: [13.275] s 28QH: [13.380] s 33(1): [12.268] s 33(2): [12.268] s 33(3): [12.268] s 44: [13.345], [13.365] s 47: [13.365] s 49: [13.295], [13.365] s 59: [13.355] s 62: [13.360] s 121: [12.285] Sch 1: [13.370] Sch 2: [13.268], [13.270]

Roads Act 1993 s 145: [16.270]

Strata Titles (Covenants) Amendment Act 1986: [18.45]

Status of Children Act 1996 s 6(2): [11.90] Strata Schemes Development Act 2015: [13.95] s 9: [13.85] s 10: [13.85] s 10(1)(c): [13.100] s 23: [12.285], [12.312] s 28: [12.312] s 49: [12.295] ss 76–​83: [13.98] s 90: [12.290] s 106: [12.285] s 107: [12.285] s 130: [13.385] s 135: [13.390] s 153: [13.385] s 178: [13.385] Sch 2: [12.290] Sch 7: [13.385]

Strata Schemes Management Act 2015: [13.95] s 62: [12.265] s 120: [12.340] s 122: [12.340] s 196: [12.310] s 201: [12.310] s 207: [12.310] s 198A: [12.310] s 211B: [12.310] Sch 1: [12.310], [12.340] Sch 2: [12.265] Strata Schemes Management Amendment (Building Defects Scheme) Act 2018: [12.310]

Succession Act 2006 s 3: [2.140] s 4: [2.140], [2.270], [10.110] s 8: [8.30] s 38: [2.185] s 136: [2.20] Ch 3: [8.15] Ch 4: [8.10] Supreme Court Act 1970 s 57: [2.365] s 68: [1.275], [18.245], [18.250] s 79: [2.55] Trustee Act 1925: [13.195] s 9(1): [12.60] s 27B: [13.245] s 36: [13.260] cvi

s 48: [2.600] s 62: [2.495] s 77: [7.340] s 81: [13.205] s 82: [13.225] s 82A: [13.225] s 100: [2.20]

NORTHERN TERRITORY Administration Act 1969 s 52: [2.360] Administration and Probate Act 1969: [2.20], [8.10] s 52: [8.15] s 62: [8.10] Sch 6, Pt 4: [2.20] Business Tenancies (Fair Dealings) Act: [14.90] s 5(1): [14.90] s 6: [14.90] s 60(1): [14.360] s 60(2): [14.360] s 60(3): [14.360] s 60(5): [14.360] Caravan Parks Act: [15.155], [15.160], [15.170], [15.175] Pts 4–​8: [15.170] Pt 13: [15.175] s 6: [15.160] Code of Practice: [15.225], [15.230] cl 17: [15.225] cl 21: [15.225] cl 23: [15.225] cl 37: [15.230], [15.245] cl 40: [15.245] Consumer Affairs and Fair Trading Act: [8.80], [9.25], [9.180] Control of Roads Act 1953 s 7: [16.270] Crown Lands Act: [6.35] s 46: [6.175] Crown Lands Amendment Act (No 3) 1980 s 8(1): [6.30] Encroachment of Buildings Act s 3: [16.300] s 5: [16.295] ss 5–​12: [16.295] s 6(1): [16.300] s 6(2): [16.300]

Table of Statutes

Encroachment of Buildings Act — cont s 7(1): [16.305] s 8: [16.305] s 11: [16.310] s 13: [16.290] s 14(1): [16.290] s 14(2): [16.290] Family Provision Act: [8.15] Fences Act 1972: [16.320] s 6: [16.325] s 6(1): [16.320] s 7: [16.325] s 8: [16.330] s 8(6): [16.330] s 9: [16.330] s 10: [16.335] s 14: [16.350] s 15: [16.355] s 15(3): [16.355] s 20: [16.340] s 22: [13.345] Interpretation Act 1978 s 17: [16.125] Land Title Act 2000: [1.120], [4.30], [4.430], [4.565], [8.110], [12.90] Pt 6, div 7: [4.65] s 4: [4.60], [14.125], [17.485], [17.495] s 5: [7.15] s 6: [4.40] s 6(1): [4.45] s 6(3): [4.45] s 6(4): [4.45] s 17(1): [4.400] s 17(1)(a): [4.395] s 17(1)(b): [4.400] s 17(3): [4.400] s 17(3)(a): [4.400] s 17(3)(b): [4.400] s 17(5): [4.400] s 18: [5.25] s 19: [4.400] ss 20–​23: [4.400] s 24: [4.70] s 30: [4.45], [4.50] s 30(1): [4.50] s 31: [4.305], [4.325], [5.30] s 35: [4.305], [4.325] s 38: [4.305], [4.325] s 39: [4.50], [4.100], [4.105] s 40: [4.100] s 44(1): [4.45], [5.135] s 44(2): [4.45], [5.135]

ss 48–​49: [4.60] s 50: [6.170] s 56: [4.55], [10.100] s 57(1): [12.70], [12.210] s 57(2): [12.210] s 58: [4.60], [12.70] s 59: [12.370] s 65: [14.120], [14.125] s 70: [14.338] s 71(1): [14.380] s 71(2): [14.380] ss 71(3)–​(5): [14.380] s 71(4): [14.380] s 73: [4.75] s 74: [7.80], [17.495] s 76: [7.60] s 77: [5.135] s 79: [5.235] s 80: [7.85], [7.275], [7.295], [17.530] s 81: [7.470] s 83: [7.370], [17.535] s 85: [7.345] s 91: [17.240] s 95: [17.75] s 104: [17.125] ss 106–​114: [4.60] ss 106–​117: [4.60] s 112: [18.195] ss 118–​124: [4.60], [17.470] ss 125–​127: [4.85] s 125: [12.90] s 126(1): [5.25] s 137: [5.50] s 138: [5.30], [5.35], [18.40] s 138(1)(c): [5.40] s 139: [5.55] s 140: [5.30] s 140(1): [5.55] s 140(3): [5.65] s 140(3)(b): [5.55] s 140(3)(c): [5.60] s 140(3)(e): [5.60] s 141: [5.85] s 142: [5.75] s 142(3): [5.75] s 142(5): [5.75] s 143: [5.90] s 144: [5.90], [5.100] s 145: [5.80] s 146: [5.45] s 179: [8.110], [17.125] s 180: [5.235] s 181: [5.235] s 183: [4.320], [5.235] s 184: [4.75], [5.10], [8.105], [14.105], [14.160] cvii

s 185: [17.240] s 186: [5.235] s 187: [12.395] s 188: [4.105] s 188(1): [4.190] s 188(2): [110] s 188(2)(c): [110] s 189(1)(a): [4.355] s 189(1)(b): [4.295], [8.110], [14.150] s 189(1)(c): [4.285] s 189(1)(d): [4.255] s 189(1)(f): [4.260] s 189(1)(e): [4.255] s 189(3): [4.285] s 191IV: [5.90] ss 192–​196: [4.435] s 192(1)(a): [4.440] s 192(1)(b): [4.450] s 192(1)(b)(c): [4.445] s 192(1)(c): [4.450] s 192(1)(e): [4.455] s 192(2): [4.425], [4.460] s 193: [4.440], [4.465] s 193(1)(a): [4.450] s 193(1)(a)(b): [4.445] s 193(1)(b): [4.450] s 193(1)(c): [4.450] s 192(1)(d): [4.450] s 194: [4.460] s 195: [4.470] s 195(1)(a): [4.470] s 195(1)(b): [4.470] s 195(1)(d): [4.470] s 195(1)(f): [4.470] s 197: [5.35] s 198: [3.05], [3.385], [5.25], [8.20] Law of Property Act 2000: [2.20], [4.565], [8.65], [8.105], [10.130], [11.110] Pt 5, div 2: [12.455] Pt 11: [11.20] s 4: [14.115], [17.175] s 6: [2.360], [10.145] ss 9–​11: [8.25] s 9(1): [7.45], [8.105], [14.105], [14.380], [17.125] s 9(2)(b): [14.380] s 10: [17.135], [18.85] s 11(2): [14.105] s 12: [18.275] s 13(3): [12.370] s 14(3): [12.370] s 16: [3.415], [14.385] s 19(1): [2.20] s 20: [2.20] s 21: [2.20]

Australian Real Property Law

Law of Property Act 2000 — cont s 22: [2.125], [2.180] s 28: [2.215], [10.115] s 29: [2.180] s 30(1): [10.130], [10.145] s 30(5): [10.130] s 31: [10.110] s 31(1)(a): [2.270] s 31(1)(b): [2.50] s 32: [10.140] s 32(2): [10.140] s 33(2): [12.15] s 34: [12.75] s 35: [12.175], [12.190] s 35(1): [12.195] s 35(2)(c): [12.195] s 36: [12.175], [12.190] s 45: [12.260] s 47(2): [14.105] s 56: [18.275] s 62: [8.65], [8.105], [14.110] s 81: [7.475] s 88B(2)(a): [17.40] s 88B(2)(b): [17.40] s 90(1): [7.460] s 96: [7.310] s 99: [7.335] s 103: [12.150] ss 114–​152: [14.15] s 115(3): [14.45] s 115(7): [14.85] ss 117–​119: [14.310] s 117(1): [14.165], [14.330] s 117(1)(c): [14.195] s 117(2): [14.195] s 119(1): [14.230] s 119(1)(a): [14.205] s 119(1)(c)(i): [14.205] s 119(1)(d)(i): [14.170] s 119(1)(d)(ii): [14.230] s 121: [14.310] s 125: [14.425] s 128(1): [14.385] s 129: [14.290] s 130: [14.290] s 131: [14.290] ss 132–​133: [14.320] s 132(b): [14.255] s 133: [14.255] s 134(1): [14.255] s 134(1)(b): [14.265] s 135: [14.250] ss 136–​143: [14.335] s 136(2): [14.295] s 137: [2.160] s 137(1): [14.315] s 137(2): [14.350] s 137(3): [14.345] ss 137–​138: [14.340], [14.345]

s 138(6)(b): [14.340] s 139: [14.355] s 144: [14.65], [14.250] s 144(1): [14.60] s 152: [14.435] s 155: [17.40] s 157(1): [17.335] s 162: [17.355] ss 163–​164: [17.280] s 164(3)(b): [17.290] s 168: [18.20] s 170.: [18.300] s 171: [14.285], [18.50], [18.82], [18.315] s 177: [17.395], [17.410], [17.430] s 182: [18.295] s 184: [11.20] s 185: [11.15] s 187: [11.95], [11.110] s 188: [11.115] s 189: [11.100], [11.115] s 190: [11.115] s 191: [11.205] s 192: [11.205] s 196: [11.255] s 196(5): [11.260] s 197: [11.260] s 199: [11.225] s 201: [11.10] s 208: [2.395] s 209: [2.395] s 216(2)(d): [12.80] s 221: [2.125] Sch 3: [17.335] Sch 4: [2.125] Limitation Act 1981 s 6(4): [3.50] s 12(1)(d): [4.480] s 14: [14.165], [14.400] Local Government Act 2008 s 185: [16.270] s 186: [16.270] Married Persons (Equality of Status) Act s 3(1)(2): [12.20] Married Women's Property Act: [8.345] Minerals (Acquisition) Act s 2: [16.195] s 3: [16.195] Pastoral Land Act: [14.15] Perpetuities Act 1994: [11.20] Petroleum Act 1984 s 5: [16.200] s 6: [16.200] cviii

Real Property Act: [4.30], [6.30] Real Property (Amendment) Act (No 2) 1993 s 48A: [4.305] s 56B(2): [4.305] Residential Tenancies Act 1999: [14.15], [15.25], [15.45], [15.55], [15.60], [15.65], [15.70], [15.75], [15.80], [15.85], [15.90], [15.95], [15.100], [15.110] s 3: [15.25] s 4: [15.110] s 5: [15.23], [15.30] s 6: [15.30] s 19: [15.40] s 25: [15.40] s 29: [15.45] s 35: [15.55] s 41: [15.55] s 41(3): [15.43] s 42: [15.60] s 47: [15.80] s 48: [15.90] s 51: [15.80], [15.90] s 54: [15.70] s 57: [15.80] s 58: [15.80] s 59: [15.85] s 60: [15.85] s 63: [15.85] s 66: [15.65] s 68: [15.65] s 74: [15.30] s 99A: [15.75] s 100: [15.75] s 100A: [15.95] s 104: [15.100] s 106: [14.315] Retirement Villages Act 1995: [15.180], [15.200], [15.210], [15.215], [15.230] s 3: [15.200], [15.340] s 12(6): [15.210] s 13: [15.350] s 13(1): [15.345] s 13(6): [15.230] s 14: [15.305] ss 15–​20: [15.305] s 21: [15.305] s 23: [15.305] s 36: [15.210] Sch 2: [15.215] Retirement Villages Regulations 1995: [15.255], [15.330], [15.345] cl 24: [15.330]

Table of Statutes

Retirement Villages Regulations 1995 — cont cl 37(2)(d): [15.255] cl 39: [15.345] cl 40: [15.345] Sch 2: [15.255], [15.330], [15.345]

QUEENSLAND

Status of Children Act 1979 s 4(1): [11.90]

Administration and Probate Act 1958 Pt IV: [8.15]

Trustee Act: [13.195] s 13(1): [12.60] s 50A: [13.120], [13.205] s 69: [13.110], [13.115], [13.120], [13.175], [13.180] Unit Titles Act s 11: [13.290] s 43: [13.310] s 63: [13.270] s 64: [13.270] s 79: [13.270] s 94: [13.365] Unit Titles Schemes Act s 10: [13.85] s 14: [13.385], [13.390] s 15: [13.385], [13.390] s 18: [12.290], [13.100] s 19: [12.295] s 20: [13.85], [13.98] s 25: [12.265] s 30: [12.265], [12.268] s 32: [12.285], [12.320] s 33: [12.285] s 34: [12.312], [12.360] s 45: [12.300] s 50: [12.285] s 78: [12.270] s 87: [12.268] s 90: [12.275] s 92: [12.268], [12.275] s 93: [12.275] s 94: [12.355] s 95: [13.365], [13.370] s 96: [12.340] Validation of Titles and Actions Act: [6.385] s 3: [6.405] ss 5–​8: [6.405] s 11: [6.405] Water Act 1992 s 12: [16.255] s 13: [16.255] Wills Act 2000 s 3: [2.270] s 6: [2.270], [10.110] s 37: [2.185]

Aboriginal Land Act 1991 s 40D: [6.380] Acquisition of Land Act 1967 s 5: [17.275] s 6: [17.275]

Acts Interpretation Act 1954 s 35C(1): [5.45] s 36: [16.125] Auctioneers and Agents Act 1971: [8.272] s 14 [ 8.272] Biosecurity Act 2014 Pt 2: [16.365] Body Corporate and Community Management Act 1997: [12.305], [13.95] s 30(7): [12.312] s 31: [12.265] s 37: [12.295] s 62: [12.270] s 72: [13.390] s 73: [13.390] s 78: [13.385] s 87: [12.265] ss 87–​114: [12.360] s 90: [12.268] ss 102–​112: [12.275] s 129: [13.370] ss 132–​140: [12.312] s 206: [12.300] s 231: [13.380] s 232: [13.380] s 236: [13.380] Body Corporate and Community Management (Standard Module) Regulation 1997 reg 27–​38: [12.270] reg 95: [12.355] Building Act 1975 246L–​246U: [18.260] Carriage of Goods by Land Act 1962: [8.90] Civil Proceeding Act s 8: [1.275] Constitution Act 1867 s 33: [14.435] Consumer Credit Act 1995: [7.210] cix

Crown Lands Alienation Act 1860: [16.170] Crown Lands Alienation Act 1868: [16.170] Dividing Fences Act 1953: [16.320] Electronic Conveyancing National Law 2013: [4.40] Fair Trading Act 1989: [8.80], [9.25], [9.180] Fauna Conservation Act 1974: [1.200], [6.460] Forestry Act 1959 s 61J: [4.60] Forestry and Land Title Amendment Act 2001: [4.60] Greenhouse Gas Storage Act 2009: [4.185] Land Act 1910: [2.35], [6.350], [6.425] Land Act 1962: [2.35], [6.350], [6.425] Land Act 1972: [6.167] Land Act 1994: [6.35] s 9(1): [16.210] s 9(2): [16.210] s 10: [16.215], [16.220] s 13(4): [16.255] s 95: [16.270] s 127: [16.215] s 13A(1): [16.255] s 240E: [6.175] s 9: [16.240] s 10: [16.240] s 13A: [16.260] s 13B: [16.260] Sch 6: [16.210] Land Sales Act 1984 s 22: [12.305] Land Title Act 1994: [1.120], [3.260], [3.400], [4.30], [4.30], [4.40], [4.60], [4.215], [4.535], [8.110], [12.90], [13.90] Pt 2, div 4: [4.70] Pt 6, div 6: [4.65] Pt 7A: [5.230] s 3(d): [4.40] s 8: [4.40] s 8(1): [4.45]

Australian Real Property Law

Land Title Act 1994 — cont s 10(3): [4.80] s 11: [12.285] s 11A: [4.225], [4.470], [7.75] s 11A(2A): [4.225] s 11A(2B): [4.225] s 11A(1)(b): [4.225] s 11A(2): [4.225] s 11B: [4.225], [4.470], [7.75] s 12: [8.110] s 15: [4.395], [4.400] s 15(1)(a): [4.395], [4.400] s 15(1)(b): [4.400] s 15(2)(b): [4.400] s 15(3): [4.400] s 15(6)(a): [4.400] s 15(7): [4.400] s 15(8): [4.400] s 17 [ 5.25],: [5.80] s 19: [4.400] ss 19–​24: [4.70] s 27: [4.45] s 28: [4.50] s 28(2): [4.325] s 29: [5.30] s 29(2): [4.325] s 32: [4.50] s 34: [4.325] s 34(2): [4.325] s 36: [13.100] s 37 [4.100,4.50],: [12.285] s 38: [4.100], [4.105] s 42(1): [4.40], [4.45], [5.135] s 42(2): [4.40], [4.45], [5.135] s 44: [12.290] s 46: [12.290] s 48: [6.170] ss 49–​49D: [13.85] s 55: [4.55], [10.100] s 56(1): [12.210] s 56(2): [12.70], [12.210] s 57: [12.70], [13.98] s 57(1): [4.60] s 59: [12.370] s 59(1): [12.370] ss 60–​65: [12.285] s 64: [4.75], [14.120] s 65: [4.75] s 66: [7.295] s 68: [14.335] s 69: [14.380] s 69(1): [14.380] s 69(2): [14.380] s 71: [4.75] s 72: [7.15] s 73: [7.80] s 74: [7.60]

s 75(1): [5.135] s 75(2): [5.135] s 77: [5.235] s 78: [7.230], [7.300] s 78(2): [7.275] s 78(2)(c): [7.345] s 79: [7.470] s 80(2): [7.85] s 81: [7.370] s 82: [17.125], [17.170], [17.205], [17.240] s 83: [17.240] s 86: [17.75] s 87: [7.475] s 89: [17.40] s 90(1): [17.410] ss 97A–​97DA: [4.60] s 97E: [17.25], [17.460] ss 97E–​97L: [4.60] ss 97E–​97M: [17.470] s 99: [3.400], [8.20] s 103: [3.400] s 104: [3.400], [5.25] s 107: [3.400] s 107(2): [3.400] s 108: [3.400] s 108A: [3.400] s 108B: [3.400] s 109: [12.90] ss 109–​111: [4.85] s 110(1): [5.25] s 110(2): [5.25] s 110(3): [5.25], [12.90] s 110(4): [5.25], [12.90] s 111: [8.35] s 112: [8.35] s 114: [4.65], [12.70] s 121: [5.50] s 122: [5.30], [5.35], [18.40] s 122(1)(a): [5.35] s 122(1)(b): [5.25] s 122(2): [5.35] s 122(3): [5.35] s 123: [5.55] s 124: [5.30] s 124(1): [5.55] s 124(2): [5.65], [5.230] s 124(2)(b): [5.55] s 124(2)(c): [5.60] s 124(2)(e): [5.60] s 124(5): [5.35] s 125: [5.85] s 126: [5.75] s 126(2): [5.75] s 126(4): [5.75] s 127: [5.90] s 128: [5.90], [5.100] s 129(1): [5.80] s 129(2): [5.80] s 129(3): [5.80] cx

s 130: [5.45] ss 138–​152: [5.230] s 140: [5.230] s 141: [5.230] s 141(2): [5.230] s 154(1): [4.60] s 155(2)(b): [4.395] s 161: [8.110] s 176: [17.125] s 177: [5.235] s 178: [5.235] s 180: [4.320] s 181: [4.75], [5.10], [8.105], [14.105] s 183: [5.235] s 184: [4.105] s 184(1): [4.190] s 184(2): [4.110] s 184(2)(b): [4.110] s 185(1): [17.155] s 185(1)(a): [4.355], [4.380] s 185(1)(b): [4.75], [4.295], [8.110], [14.150] s 185(1)(c): [4.285], [17.250] s 185(1)(d): [3.400] s 185(1)(e): [4.255] s 185(1)(f): [4.255] s 185(1)(g): [4.260] s 185(1)(i): [4.185] s 185(1A)(a): [4.225] s 185(1A)(b): [4.225] s 185(3): [4.285], [17.155], [17.250] s 188: [4.430], [4.440] s 188(1)(a): [4.440] s 188(1)(b): [4.445], [4.450] s 188(1)(c): [4.445], [4.450] s 188(1)(d): [4.450] s 188(1)(e): [4.455] s 188(2): [4.425], [4.460] s 188A: [4.430], [4.440], [4.465] s 188A(1)(a): [4.445], [4.440], [4.450] s 188A(1)(b): [4.445], [4.450] s 188A(1)(c): [4.450] s 188B: [4.460] s 188C: [4.480] s 188D: [4.430] ss 188–​190: [4.435] s 188AA: [4.440] s 189: [4.470] s 189(1)(a): [4.470] s 189(1)(b): [4.470] s 189(1)(b)(e): [4.470] s 189(1)(e): [4.470]

Table of Statutes

Land Title Act 1994 — cont s 189(1)(f): [4.470] s 189(1)(g): [4.470] s 189(1)(i): [4.470] s 189(1)(j): [4.470] s 189(1)(k): [4.470] s 189(1)(ab): [4.470] s 189A: [4.485] ss 189A(2)–​(5): [4.470] s 190: [4.460] s 191: [5.35] Limitation of Actions Act 1974: [3.05], [3.260] s 5(1): [3.200], [3.330] s 5(2): [3.280] s 5(3): [3.280] s 5(4): [3.70] s 6: [3.45] s 6(1): [3.55] s 6(4): [3.45] s 10(6)(b): [3.220] s 13: [3.45] s 14(1): [3.65], [3.70] s 14(2): [3.175] s 14(3): [3.180] s 15(1): [3.185], [3.255] s 15(2): [3.190], [3.255] s 15(3): [3.70], [3.190] s 15(4): [3.195] s 16(1): [3.200] s 16(2): [3.210] s 16(3): [3.210] s 16(4): [3.215] s 17: [3.230] s 18: [14.70] s 18(1): [3.235] s 18(2): [3.240] s 18(2A): [3.240] s 18(3): [3.255] s 19(1): [3.65] s 19(2): [3.290] s 20: [3.260] s 21: [3.260], [3.360] s 22: [3.270] s 24: [3.35] s 24(1): [3.260] s 25: [3.230], [14.165], [14.400] s 26(1): [3.265] s 27(1): [3.205] s 27(2): [3.205] s 29: [3.280] s 29(2)(b): [3.280] s 35: [3.260] s 35(1)(a): [3.365] s 35(4): [3.365] ss 35–​37: [3.365] s 36(1): [3.365] s 36(2): [3.365]

s 37: [3.260] s 37(1): [3.370] s 37(5): [3.370] s 37(6): [3.370] s 38: [3.280] s 38(2): [3.285] Local Government Act 2009 s 60: [16.270] Manufactured Homes (Residential Parks) Act 2003: [15.155] Married Women's Property Act 1890 s 8: [12.20] s 9: [12.20] Mineral Lands Act 1872 s 6: [16.170] s 8(1): [16.170] s 8(2): [16.170] Mineral Resources Act 1989 s 8(3): [16.170] Native Title (Queensland) Act 1993: [6.385] s 5: [6.405] ss 10–​12: [6.405] s 14: [6.405] Natural Resources and Other Legislation Amendment Act 2005 s 11A: [4.225] s 189A: [4.225] s 11B: [4.225] Natural Resources and Other Legislation Amendment Act 2010 ss 182–​183: [4.225] Neighbourhood Disputes (Dividing Fences and Trees) Act 2011: [16.320] s 7: [16.325] s 10: [16.320] s 20: [16.325], [16.350] s 21: [16.325], [16.350] s 24: [16.340] s 24(5): [16.340] s 28: [16.355] s 31: [16.325], [16.355] s 35: [16.330] s 36(b): [16.330] s 36(c): [16.330] s 37: [16.335] s 94: [13.345] Perpetuities and Accumulations Act 1972: [11.20] cxi

Petroleum Act 1923 s 2: [16.200] s 9: [16.200] s 10: [16.200] Property Law Act 1958 s 6: [4.510] s 124: [2.160] Property Law Act 1974: [1.120], [2.20], [7.405], [8.65], [8.105], [10.130], [14.15], [16.100] Pt 5, div 2: [12.455] Pt 7: [7.230] Pt 14: [11.20] s 2: [11.15] s 3: [14.115], [16.60], [17.175] s 3(1): [2.125], [2.360] s 5(1)(b): [4.560] s 7: [10.145] s 10: [17.125] s 10(1): [7.45], [8.105], [14.105], [14.380] s 10(2)(b): [14.380] s 11: [8.25], [17.135], [18.85] s 12: [8.25] s 12(2): [14.105] s 13: [18.275] s 13(1): [18.275] s 14(3): [12.370] s 17: [3.415], [14.385] s 20(1): [2.20] s 20(3): [2.20] s 20(4): [2.20] s 21: [2.20] s 22: [2.125], [2.180] s 25: [13.55] s 28: [2.215], [10.115] s 29: [2.180] ss 29(1)–​(3): [2.180] s 30: [13.30] s 30(1): [10.130], [10.145] s 30(4): [10.130] s 31: [10.110] s 31(1)(a): [2.270] s 31(1)(b): [2.50] s 32: [10.140] s 32(2): [10.140] s 33: [8.345], [12.20] s 33(2): [12.15] s 34: [12.75] s 35: [12.175], [12.190] s 35(2)(b): [12.195] s 36: [12.175], [12.190] s 43: [12.260] s 45(2): [14.105] s 47: [14.105] s 53: [18.50], [18.82]

Australian Real Property Law

Property Law Act 1974 — cont s 53(1): [18.300] s 53(2A): [14.285] s 55: [18.275] s 55(1): [18.275] s 55(5): [18.275] s 55(6): [18.275] s 59: [8.65], [8.105], [14.110] s 60: [8.265] s 61: [8.295] s 63: [8.320] s 64: [8.130], [8.320] s 68: [8.295] s 72: [8.335] s 73: [8.330] s 75: [8.330] s 78: [7.250] s 82: [7.110] s 83(1)(c): [7.310] s 84C(1)(e): [18.220] s 85(1): [7.460] s 93: [12.150] s 97: [7.250] s 99(2): [7.335] s 102(3): [14.45] s 102(5): [14.85] s 103: [14.425] s 105(1)(a): [14.165], [14.330] s 105(1)(b): [14.195] ss 105–​107: [14.310] s 106: [14.230] s 106(1): [14.195] s 106(1)(a): [14.195] s 106(1)(b): [14.195] s 107(a): [14.205] s 107(c): [14.205] s 107(d): [14.170], [14.230], [14.330] s 115(1): [14.385] s 116: [14.290] s 117: [14.290] s 118: [14.290] s 119: [14.255], [14.320] s 121: [14.255] s 121(1): [14.265] s 122: [14.250] s 123: [14.295] ss 123–​128: [14.335] s 124(1): [14.340], [14.345] s 124(2): [14.350] s 124(6)(c): [14.340] s 124(6)(d): [14.340] s 124(7): [14.340] s 124(9): [14.340] s 125: [14.355] s 129(1): [14.65], [14.250] s 138: [14.435]

s 139: [14.435] ss 153–​167: [14.15], [16.100] s 155: [16.100] s 176: [7.15], [17.480], [18.35] s 177: [17.535] s 178: [17.25] s 179: [17.355], [17.360] s 180(1): [17.280] s 180(3)(a): [17.290] s 181: [17.395], [17.430], [17.520] s 181(1): [18.220] s 181(2): [18.220] s 181(3): [18.240] s 181(4): [18.225] s 182: [16.300] ss 182–​194: [16.295] s 184(1): [16.295] s 185(1): [16.300] s 185(2): [16.300] s 186(1): [16.305] s 187(1): [16.305] s 191: [16.310] s 196: [16.290] s 197(1): [16.290] s 197(2): [16.290] s 198A(1): [17.205], [17.345] s 198A(2): [17.345] s 199: [18.295] s 200: [12.395], [12.400], [18.295] s 207(1): [11.20] s 209: [11.95] s 209(1): [11.120] s 210: [11.125] s 210(4): [11.120] s 212: [11.100], [11.125] s 213: [11.195] s 214: [11.125] s 215: [11.225] s 216: [11.10] s 217(1): [11.265] s 218: [11.260] s 219: [11.255] s 219(2): [11.260] s 228: [2.395] s 229: [2.395] s 234A: [17.185] s 237(1): [2.530] s 237(6): [2.530] s 239: [14.115], [16.55], [17.175], [18.190] ss 241–​249: [2.395], [2.600] ss 250–​254: [4.535] s 346: [2.490] s 346(1)(b): [2.550] Sch 6: [2.125], [2.360] cxii

Property Law Amendment Act 1999 s 4: [2.125], [2.360] s 5: [2.125], [2.360] Queensland Building and Construction Commission Regulation 2018: [12.310] Sch 2: [12.310] Sch. 6: [12.310] Queensland Coast Islands Declaration Act 1985: [6.315], [6.335], [6.495] Real Property Act 1861: [3.260], [4.25] s 44: [17.250] s 185(1)(g): [4.260] Real Property Act 1877 s 11: [4.295] Residential Tenancies and Rooming Accommodation Act 2008: [14.15], [15.25], [15.50], [15.55], [15.60], [15.65], [15.70], [15.80], [15.85], [15.90], [15.95], [15.100], [15.110], [15.115], [15.120], [15.135], [15.140], [15.145], [15.150], [15.155], [15.160], [15.165], [15.170], [15.175] Ch 2: [15.170] Ch 4: [15.115], [15.135] s 3: [15.23] s 15: [15.120] s 26: [15.30] ss 29–​41: [15.30] s 45: [15.160] s 58: [15.40] s 61: [15.40], [15.165] s 62: [15.40] s 65: [15.40] ss 91–​93: [15.55] s 92: [15.43], [15.60] s 95: [14.425] s 99: [15.55] s 111: [15.45] s 112: [15.45] s 119: [15.45] s 123: [15.45] ss 156–​162: [15.50] s 183: [15.65] s 184: [15.70] s 185: [15.80], [15.90] s 188: [15.90] s 192: [15.65] s 214: [15.85]

Table of Statutes

Residential Tenancies and Rooming Accommodation Act 2008 — cont s 215: [15.85] s 217: [15.80] s 228: [15.175] s 231: [15.110] s 232: [15.110] ss 249–​250: [15.140] ss 257–​265: [15.140] ss 266–​275: [15.145] s 277: [14.315] s 336: [15.95] s 350: [15.100] ss 368–​377: [15.150] s 400: [15.110] s 402: [15.110] s 416: [15.110]

Statute Law (Miscellaneous Provisions) (No 2) Act 1992 s 29: [14.425]

Retail Shop Leases Act 1994: [14.15], [14.90] s 5: [14.90] s 5A: [14.90]

Supreme Court Act 1995 s 244: [18.245], [18.250]

Retirement Villages Act 1999: [15.180], [15.190], [15.200], [15.210], [15.215], [15.230], [15.240], [15.250], [15.350] s 5: [15.200] s 7: [15.200] s 43: [15.215] s 46: [15.240] s 64: [15.335] s 68: [15.335] s 90: [15.255] s 90A: [15.250] s 90B: [15.250] s 98: [15.245] s 99: [15.245] s 114: [15.190], [15.330] s 116: [15.210], [15.310], [15.330] s 120: [15.210] s 127: [15.230] s 130: [15.230] s 131: [15.245] s 134: [15.340] ss 135–​151: [15.340] s 154: [15.350] s 167: [15.345] ss 167–​171: [15.345] s 168: [15.280] s 190: [15.280] Stamp Act 1894: [4.130] Status of Children Act 1978 s 6(2): [11.90]

Stock Route Management Act 2002 Pt 6: [16.365] Succession Act 1981: [2.185], [8.10] Pt 3: [8.10] Pt 4: [8.15] s 8: [10.110] s 8(1): [2.270] s 9: [8.30] s 33K: [2.185] s 45: [2.360], [8.15] s 65: [12.80] Sch 2, Pt 2: [2.20], [8.10]

Survey and Mapping Infrastructure Act 2003 s 62: [16.260] s 63: [16.255] s 99(1): [16.260] s 99(2): [16.255] Sustainable Planning Act 2009 s 245: [4.335] Trusts Act 1973: [13.195] s 7A: [13.200], [13.250] s 15(1): [12.60] s 32: [12.260], [13.245] s 32(a): [13.250] s 33(1): [13.225] s 69: [2.495] s 94: [13.205] Water Rights Act 1895: [1.100]

SOUTH AUSTRALIA Aboriginal Land Trusts Act 1966: [6.270] Aboriginal Land Trusts Act 2013: [6.270] Acts Interpretation Act 1915 s 4: [16.125] s 48: [14.435] Adelaide Parklands Act 2005: [6.10] Administration and Probate Act 1919: [2.20], [2.360] Pt 3A: [8.10] s 45: [2.360] s 46: [2.360], [8.15] cxiii

s 72G(1)(e): [2.20] s 72G(e): [8.10] Appraisers Act and Auctioneers Act Repeal Act 1980: [8.270] Community Titles Act 1996 s 10: [12.265] s 13: [13.100] s 13(3): [13.98] s 19: [13.320], [12.345] s 19(4): [13.365] s 20: [12.290] s 22: [12.85] s 23: [12.285] s 24: [12.285] s 28: [12.285] s 28(6): [12.312] s 34: [13.370] s 37: [12.295] s 39: [13.365] s 39(a): [13.365] s 43: [13.365] s 52: [13.390] s 64: [13.385] s 75: [12.265] s 75(1): [12.360] s 76: [12.265] s 81: [12.270] s 82: [12.265], [12.270] s 91(1): [12.340] s 91(2): [12.340] s 94(4): [12.270] s 101: [12.312], [12.340] s 103(10): [12.360] s 114: [12.355] Compulsory Acquisition of Land Act 1925: [4.310] Consumer Credit Act 1972: [7.210] Consumer Transactions Act 1972: [14.425] Control of Waters Act 1919] s 5: [16.255] Crown Land Management Act 2009: [6.35] s 34: [6.175] Development Act 1993: [1.125] s 4: [17.365] s 57: [1.125] Dog Fence Act 1946: [16.365] Electronic Conveyancing National Law 2013: [4.40]

Australian Real Property Law

Encroachments Act 1944: [16.295] s 2: [16.300] s 4(1): [16.295] s 4(2): [16.300] s 4(3): [16.300], [16.305] s 5(1): [16.305] s 6(1): [16.305] s 10: [16.310] Environment Protection Act 1993 s 101: [1.125] Estates Tail Act 1881: [2.125] ss 250–​266: [2.125] Excessive Rents Act 1962: [15.60] Fair Trading Act 1987: [8.80], [9.25], [9.180] Family Relationships Act 1975 s 6(1): [11.90] s 6(2): [11.90] Fences Act 1975: [16.320] s 5: [16.325] s 5(3): [16.355] ss 5–​7: [16.320] s 8: [16.355] s 8(3): [16.330] s 9: [16.335] s 12: [16.330], [16.355] s 12(2): [16.330], [16.350] s 12(6): [16.325], [16.350] s 12(8): [16.330] s 14: [16.340] s 18: [13.345] s 21: [16.320] Forest Property Act 2000 s 3A: [4.60] s 5: [4.60] s 6: [4.60] s 7: [4.60], [17.460] Inheritance (Family Provision) Act 1972: [8.15] Land and Business (Sale and Conveyancing) Act 1994 s 5: [8.300] s 5(7): [8.305] s 5(8): [8.305] s 6: [8.330] s 7: [8.285], [8.290] s 15: [8.290] s 24A–​H: [8.265] s 24A: [8.265] s 24A(2): [8.265] s 24J: [8.265]

s 24K: [8.265] s 24M: [8.270] s 24N: [8.265] s 24O: [8.265] Landlord and Tenant Act 1936: [14.15] Pt 2: [14.425] s 4: [14.330], [14.335] s 5: [14.335] s 7: [14.335] s 9: [14.335] s 10: [14.340], [14.345] s 11: [14.350] s 12: [14.355] s 12(4): [14.255] s 12(5): [14.340] s 12(6): [14.340] s 47: [14.255], [14.320] s 50: [14.290] Law of Property Act 1838: [1.70] Law of Property Act 1936: [1.120], [8.65], [8.105], [10.130] Pt 6: [1.115], [11.20] Pt 6, div 2: [11.210] Pt 8: [12.445] s 6: [4.565] s 6(1): [11.135] s 6(3): [11.135] s 7: [14.115], [16.60], [17.175] s 10: [10.110] s 10(a): [2.270] s 10(b): [2.50] s 12: [13.55] s 13: [3.415], [14.385] s 15: [18.290] s 22: [17.25] s 24C: [12.75] s 25: [10.130] s 26: [8.65], [8.105] s 26(1): [14.110] s 28: [17.125] s 28(1): [7.45], [8.105], [14.105], [14.380] s 28(2)(c): [14.380] s 29: [17.135], [18.85] ss 29–​31: [8.25] s 30(2): [14.105] s 34: [18.270] s 36: [14.115], [16.55], [17.175], [18.190] s 38: [17.535] s 40(3): [12.370] s 41: [8.105] s 41(3)–​(5): [14.105] s 41(4): [14.290] s 41A: [17.40] cxiv

s 41AA: [8.105] s 44(2): [7.335] s 47(1)(c): [7.310] ss 54–​55: [12.150] s 55A: [7.405] s 55A(2): [7.165] s 55B(3): [7.335] s 56: [4.565] s 59(1): [11.20] s 59(2): [11.20] s 60: [11.210] s 60A(1): [11.210] s 60A(2)(3): [11.210] s 61: [11.130] s 61(1): [11.20] s 62: [11.130] s 62(1): [11.130] s 62(2): [11.130] s 62(4): [11.130] s 62(5): [11.130] s 86: [2.395] s 87: [2.395] s 92: [12.20] ss 92–​111: [8.345] s 117: [2.490], [2.530] s 117(1)(b): [2.550] Law of Property (Perpetuities and Accumulations) Amendment Act 1996: [11.20] Limitation of Actions Act 1936: [3.05] s 3(1): [3.70], [3.280], [3.330] s 4: [3.45], [14.400] s 6: [3.65], [3.70] s 7: [3.175] s 8: [3.180], [3.265] s 9: [3.185], [3.255] s 10: [3.230] s 15: [3.235], [14.70] s 16: [3.240], [14.70] s 17: [3.255] s 18: [3.260], [3.360] s 20: [3.270] s 21: [3.365] s 21(b): [3.370] s 22: [3.195] s 24: [14.165] s 25: [3.280] s 27: [3.260] s 28: [3.35] s 32: [3.205] s 32(1): [3.205] s 32(1)(a): [3.200] s 33: [3.365] s 35: [3.205] s 35(f): [3.230] s 42: [3.365]

Table of Statutes

Limitation of Actions Act 1936 — cont s 44: [30365] s 45: [3.280] s 45(3): [3.280] s 48: [3.280] Local Government Act 1999 s 208(1): [16.270] s 208(2): [16.270] Maralinga Tjarutja Land Rights Act 1984: [6.290] Mining Act 1971] s 6: [16.175] s 16: [16.175] Native Title (South Australia) Act 1994: [6.385], [16.125] s 31: [6.405] ss 32–​36: [6.405] s 38: [6.405] Northern Territory Land Act 1872: [6.70] Pastoral Land Management and Conservation Act 1989: [6.35] Petroleum and Geothermal Energy Act 2000 s 4(1): [16.200] s 5(1): [16.200] Pitjantjatjara Land Rights Act 1981: [6.290], [6.300] Real Property Act 1858: [4.25] Real Property Act 1886: [4.30], [4.440], [7.65], [8.110], [10.05], [10.50], [14.285], [16.270] Pt 7A: [8.20] Pt 13A: [5.230] Pt 19AB: [4.525] s 3: [4.65], [14.125], [16.125], [16.150] s 6: [4.565] s 27: [4.495], [16.125] ss 27–​38: [4.495] s 37: [4.100] s 39: [5.25] s 47: [4.45] ss 47–​49: [4.50] ss 47–​51A: [4.45] s 48: [4.45], [4.50] s 49: [4.45], [4.50] s 51B: [4.40], [4.45] ss 51B–​51D: [4.45] s 51C: [4.45]

s 56: [5.235], [8.110] s 56(3): [5.235] s 57: [8.110], [17.125] s 67: [5.10], [8.105], [14.105], [14.160] s 69: [4.190] s 69VIII: [8.110] s 69(a): [4.105], [9.160] s 69(b): [4.250], [4.430] s 69(c): [4.260] s 69(d): [4.285] s 69(e): [4.255] s 69(f): [3.400], [4.290] s 69(h): [4.295], [14.155] s 69(i): [4.305] s 69II: [4.250] s 70: [4.105] s 71: [4.310] s 71(d): [4.350], [4.355] s 71(e): [4.350], [4.355] s 74: [4.60], [12.220] s 75: [4.55], [10.105] s 80A: [3.400] ss 80A–​80I: [3.400] s 80F: [5.25] s 80F(3): [3.400] s 80G: [3.400] s 80H: [3.400] s 81: [17.40], [17.125], [17.240] s 84: [17.205], [17.255] s 90B: [17.400], [17.410] s 90C: [17.75] s 91: [6.170] s 93: [4.45] s 96: [17.240] s 97: [18.35] s 111: [10.100] s 115A: [4.490] s 115A(a): [4.530] s 115A(b): [4.530] s 116: [14.120], [14.125] s 117: [4.170] s 118: [7.295] s 119: [14.155] s 120: [14.380] s 121: [14.380] s 122: [14.380] s 123: [14.380] s 124: [14.310] s 124(1): [14.165], [14.330] s 124(b): [14.195] s 125: [14.310] s 125(b): [14.205] s 125(c): [14.170], [14.230] s 126: [14.338] s 128B:17.485],: [17.495] s 129: [7.15] cxv

s 132: [7.60], [7.80] s 133: [17.530] s 134: [7.475] s 136: [4.470], [5.65] s 136(2): [5.60] s 137: [7.275], [7.300] s 139: [7.85] s 140: [7.345] ss 143–​144: [7.370] s 149: [7.65] s 151: [14.285] s 152: [14.305] s 162: [4.85], [5.25] s 163: [12.90] s 164: [12.90] ss 175–​187: [4.65] ss 176–​178: [8.35] s 178: [8.35] s 186: [4.110] s 187: [4.110] s 188: [4.65], [8.40], [12.70] s 191: [5.25], [5.30], [5.65], [18.40] s 191(a): [5.50] s 191(b): [5.30], [5.55] s 191(c): [5.65] s 191(d): [5.90] s 191(e): [5.75], [5.100] s 191(f): [5.75] s 191(h): [5.85] s 191(j): [5.45] s 191(k): [5.80] ss 201–​205: [4.435] s 203: [4.440], [4.445], [4.450], [4.460] s 205: [4.460] s 207: [4.110] ss 207–​219: [4.435] s 208: [4.460], [4.465] s 209: [4.485] s 211: [4.470] s 212: [4.470] s 214: [4.470] s 215: [4.480] s 216: [4.470], [4.475] s 220(a): [4.70] s 220(b): [4.70] s 220(c): [4.70] s 220(d): [4.70] s 220(f): [4.395], [4.400] s 220(g): [5.25] s 223(1B)(4): [13.100] s 246: [8.110] s 249(1): [4.355] s 249(2): [4.355] s 251: [3.400] s 262: [14.230], [14.310] Real Property (Registration of Titles) Act 1945: [4.530]

Australian Real Property Law

Registration of Deeds Act 1935: [2.395], [2.600] s 9: [2.605] Residential Parks Act 2007: [15.155], [15.160], [15.165], [15.170], [15.175] s 5: [15.160] s 6(2): [15.175] s 50: [15.170] s 66: [15.170] s 114: [15.165] Residential Tenancies Act 1978: [1.130], [15.25], [15.110] s 4: [15.110] Residential Tenancies Act 1995: [14.15], [15.25], [15.55], [15.60], [15.65], [15.70], [15.75], [15.80], [15.85], [15.90], [15.95], [15.100], [15.105], [15.110], [15.115], [15.150] Pt 3: [15.23] Pt 8, div 3: [15.23] Pt 8, div 4: [15.23] s 3: [15.120] s 3(1): [15.30] s 5: [15.30] s 5(2): [15.23], [15.30] s 24: [15.110] s 48: [15.40] s 49: [15.40] s 55: [15.43], [15.55] s 56(1): [15.60] s 56(2): [15.60] s 56(3): [15.60] s 56A: [15.55] s 58A: [15.55] s 60: [14.425] s 61: [15.45] s 61(3): [15.45] s 65: [15.23], [15.65] s 66: [15.23] s 68(1)(a): [15.80], [15.90] s 68(3): [15.85] s 69(1)(a): [15.90] s 69(1)(b): [15.80] s 69(1)(c): [15.80] s 71: [15.23], [15.70] s 72: [15.65] s 80: [15.95] s 87: [15.23] s 89A: [15.23], [15.105] s 90: [15.23], [15.75] s 93: [15.23], [15.100] s 95: [14.315] s 99: [15.23]

s 100: [15.45] s 101: [15.45] ss 103–​105A: [15.115] s 105A: [15.150] s 110(b): [15.85] Residential Tenancies (Domestic Violence Protections) Amendment Act 2015: [15.105] s 87(1): [15.105] Residential Tenancies (Rooming House) Regulations 1999: [15.135], [15.140], [15.145] reg 7: [15.145] Sch 2: [15.135], [15.140] Retail and Commercial Leases Act 1995: [14.15], [14.90] s 3(1): [14.90], [14.180] s 4(2)(a): [14.90] Retirement Villages Act 1987: [15.180], [15.190] s 9(4A): [4.340] ss 19(3)–​(6): [4.345] s 19(4): [4.345] Retirement Villages Act 2015: [15.230], [15.255] s 6: [15.340] s 21(8): [15.310] s 27(8): [15.255] s 41: [15.230] s 50(4): [15.310] Retirement Villages Act 2016: [15.180], [15.200], [15.210], [15.215], [15.225], [15.230], [15.245], [15.335], [15.345] s 6: [15.340] s 6(3): [15.225] s 13: [15.225] s 14: [15.225] s 20(1): [15.225] s 20(1): [15.240] s 20(3): [15.225] s 21(3): [15.215] s 23: [15.225] s 24: [15.225] s 25: [15.225] s 26(8): [15.245] s 26(1)(b): [15.245] s 27: [15.210], [15.330] s 27(8): [15.250] s 32: [15.335] s 33: [15.230] cxvi

s 40: [15.345], [15.350] s 40(3): [15.350] s 40(5): [15.350] s 41: [15.225] s 45: [15.200], [15.345] s 46: [15.285] s 56: [15.210] Rights in Water and Irrigation Act 1914 s 2: [16.260] s 15: [16.260] Settled Estates Act 1880: [13.110] s 2: [13.115] s 3: [13.120] ss 4–​14: [13.180] s 15: [13.170] ss 15–​21: [13.175] s 22: [13.120] ss 23–​27: [13.105] s 29: [13.120] ss 44–​45: [13.180] Summary Offences Act 1953 s 17D: [14.315] Supreme Court Act 1935: [18.245] s 30: [1.275], [18.245], [18.250] Trustee Act 1936: [13.195] s 16(1): [12.60] s 25A: [13.225] s 25B: [13.225] s 25C: [13.260] s 34A: [2.495] s 59B: [13.205] War Service Settlement Agreement Act 1945: [6.155] Water Resources Act 1976: [16.255] Water Resources Act 1990: [16.255] Water Resources Act 1997: [16.255], [17.350] Wills Act 1936] s 4: [10.110] s 4(2)(b): [2.270] s 12(2): [8.30] s 31: [2.185]

TASMANIA Aboriginal Lands Act 1995: [6.307]

Table of Statutes

Acts Interpretation Act 1931 s 46: [16.125] Administration and Probate Act 1935: [2.360] s 4: [2.360], [8.15] s 45: [8.10] Pt V: [8.10] Auctioneers and Estate Agents Act 1959 s 13: [8.270] s 19: [8.265] Australian Consumer Law (Tasmania) 2010: [9.25], [9.180] Boundary Fences Act 1908: [16.320] Pt IV: [16.330] s 4: [16.330] s 8: [16.325] s 9(1): [16.325] s 10: [16.330] s 13: [16.330] s 23: [16.350] s 23(1): [16.355] s 26: [16.325] s 37(2): [16.340] s 43: [16.320] s 44: [13.345] Conveyancing and Law of Property Act 1884: [2.395], [8.65], [8.105] s 2: [14.115], [16.60], [17.175] s 5: [2.490], [14.115] s 5(1)(b): [2.550] s 5(1A): [2.490] s 6: [14.115], [16.55], [17.175], [18.190] s 9A: [18.205] s 10: [14.290] ss 10–​12: [14.15] s 11: [14.290] s 12: [14.290] ss 15-​16: [14.15] s 15(1): [14.340], [14.345] s 15(2): [14.350] s 15(3): [14.355] s 15(6): [14.340] s 15(7): [14.340] s 15(8): [14.340] ss 15–​16: [14.15] s 16: [14.255], [14.320] s 19: [7.285] s 20: [7.285] s 21(1)(c): [7.310] s 27(2): [7.335] s 28: [7.250]

s 30: [12.150] s 34A(1): [17.335] s 34B: [17.365] s 35(1): [2.530] s 35(5): [2.530] s 36: [8.65], [8.105] s 36(1): [14.110] s 38: [7.110] s 40: [2.395] s 41: [2.395] s 56: [17.525] s 57: [17.535] s 60: [8.25] s 60(1): [7.45], [8.105], [14.105], [14.380], [17.125] s 60(1)(c): [14.380] s 60(2): [17.135], [18.85] s 60(4): [14.105] s 61: [18.270] s 61(2): [2.180] s 62: [10.100] s 62(1): [12.370] s 62(2): [12.370] s 62(4): [12.75] s 63: [8.105] s 65: [2.190], [2.200] s 70: [7.80] s 71: [18.115], [18.300] s 71A: [18.50] s 71A(2): [14.285] s 79: [10.140] s 79(2): [10.140] s 80: [10.100] s 80(1): [2.50], [2.270], [10.110] s 80(2): [10.130] s 81: [10.130] s 82: [14.385] s 83: [14.55] ss 84A: [17.520] s 84C: [17.395], [17.430], [17.520] s 84C(1): [18.220] s 84C(4): [18.240] s 84C(7): [18.225] s 84J: [17.280] s 84J(1): [17.290] s 90A(1): [17.40] s 91: [4.570], [17.185] Sch 4: [17.185] Sch 8: [17.335] Crown Lands Act 1905: [16.185] Crown Lands Act 1911: [16.185] Crown Lands Act 1976: [6.35] s 16(3): [16.185] cxvii

s 29: [6.170] s 29(7): [6.175] s 54: [16.150] s 54(1): [16.185] Damage by Aircraft Act 1963 s 3: [16.130] Electronic Conveyancing (Adoption of National Law) Act 2013: [4.40] Estates Tail Act 1853: [2.125] Fair Trading Act 1990: [8.80] Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998: [14.15], [14.90] Forestry Rights Registration Act 1990 s 3: [4.60] s 5: [4.60], [17.460] Intestacy Act 2010 s 37: [2.20] Land Titles Act 1980: [1.120], [4.30], [5.80] Pt IXB, div 2: [17.205] s 1: [17.470] s 3(1): [4.65], [16.125], [16.150] s 11: [4.495] s 11(1): [16.125] s 12: [4.495] s 14: [5.25] s 14(4): [5.80] s 17: [4.525] s 17A: [4.525] s 18: [4.525] s 19: [4.540] s 21: [4.515], [4.540] s 25: [4.515] s 27A: [6.170] s 33(1): [4.45] s 33(3): [4.40], [4.45] s 33(4): [4.45] s 33(5): [4.45] s 33(6): [10.105] s 33(6)(a): [4.55] s 33(6)(b): [4.55] s 33(6)(c): [4.55] s 33(6)(d): [4.55] s 33(7): [4.45] s 33(8): [4.45], [4.55], [10.105] s 33(9): [4.45] s 33(10): [4.45] s 40: [1.120], [4.100], [4.190], [17.170]

Australian Real Property Law

Land Titles Act 1980 — cont s 40(1): [4.105] s 40(2): [4.105] s 40(3): [14.150], [17.155], [17.205], [17.245] s 40(3)(b): [4.255] s 40(3)(d): [4.295], [8.110] s 40(3)(e): [4.285] s 40(3)(f): [4.260] s 40(3)(g): [4.305] s 40(3)(h): [3.395] s 40(5): [4.105] s 41(1): [4.110] s 41(2): [4.110] s 42: [4.110] s 44: [12.215] s 46: [3.400], [4.290] s 47: [4.160] s 48: [5.235], [8.110] s 48(2): [5.235] s 48(3): [5.235] s 48(4): [5.235] s 48(7): [8.110], [17.125] s 49(1): [5.10], [8.105], [14.105], [14.160] s 52: [5.230] s 54(1): [4.45] s 57: [14.310] s 57(1): [14.230] s 63: [12.370] s 64: [7.295], [7.300], [14.125] s 64(1): [14.120] s 64(2): [14.120] s 65: [14.380] s 65(2): [14.380] s 65(3): [14.380] s 66: [14.165], [14.310], [14.330] s 66(b): [14.195] s 67: [14.310] s 67(a): [14.205] s 67(b): [14.170], [14.230] s 68: [14.335] s 69(1): [14.125] s 69(3): [14.230] s 71: [4.55] s 72: [7.15] s 72(b): [17.485], [17.495] s 73: [7.60], [7.80] s 76: [5.235] s 77: [7.475] s 78: [17.530] s 80: [7.395] s 81: [7.470] s 82: [7.275] s 84: [7.85] s 85: [7.345] s 89: [7.370] s 98: [4.65]

s 99: [4.65], [8.35] s 100: [4.65], [8.40], [12.70] s 102(2)(a)(iv): [18.165] s 102(3): [18.25] ss 102–​104: [18.25] s 103: [3.430], [18.205] s 103B: [17.125] s 104: [18.195] s 105: [17.240] s 106: [17.240] s 107: [4.60], [17.470] s 108(1): [17.410], [17.500] s 108(3): [17.420], [17.505] s 109: [3.430], [17.75], [17.445] s 110: [17.410] ss 113-​116: [2.125] s 117: [3.395], [8.20] s 126: [4.490] s 127: [4.470] ss 127–​128: [4.435] s 128: [4.470] s 132: [4.85] s 132(3): [4.85], [5.25] s 133: [5.30], [14.160] s 133(1): [5.50] s 133(1)(a): [5.25] s 133(2): [5.50] s 133(3)(a): [5.30] s 133(3)(b): [5.55] s 133(5): [5.85] s 133(6): [5.85] s 134: [5.80] s 135: [5.90] s 136: [5.30] s 136A: [5.100] s 137(1): [5.55] s 137(2)(a): [5.65] s 137(3): [5.65] s 137(3)(c): [5.60] s 137(3)(g): [5.65] s 138: [5.45] s 138(2): [3.395] s 138I: [17.210] s 138I(2): [17.215] s 138T: [3.395] ss 138T–​138Y: [3.150] ss 138T–​138ZA: [3.05], [3.15], [3.395] s 138U: [3.165], [3.395] s 138U(1): [3.165] s 138U(2): [3.165] s 138V: [3.395] s 138W: [3.395] s 138W(1): [3.395] s 138W(2): [3.395] s 138W(4): [3.395] s 138W(8): [3.395] s 138X: [3.395] cxviii

s 138Y: [3.395] s 138Z: [3.395], [5.25] s 138ZA: [3.395] s 139(1): [4.395] s 139(2)(a): [4.400] s 139(2)(b): [4.400] s 139(2)(c): [4.400] s 149: [4.105], [4.245] ss 150–​159: [4.435] s 151(1)(a): [4.470] s 151(1)(b): [4.470] s 151(1)(d): [4.470] s 151(2): [4.470] s 152(1)(a): [4.440] s 152(1)(b): [4.445] s 152(1)(d): [4.450] s 152(2)(b)(iii): [4.460] s 152(8)(a): [4.460] s 152(8)(b): [4.460] s 152(8)(c): [4.460] s 152(9): [4.485] s 153(1): [4.465] s 153(1)(b): [4.460] s 153(2): [4.485] s 158(1): [4.480] s 158(2): [4.475] s 160(1): [4.70] s 160(2): [4.70] s 160(3): [5.25] s 160(6): [4.70] s 163: [4.400] s 164: [4.400] s 170(2)(b): [4.455] s 183H: [3.165] Land Titles Amendment (Law Reform) Act 2001: [3.05], [3.15], [3.395] s 42(2)(b): [3.390] Landlord and Tenant Act 1935: [14.15], [16.100] Pt V: [14.425] s 8: [14.430] s 9: [14.435] s 10: [14.435] s 26: [16.100] s 66: [14.425] Limitation Act 1974: [3.05] s 2(1): [3.200], [3.330] s 2(2): [3.280] s 2(3): [3.280] s 2(4): [3.70] s 2(6): [3.265] s 9: [3.220] s 10(1): [3.45] ss 10(1)–​(3): [3.50] s 10(2): [3.40] s 10(4): [3.45] ss 10(4)–​(6): [3.45]

Table of Statutes

Limitation Act 1974 — cont s 11(1): [3.65], [3.70] s 11(2): [3.175] s 11(3): [3.180] s 12(1): [3.185], [3.255] s 12(2): [3.190], [3.255] s 12(5): [3.70], [3.190] s 12(6): [3.195] s 13(1): [3.200] s 13(3): [3.210] s 13(4): [3.210] s 13(5): [3.215] s 14(1): [3.230] s 15: [14.70] s 15(1): [3.235] s 15(2): [3.240] s 15(3): [3.240], [3.255] s 16: [3.65] s 16(2): [3.290] s 16(4): [3.270] s 18: [3.260] s 19: [3.260], [3.360] s 21: [3.35], [3.260] s 22: [3.230], [14.165], [14.400] s 23(1): [3.265] s 24: [3.260] s 24(1): [3.205] s 24(2): [3.205] ss 26–​28: [3.280] s 26(4): [3.280] s 29: [3.260] s 29(1): [3.365] s 29(5): [3.365] ss 29–​31: [3.365] s 30(1): [3.365] s 31: [3.260] s 31(1): [3.370] s 31(5): [3.370] s 31(7): [3.370] s 32: [3.280] s 32(2)(a): [3.285] s 37(1): [3.55] Local Government (Building and Miscellaneous Provisions) Act 1993 s 109: [3.395] Married Women's Property Act 1935: [8.345] s 3(1): [12.20] Mineral Resources Development Act 1995: [16.185] s 3: [16.185], [16.200], [16.205] s 6: [16.185] s 6(1): [16.200] s 6(4): [16.185], [16.205]

Mining (Amendment) Act 1911 s 25: [16.185] Native Title (Tasmania) Act 1995: [6.385] s 3(2): [6.405] ss 6–​8: [6.405] s 11: [6.405] Partition Act 1869: [12.445] Perpetuities and Accumulations Act 1992: [11.20], [11.135] s 4(1): [11.20] s 5: [11.15] s 6: [11.95] s 6(1): [11.135] s 6(3): [11.135] s 9: [11.140] s 9(6): [11.135] s 10: [11.100] s 11: [11.200] s 12: [11.225] s 15: [11.260] s 16: [11.255] s 16(5): [11.260] s 20: [11.265] s 21: [11.10] Presumption of Survivorship Act 1921 s 2: [12.80] Property Law Act 1969 s 62(4): [12.75] Real Property Act 1862: [4.25] Registration of Deeds Act 1935: [2.395], [2.600] s 3: [2.605] s 3(a): [2.620] s 3(b): [2.620] s 5: [2.620] s 9(1): [2.625] ss 9–​12: [2.620] s 12: [2.620] Residential Tenancy Act 1997: [14.15], [15.23], [15.25], [15.45], [15.55], [15.60], [15.65], [15.70], [15.80], [15.85], [15.90], [15.95], [15.100], [15.110], [15.115], [15.120], [15.135], [15.140], [15.145], [15.150] s 3: [15.120] s 4: [15.23] s 5: [15.135] s 6: [15.30] cxix

s 8: [15.110] s 13: [15.40] s 14: [15.40] s 20: [15.43], [15.55] s 23: [15.60], [15.110] s 24: [14.425] s 25: [15.45] s 26: [15.40] s 32: [15.80], [15.85] s 33: [15.85] s 34: [15.85] s 36A: [15.110] s 36B: [15.80] s 42: [15.95] s 45: [15.100] ss 48A–​48H: [15.115], [15.150] ss 48B–​48F: [15.140] s 48H: [15.145] s 52: [15.70] s 53: [15.80], [15.90] s 55: [15.65] s 56: [15.65] Retirement Villages Act 1992 Pt 5: [15.340] Retirement Villages Act 2004 [: [15.180], [15.200], [15.210], [15.215], [15.255], [15.345], [15.350] s 3: [15.200] s 6: [15.215] s 6(3): [15.225] s 8: [15.295], [15.330] s 10(4): [15.210] s 12: [15.330] s 13: [15.330] s 14: [15.245] s 14(11): [15.255] ss 28–​34: [15.345] ss 31–​33: [15.340] s 32: [15.295] s 33: [15.350] s 38: [15.210] Roads and Jetties Act 1935 s 8(1): [16.270] Settled Land Act 1884: [13.110], [13.155], [13.190] Pt III: [13.155] s 2: [13.115], [13.120] s 2(8): [13.120] s 9: [13.150] s 10(2)(e): [13.120] ss 14–​18: [13.175] s 23: [13.150], [13.155] s 32: [13.170] ss 38–​39: [13.145]

Australian Real Property Law

Settled Land Act 1884 — cont s 41: [13.145] s 42: [13.145] s 45(2): [13.130] s 45(3): [13.130] s 46(1): [13.130] s 46(2): [13.130] s 47: [13.130] s 48: [13.125] s 51(1): [13.140] s 51(2): [13.130], [13.140] s 52(2): [13.190] s 54: [13.115], [13.120] Status of Children Act 1974 s 3(2): [11.90] Strata Titles Act 1998 s 8: [13.85], [13.265], [13.285] s 9: [13.320] s 10: [13.285] s 12: [13.310] s 14: [13.285], [17.30] s 16: [13.290] s 26: [13.385] s 27: [13.385] s 32: [13.390] s 35: [13.100] s 46: [13.100] s 51: [13.265] s 71: [13.265] s 72: [13.365] s 75: [13.270] s 75H: [13.285], [17.30] s 75K: [13.285], [17.30] s 75L: [13.285], [17.30] s 76: [13.270], [13.365] s 79: [13.265] s 80: [13.275] s 81: [13.360] s 82: [13.355] s 83: [13.355] s 90: [13.370] s 91: [13.295], [13.365] s 93: [13.365] s 95: [13.340] s 131: [13.340] Sch 1, cl 1: [13.340] Supreme Court Civil Procedure Act 1932 s 11(4): [3.415] s 11(13): [1.275], [18.245], [18.250] s 11(14): [14.330] TAFE Tasmania Act 1997: [15.120] Testator's Family Maintenance Act 1912: [8.15]

Trustee Act 1898: [13.195] s 15(1): [12.60] s 50A: [13.205] s 64: [13.200] Wills Act 1992 s 6: [10.110] Wills Act 2008 s 4: [2.140], [2.270] s 6: [2.140], [2.270] s 52(1): [2.185]

VICTORIA

Fences Act 1968: [16.320] s 6(1)(b): [16.330] s 6(1)(d): [16.330] s 7: [16.325] s 7(2): [16.350] s 9: [16.335] s 10: [16.340] s 13: [16.325], [16.355] s 19: [16.355] s 21: [16.355] s 30C: [16.330] s 30F: [16.330] s 33: [13.345] s 34: [16.320]

Aboriginal Lands Act 1970: [6.270]

Fences Amendment Act 2014: [16.320]

Administration and Probate Act 1958 Pt I, div 6: [8.10] Pt IV: [8.15], [12.305] s 13: [2.360], [8.15] s 55: [2.20], [8.10]

Forestry Rights Act 1996 ss 3–​12: [4.60] s 25(1): [4.60]

Auction Sales Act 1958 s 4: [8.270] Australian Consumer Law and Fair Trading Act 2012: [9.25], [9.180] Australian Consumer Law and Unfair Trading Act 2012: [9.190] Charter of Human Rights and Responsibilities Act 2006: [3.30] s 20: [3.30] s 39: [3.30] Climate Change Act 2010 s 9: [4.60] Climate Change Act 2017: [17.460] Domestic Building Contracts Act 1995 s 18: [5.35] Drugs, Poisons and Controlled Substances Act 1981: [15.95] Electronic Conveyancing (Adoption of National Law) Act 2013: [4.40] Fair Trading Act 1985: [15.340] Fair Trading Act 1999: [8.80], [9.180], [9.190] cxx

Health (Prescribed Accommodation) Regulations 2001: [15.130] Imperial Acts Application Act 1980: [14.435] s 5: [2.20], [2.125], [2.360], [10.145] Instruments Act 1958 s 126: [8.65], [8.105], [14.110] Interpretation of Legislation Act 1984 s 38: [16.125] Land Act 1898: [6.425] Land Act 1933: [6.425] Land Act 1958: [6.35] s 55: [6.175] s 384(1)(2): [16.260] s 385: [16.255] s 385(1): [16.260] s 386: [16.255] Land Legislation Amendment Act 2009: [4.85], [5.25], [5.80] Land Titles Validation Act 1994: [6.385], [6.390] s 4: [6.405] ss 7–​9: [6.405] s 12: [6.405] Landlord and Tenant Act 1958: [14.15] Pt V: [14.15] s 9: [14.435] s 10: [14.435]

Table of Statutes

Landlord and Tenant Act 1958 — cont s 12: [14.425] s 29: [14.365] s 32(4): [14.365] Limitation of Actions Act 1958: [3.05] s 3(1): [3.200] s 3(3): [3.280] s 3(4): [3.70] s 3(5): [3.265] s 5(1)(d): [4.480] s 5(8): [3.220] s 7: [3.45] s 7A: [3.45] s 7AB: [3.45] s 7B: [3.45] s 7B(3): [3.45] s 8: [3.40], [3.50] s 9(1): [3.65], [3.70], [3.245] s 9(2): [3.175] s 9(3): [3.180], [3.190] s 10(1): [3.185], [3.255] s 10(2): [3.190], [3.255] s 10(3): [3.70], [3.190] s 10(4): [3.195] s 11(1): [3.200] s 11(2): [3.210] s 11(3): [3.210], [3.215] s 11(4): [3.210] s 11(5): [3.215] s 12: [3.230] s 13: [14.70] s 13(1): [3.235], [3.245] s 13(2): [3.240], [3.245] s 13(3): [3.255] s 14(1): [3.65], [3.245] s 14(2): [3.290] s 14(4): [3.270] s 15: [3.260] s 16: [3.260], [3.360] s 18: [3.35], [3.260] s 19: [3.230], [14.165], [14.400] s 20(1): [3.265] s 21(1): [3.205] s 21(2): [3.205] s 23: [3.280] s 23(1)(c): [3.280] s 24(1)(a): [3.365] s 24(2): [3.260] s 24(3): [3.365] ss 24–​26: [3.365] s 25(1): [3.365] s 25(2): [3.365] s 26: [3.260] s 26(1): [3.370] s 26(5): [3.370]

s 26(6): [3.370] s 27: [3.280], [3.285] s 32: [3.45], [3.55] Liquor Control Act 1987: [15.120] Local Government Act 1989 s 187A: [17.40] Marriage Act 1958: [8.345] s 156: [12.20] Mines Act 1958 s 291: [16.165] Mines (Amendment) Act 1983: [16.165] Mines Resources (Sustainable Development) Act 1990: [16.165] s 4(1): [16.165] s 9(1): [16.165] s 11: [16.165] Sch 4: [16.165] Mining Act 1992 s 6: [16.200] Owners Corporation Act 2006: [13.90], [13.95] s 4: [13.265] s 14: [13.310] s 24: [13.320] s 25: [13.355] s 31A: [13.310] s 46: [13.360] s 49(3): [13.360] s 69: [13.270] s 91: [13.270] s 100: [13.265] s 119: [13.275] s 129: [13.340] s 138: [13.365], [13.370] s 140: [13.295], [13.365] s 141: [13.365] s 152: [13.380] s 155: [13.340] s 156: [13.340] s 172: [13.380] Sch 1: [13.370] Partnership Act 1958: [12.305] Perpetuities and Accumulations Act 1968: [11.20], [11.145] s 1(2): [11.15] s 3(1): [11.20] s 5: [11.95] s 5(1): [11.120], [11.145] s 5(3): [11.145] s 6: [11.115], [11.125], [11.140] cxxi

s 6(1): [11.150] s 6(4): [11.120], [11.145], [11.155] s 7: [11.140] s 8: [11.100], [11.125], [11.140] s 8(1): [11.150] s 8(2): [11.150] s 8(4): [11.150] s 9: [11.185] s 10: [11.115], [11.125], [11.140], [11.150], [11.160] s 11: [11.225] s 12: [11.10] s 13: [11.265] s 15: [11.260] s 16: [11.255] s 16(2): [11.260] Petroleum Act 1998 s 13: [16.200] Planning and Environment Act 1987: [18.260] s 60(2): [18.260] Property (Co-​ownership) Act 2005: [12.300] Property Law Act 1958: [2.125], [2.605], [4.555], [7.70], [7.230], [10.145], [14.295] Pt I: [2.395], [2.600] Pt IV: [12.300], [12.305] Pt IV, div 2: [12.450] Pt IX: [12.305], [14.305] s 6(1): [2.605], [2.625] s 6(2): [2.605] s 18(1): [14.115], [16.60], [17.175] s 18A: [2.20] s 19: [10.100] s 19(1): [10.110] s 19(1)(a): [2.270] s 19(1)(b): [2.50] s 19A: [2.360], [10.145] s 28: [12.75] s 28A: [12.260] s 44(1): [2.530], [2.535] s 44(6): [2.530], [2.535] s 52(1): [7.45], [8.105], [12.380], [14.105], [14.380], [17.125] s 52(2)(c): [14.380] s 53: [17.135], [18.85] s 53(1)(b): [12.385] s 54(2): [14.105] s 56: [18.130] s 56(1): [18.270]

Australian Real Property Law

Property Law Act 1958 — cont s 58: [13.225] s 60(1): [2.180] s 60(6): [2.180] s 62: [4.555], [14.115], [16.55], [17.175], [18.190] s 70: [17.535] s 70(1): [17.535] s 72(3): [12.370] s 73: [8.105] s 73A: [8.105], [14.105] s 74(1)(b): [17.495] s 77(1)(c): [14.305] s 78: [18.115] s 78(1): [18.300], [18.305] s 79: [18.50] s 79(1): [14.285] s 79A: [18.80] s 84: [17.395], [17.430], [18.260] s 84(1): [17.515], [18.215], [18.225], [18.240] s 84(1)(b): [18.220] s 84(1)(c): [18.220] s 84C(1)(e): [18.220] s 87: [7.335] s 91(2): [7.335] s 94: [7.110] s 99: [7.285] s 101(1)(c): [7.310] s 117: [7.250] s 127(1): [17.495] s 129(1): [14.345] s 130: [2.215], [10.115] s 132: [10.140] s 132(2): [10.140] s 133: [13.55] s 134: [18.290] s 139(1): [14.385] s 140: [14.290] s 141: [14.290] s 142: [14.290] s 144(1): [14.255], [14.265] s 146: [14.350], [14.420] s 146(1): [14.325], [14.340], [14.345] s 146(1)(b): [14.345] s 146(2): [14.350] s 146(4): [14.355] s 146(8)(b): [14.340] s 146(9): [14.340] s 146(12): [14.340] s 146(13): [14.340] ss 146–​147: [14.335] s 148: [14.255], [14.320] s 149(3): [14.45] s 149(5): [14.85] s 153: [14.55] s 154: [14.295]

s 154A: [16.95], [16.100] s 184: [12.80] s 185: [3.415], [14.385] s 195: [17.25] s 196: [17.25] s 199: [2.490], [2.550], [5.120], [14.115] s 199(1)(b): [2.550] s 206: [7.80] s 222: [12.305] s 228(1): [12.300] s 233(1): [12.300] s 233(1)(a): [12.300] s 233(1)(c): [12.300] s 233(2): [12.300], [12.305] s 233(2)(a): [12.305] s 233(2)(e): [12.305] s 233(3): [12.300], [12.305] s 233(3)(a): [12.300] s 233(3)(c): [12.300] s 234: [12.260] s 234C(1): [12.305] s 234C(2): [12.305] s 249: [2.125], [2.180] s 272: [16.275] s 273: [4.555], [16.275] Sch IV: [14.305] Property Law (Amendment) Act 1998: [12.260] Residential Tenancies Act 1980: [15.25] s 10: [15.110] Residential Tenancies Act 1997 s 1: [15.25] s 3: [15.120], [15.160] s 4: [15.23] s 6: [15.30] ss 6–​14: [15.30] s 10: [15.110] s 26: [15.40] s 31: [15.43], [15.45] s 35: [15.40] s 44: [15.55] ss 45–​46: [15.60] s 47: [15.60] s 54: [15.45] s 60: [15.70] s 61: [15.80] s 62: [15.80] s 63: [15.90] s 65: [15.80], [15.90] s 67: [15.65] s 68: [15.45] s 72: [15.85] s 74: [15.85] s 86: [15.65] s 94D: [15.130] s 99(3): [15.85] cxxii

ss 100–​127: [15.115] ss 110–​119: [15.135] ss 120–​123: [15.140] ss 124–​127: [15.145] ss 143–​206A: [15.155] s 144: [15.165] ss 146–​148: [15.170] ss 185–​187: [15.175] s 246: [15.95] ss 269–​270: [15.150] s 322: [15.100] Retail Leases Act 2003: [14.15], [14.90] s 4: [14.90] s 64(1): [14.360] s 64(2): [14.360] s 64(3): [14.360] s 64(4): [14.360] Retail Leases Regulations 2003 reg 6: [14.90] Retirement Villages Act 1986: [15.180], [15.190], [15.200], [15.210], [15.215], [15.220], [15.225], [15.230], [15.240] s 3: [15.200], [15.225], [15.340] s 6: [15.340] s 9(1): [15.210] s 16(2): [15.275] s 16(4): [15.275] s 16(5): [15.275] s 18: [15.220] s 19: [15.215], [15.225] s 20(2): [15.225] s 20(3): [15.225] s 22: [15.225] s 24(2): [15.225] s 24(5): [15.225] s 25(2): [15.240] s 26: [15.330] s 27: [15.225] s 31: [15.210], [15.340] s 33: [15.245] s 36: [15.230] s 37: [15.230] s 38: [15.245], [15.310] s 38(6): [15.255] s 38E: [15.350] ss 38E–​38G: [15.345] s 43: [15.225] s 48: [15.225] Retirement Villages (Contractual Arrangements) Regulations 2006] Sch 1: [15.335]

Table of Statutes

Road Management Act 2004] Sch 5: [16.270] Rooming Houses Act 1990: [15.125] Sale of Land Act 1962: [5.180], [8.280], [8.285], [8.290] s 4: [8.330] s 7: [8.330] s 24: [5.140] s 25: [5.140] s 27: [5.140] s 31: [8.290] s 31(1): [8.285], [8.290] s 31(2): [8.300] s 31(4): [8.305] s 31(5): [8.305] s 32: [5.210], [8.285] ss 32A-​32L: [8.285] s 34: [8.315] ss 34–​40: [8.130] s 35: [8.320] s 38: [8.265] s 41: [8.265] s 47: [8.270] Sale of Land (Amendment) Act 1989 s 9AA: [13.105] Sale of Land (Public Auctions) Regulations 2014 Sch 5: [8.270] Settled Land Act 1958: [13.110], [13.130], [13.210], [13.235], [13.260] Pt I: [13.155] Pt II: [13.155], [13.160] Pt III: [13.155] s 3(1): [13.120] s 8: [13.115], [13.120] s 8(1)(b)(iv): [13.115], [13.120] s 9: [13.190] s 16: [13.120] s 28: [13.115] s 30: [13.120] ss 38–​40: [13.175] ss 41–​47: [13.180] s 42(5): [13.180] s 66: [13.170] s 66(3): [13.170] s 71(1)(b): [13.150] ss 83–​89: [13.150] s 93: [13.145] s 93(a): [13.145] s 93(b): [13.145] ss 97–​99: [13.145]

s 101: [13.145] s 104(2): [13.130] s 105: [13.130] s 106(3): [13.130] s 107: [13.125] s 108(1): [13.140], [13.170] s 108(2): [13.140], [13.170], [13.190] s 109(1): [13.140] Status of Children Act 1974] s 3(2): [11.90] Subdivision Act 1988: [13.90], [18.260] s 12: [13.285], [17.30] s 22(1)(e): [4.525] s 24: [13.285], [13.290], [17.30] s 27A: [13.85] s 28: [13.85], [13.285] s 32: [13.390] s 32AG: [13.385] s 32AI: [13.385] s 36(1): [17.400] s 37: [13.100] s 38: [13.100], [13.390] Subdivision (Amendment) Act 1989 s 44(6): [13.100] Subdivision (Body Corporate) Regulations 1989 reg 401(g): [13.360] Summary Offences Act 1966 s 9(1)(g): [14.315] Supreme Court Act 1986 s 38: [1.275], [18.245], [18.250] s 49(a): [4.335] s 79: [14.330], [14.335] ss 79–​85: [14.15] s 80: [14.335] s 85: [14.335] Transfer of Land Act 1862: [4.25] Transfer of Land Act 1915 s 4: [16.150] Transfer of Land Act 1958: [3.45], [3.350], [4.30], [4.40], [4.555], [4.560], [5.60], [7.230], [8.105], [12.45], [16.125] Pt II: [4.495] Pt II, Div 3: [4.510] s 3(1): [4.555] cxxiii

s 3(3): [4.315] s 4(1): [4.65], [16.125], [16.150], [17.485], [18.30] s 8: [6.170] ss 8–​26W: [4.495] s 9: [3.390], [4.530] s 10: [4.495] s 10(1): [16.125] s 11: [4.55] s 26D: [3.390] ss 26E–​26I: [4.510] ss 26J–​26W: [4.510] s 26O: [3.390] s 26R: [5.25] s 26W: [4.325] s 27: [4.45] s 27(1): [4.45] s 27(2): [4.40], [4.45] s 27(3): [4.40], [4.45] s 27(7): [4.45] s 27(7A): [4.45] s 27B(7A): [4.45] s 27B(7B): [4.45] s 27B(6): [4.45] s 27B(7): [4.45], [4.50] s 27B(9): [4.50] s 27B(11): [4.50] s 27AB: [4.40] s 27BA: [4.50] s 30(2): [4.55], [12.220] s 33(4): [12.215] s 34: [5.105], [5.235] s 34(1): [5.235], [8.110] s 34(2): [5.235] s 34(3): [5.235] s 36(11): [17.125] s 37: [4.85] s 37(1): [5.25] s 37(2): [4.85], [5.25] s 38(1): [12.90] s 38(2): [12.90] s 38(3): [12.90] s 38(4): [12.90] s 38(6): [12.90] s 40(1): [5.10], [8.105], [12.380], [12.395], [14.105], [14.160] s 40(2): [8.110] s 42: [4.160], [4.320] s 42(1): [4.105], [4.190], [4.335] s 42(1)(a): [4.255] s 42(1)(b): [4.260] s 42(2)(b): [3.390], [8.20] s 42(2)(d): [4.285], [17.155], [17.245] s 42(2)(e): [4.295], [8.110], [14.135] s 42(2)(f): [4.305]

Australian Real Property Law

Transfer of Land Act 1958 — cont s 43: [4.110], [4.140], [4.320], [4.375] s 44: [4.260] s 44(1): [4.160] s 44(2): [4.105], [4.110], [4.140], [4.245], [4.255], [4.320] s 44Q(1): [4.395] s 45: [4.60] s 49: [4.65], [8.35] s 50: [4.65], [8.40], [12.70] s 51: [4.65] s 52: [4.320] s 54: [4.490] s 56: [4.470] ss 60–​62: [3.390] s 61: [5.25] s 66: [4.60] s 66(1): [4.75], [14.120] s 66(2): [7.295] s 67: [14.310] s 67(1)(a): [14.165], [14.330] s 67(1)(b): [14.195] s 67(1)(c): [14.205] s 67(1)(d): [14.170], [14.230] s 69(1): [14.380] s 69(2): [14.380] s 69(3): [14.380] s 70: [14.335] s 71: [4.60], [14.125] s 72: [4.60], [17.240] s 72(1): [17.125] s 72(3): [17.335] s 73: [4.415], [17.430] s 73(2): [17.410] s 73(3): [17.420] s 73A: [4.415], [17.420] s 74: [4.60], [7.80] s 74(1): [7.15], [14.230] s 74(2): [7.60] s 75B: [5.235] s 77: [7.410] s 77(1): [7.460] s 77(4): [7.470] s 78: [7.275] s 78(2): [7.85] s 79: [7.345] s 81: [7.275] s 84(1): [7.370] s 86: [7.275] s 88: [18.25] s 88(1): [18.195] s 88(3): [18.25] s 89: [14.160] s 89(1): [5.30], [5.50], [5.85] s 89(2): [5.30]

s 89(3): [5.55] s 89A: [5.100] s 90(1): [5.30], [5.55], [5.65] s 90(1)(a): [5.65] s 90(1)(b): [5.55] s 90(1)(d): [5.65] s 90(2): [5.30], [5.70] s 90(3): [5.90] s 91(2): [5.65] s 91(2A): [5.60] s 91(4): [5.80] ss 92–​93: [5.230] s 96(2): [17.195] s 98D: [4.55] s 103(2)(a): [4.395], [4.400] s 103(2)(b): [4.400] s 104: [4.70] s 104(3): [4.70] s 105: [4.70] s 106(1)(a): [5.25] s 107(2): [5.80] ss 108–​111: [4.435] s 109: [4.470] s 109(2)(a): [4.470] s 109(2)(b): [4.470] s 109(2)(c): [4.470] s 109(3)(a): [4.460] s 110: [4.440], [4.465] s 110(1): [4.455] s 110(1)(a): [4.445] s 110(1)(aa): [4.455] s 110(1)(c): [4.440], [4.450] s 110(1)(d): [4.455] s 110(2): [4.460] s 110(3): [4.320] s 110(3)(a): [4.470] s 110(4): [4.485] s 111: [4.460] s 112: [14.230], [14.310] s 116A: [4.70] s 118: [5.45]

s 13: [13.245] s 35: [2.495] s 45(1): [12.60] s 63: [13.205] Water Act 1989] s 136: [17.40] Wills Act 1997 s 4: [10.110] s 4(2)(a): [2.270] s 42: [2.185] Wrongs Act 1958 s 30: [16.130]

WESTERN AUSTRALIA Aboriginal Affairs Planning Authority Act 1972: [6.270] Administration Act 1903: [2.20] s 8: [8.15] s 13: [2.20] s 14: [2.20] Pt II: [8.10] Auction Sales Act 1973: [8.265] s 6: [8.272] s 29: [8.265] Carbon Rights Act 2003: [4.60] s 6: [17.460] s 6(1): [4.60] Code of Fair Practice for Retirement Villages 2006 cl 4.6(b): [15.330] Commercial Tenancy (Retail Shops) Agreements Act 1985: [14.15], [14.90] s 3(1): [14.90]

Transfer of Land Act 2014 ss 91C–​91J: [5.230]

Damage by Aircraft Act 1964 s 4: [16.130]

Transfer of Land (Conversion) Act 1986: [4.455], [4.510]

Distress for Rent Abolition Act 1936 s 2: [14.425]

Transfer of Land (Electronic Transactions) Act 2004: [4.40] s 6: [4.395] Transfer of Land (Single Register) Act 1998: [2.395], [2.600], [2.605], [2.610], [4.510], [4.535] ss 22–​26D: [4.510] Trustee Act 1958: [13.195] s 2(3): [13.200] cxxiv

Dividing Fences Act 1961: [16.320] s 6: [16.320] s 7: [16.325] s 8: [16.325] s 9(1): [16.330] s 9(3): [16.330] s 10: [16.330] s 11: [16.335] s 14: [16.350] s 15(1): [16.355]

Table of Statutes

Dividing Fences Act 1961 — cont s 15(7): [16.355] s 19(1): [16.340] s 19(2): [16.340] s 21: [16.345] Electronic Conveyancing Act 2014: [4.40] Escheat (Procedure) Act 1940: [2.20], [8.10] Fair Trading Act 1987: [8.80], [9.25], [9.180] Fair Trading (Retirement Villages Code) Regulations 2006 Sch 1: [15.330] Family Court Act 1997 s 205ZA: [2.240] s 205ZB: [2.240], [12.165] Inheritance (Family and Dependants Provisions) Act 1972: [8.15] Interpretation Act 1984] s 5: [16.125] s 73: [14.435] s 13A(3): [2.240] Land Administration Act 1997: [6.35] s 15: [6.175] s 55: [16.270] s 144: [17.275] s 147: [17.40] s 195: [17.40], [18.20] Land (Title and Traditional Usage) Act 1993: [6.395] Law Reform (Miscellaneous Provisions) Act 1941: [12.20] Law Reform (Property, Perpetuities and Succession) Act 1962: [11.20] Law Reform (Statute of Frauds) Act 1962: [8.65], [8.105], [14.110] Law of Property Act 1969 s 39: [9.70] Limitation Act 1935: [3.05] Limitation Act 2005: [3.05], [3.280] s 3: [3.200] s 3(1): [3.330]

s 3(2): [3.70] s 3(3): [3.70] s 3(6): [3.65] s 3(6)(d): [3.270] s 10: [3.45] s 13(1): [3.230] s 18: [14.165], [14.400] s 19(1): [3.45] s 19(2): [3.45], [3.50] s 20(1)(a): [3.265] s 25: [3.260] s 27: [3.205], [3.220] s 30: [3.280] ss 30–​–​36: [3.280] ss 30–​–​54: [3.280] s 36(3): [3.280] s 38: [3.280] ss 38–​–​44: [3.280] s 44: [3.280] s 45: [3.280] s 46: [3.260], [3.365] ss 46–​–​51: [3.365] s 47: [3.365] s 48: [3.260], [3.365] s 50: [3.370] s 51: [3.365] s 61: [3.200], [3.205] s 62: [3.210] s 65: [3.65] s 65(1): [3.65] s 65(2): [3.305] s 65(3): [3.290] s 67: [3.175] s 68: [3.180] s 69: [3.185], [3.255] s 71: [3.255] s 72: [14.70] s 72(1): [3.240] s 72(2): [3.235] s 75: [3.35] s 75(a): [3.260] s 76: [3.45], [3.50] s 77: [3.195] s 78: [3.210] s 78(1): [3.215] s 80: [3.220] s 84: [3.260] s 84(a): [3.360] Married Women's Property Act 1892: [8.345] s 1(1): [12.20] Mining Act 1904 s 3: [16.180] s 138: [16.180] Mining Act 1978 s 8(1): [16.180] s 9(1): [16.180] cxxv

Native Title (State Provisions) Act 1999: [6.385], [6.395] Petroleum (Submerged Lands) Act 1982: [16.180] Petroleum and Geothermal Energy Resources Act 1967: [16.180] s 5(1): [16.200] s 9: [16.200] Planning and Development Act 2005: [4.335] Property Law Act 1969: [8.105], [10.130], [11.20], [11.100], [14.15] Pt XI: [11.20] Pt XIX: [12.445] s 6: [4.565] s 7: [14.115], [16.60], [17.175] s 9(1)(b): [8.105] s 9(1)(c): [8.105] s 9(2): [8.105], [14.105] s 9(3): [8.105] s 9(4): [14.105] s 11(1): [18.275] s 17: [13.55] s 18: [3.415], [14.385] s 20: [18.290] s 23: [2.125] s 23(1): [2.180] s 26(1): [10.130] s 26(2): [10.130] s 27: [2.215], [10.115] s 28: [10.140] s 28(2): [10.140] s 29: [12.75] s 33: [17.125] s 33(1): [7.45], [8.105], [14.105], [14.380] s 33(2)(c): [14.380] s 34: [17.135], [18.85] ss 34–​–​36: [8.25] s 35(2): [14.105] s 37: [2.180], [7.80] s 37(1): [2.180] s 37(2): [2.180] s 39: [2.360], [10.135], [12.65] s 41: [14.115], [16.55], [17.175], [18.190] s 43: [17.535] s 44: [12.370] s 47: [18.82] s 48: [18.50] s 48(2): [14.285] s 49: [18.80] s 53: [7.335]

Australian Real Property Law

Property Law Act 1969 — cont s 55(2): [7.335] s 57(1)(c): [7.310] s 59(1): [7.400] ss 67–​68: [12.150] s 71: [14.250] ss 71–​72: [14.65] s 73: [14.255], [14.320] s 74(3): [14.45] s 74(5): [14.85] s 75(1): [14.385] s 76: [14.290] s 77: [14.290] s 78: [14.290] s 79: [14.255], [14.320] s 80(1): [14.255], [14.265] s 81(1): [14.340], [14.345] s 81(2): [14.350] s 81(4): [14.355] s 81(5): [14.295] s 81(8)(b): [14.340] s 81(9): [14.340] s 81(10): [14.340] ss 89–​91: [2.395] s 99(1): [11.20] s 99(2): [11.15] s 101: [11.95], [11.155] s 102(1): [11.160] s 102(2): [11.160] s 102(3): [11.160] s 102(4): [11.160] s 103: [11.160] s 103(1): [11.160] s 105(1): [11.190] s 105(3): [11.190] s 106: [11.190] s 107: [11.190] s 108: [11.160] s 109: [11.225] s 110: [11.260] s 111: [11.255] s 111(2): [11.260] s 114: [11.10] s 120(d): [12.80] s 121: [17.25] s 122: [16.295] s 122(1): [16.295] s 122(2): [16.300] s 122(4): [16.300], [16.305] s 123(1): [16.290] s 123(2): [16.290] s 123(5): [16.290] Registration of Deeds Act 1856: [2.395], [2.600] s 1: [2.605] s 2: [2.620] s 3: [2.620], [2.630]

Residential Parks (Long-​ stay Tenants) Act 2006: [15.155], [15.160], [15.165], [15.170], [15.175] s 11: [15.165] ss 21–​54: [15.170] ss 59–​61: [15.175] Residential Tenancies Act 1987: [14.15], [15.23], [15.25], [15.45], [15.55], [15.60], [15.65], [15.70], [15.80], [15.85], [15.90], [15.95], [15.100], [15.110] s 4: [15.23] ss 5–​6: [15.30] s 13: [15.110] s 27A: [15.40] s 27B: [15.40] s 27C: [15.40] s 29: [15.45] s 29(1): [15.43], [15.45] s 29(4): [15.45] s 30: [15.55] s 32(1): [15.60] s 32(3): [15.60] s 32(5): [15.60] s 33(2): [15.55] s 38(1)(a): [15.90] s 38(1)(b): [15.80] s 38(1)(c): [15.80] s 39: [15.70] s 42(1)(a): [15.90] s 42(1)(b): [15.80] s 43: [15.85] s 43(1): [15.85] s 44: [15.65] s 46: [15.65] s 62: [15.95] s 71: [15.110] s 74: [15.100] s 80: [14.315] Sch 1: [15.45] Retirement Villages Act 1992: [15.180], [15.190], [15.200], [15.210], [15.215], [15.345] s 3: [15.200], [15.340] s 6A: [15.190] s 9: [15.340] s 13: [15.215] s 15(3): [15.210], [15.310] s 17: [15.290] s 18(1): [15.240] s 21: [15.210] s 52: [15.350] ss 52–​74: [15.345] ss 56–​59: [15.345] cxxvi

ss 58–​63: [15.290] s 64: [15.290] Rights in Water and Irrigation Act 1914: [17.350] s 15: [16.255] s 16: [16.255] Sale of Land Act 1970 s 6: [8.335] s 8: [8.330] s 22: [2.530] Statute of Frauds 1677 s 4: [14.110] Strata Titles Act 1985 s 3: [12.265], [13.85] s 3(1): [13.365] s 3(2)(a): [13.320] s 3A: [12.320], [13.85] s 3AB: [12.320], [13.85] s 4(4): [13.285] s 10: [13.100] ss 11–​13: [12.285] s 14(1): [12.290] s 14(2): [12.290] s 15: [12.290] s 16: [12.290] s 17(1): [12.285] s 18: [13.100] s 19: [13.100], [13.312] s 28: [13.385] s 30: [13.390] s 30A: [13.390] s 31: [13.390] s 32(1): [13.85] s 33: [12.265] s 35: [12.265], [12.360] s 36: [12.355] s 36A: [13.80] s 36B: [13.80] s 38: [12.340] s 38(4): [12.340] s 42: [18.15] s 42(1): [13.365] s 42(3): [13.295] s 42(6): [13.365], [13.370] s 42(8): [13.312] s 44: [12.268] s 45: [12.268] s 49(1): [12.270] ss 68–​70: [13.98] s 69: [12.300] s 69A: [12.300] s 69B: [12.300] s 69C: [12.300] s 69D: [12.300] Sch 1, Pt 1, cl 1(1): [12.340] Sch 1, Pt 1, cl 8(2)(b): [12.275] Sch 1, Pt 1, cl 11: [12.270]

Table of Statutes

Supreme Court Act 1935 s 25(10): [1.275], [18.245], [18.250] Town Planning and Development Act 1928 s 20: [4.335] s 20(1)(a): [4.335] s 20(1)(e): [4.335] s 21: [4.335] s 21(1): [4.335] Transfer of Land Act 1874: [4.30] Transfer of Land Act 1893: [4.30], [4.520], [8.105] Pt IV, div 2A: [4.60] Pt IV, div 2B: [4.60] s 3: [4.565] s 4(1): [4.65], [16.125], [16.150], [17.485] s 6: [17.335] s 20: [3.390], [4.495], [16.125] s 20A: [4.495] s 24: [3.390] s 27: [4.520] ss 28–​29: [4.520] s 30: [5.25] s 39: [4.55] s 48: [4.40], [4.45] s 48(1): [4.45] s 48(2): [4.45] s 48A: [4.45] s 48B(1): [4.45] s 52: [4.45], [4.50] s 52(1): [4.50] s 53: [5.235], [8.110] s 55: [4.85], [5.25] s 55(3): [5.25] s 58: [5.10], [8.105], [14.105], [14.160] s 60: [4.60], [12.220] s 61: [12.90] s 63A: [17.240] s 64: [17.240] s 65: [17.240] s 65A: [17.125] s 66A: [17.125] s 67: [17.240] s 68: [4.105], [4.300], [8.20], [8.110], [14.140], [17.155] s 68(1): [3.390], [4.255], [4.260], [4.320], [17.245] s 68(1)(2): [4.190] s 68(3)(c): [4.285] s 68(3)(d): [4.305] s 68(3)(f): [4.295]

s 76: [4.400] s 77: [4.400] s 81A: [4.45], [6.170] s 84: [10.100] s 85: [8.110], [17.125] s 91: [7.295], [14.120] s 92: [14.310] s 92(i): [14.165], [14.330] s 92(ii): [14.195] s 93: [14.310] s 93(1): [14.205] s 93(2): [14.170], [14.230] s 95: [14.305] s 96: [14.338] s 98: [14.380] ss 99–​100: [14.125] s 103: [14.230] s 104: [14.338] s 105: [7.15], [17.495] s 106: [7.60], [7.80] s 107: [7.400] s 108: [7.475], [17.530] s 110: [7.470] s 111: [7.275] s 114: [7.85] s 116: [7.275] s 121: [7.345] s 123: [7.370] s 129A: [18.25] s 129B(2): [18.195] s 129C: [17.395], [17.430], [17.520], [18.215] s 129C(1): [18.215] s 129C(1)(b): [17.410] s 131: [14.230], [14.310] s 134: [4.110] s 136H: [17.75] s 137: [5.30], [5.50], [14.160] s 137(1): [5.35], [5.65] s 137(1B): [5.85] s 138: [5.30] s 138(1): [5.55] s 138(2): [5.90] s 138(4): [5.80] s 138A: [5.80] s 138A(b): [5.80] ss 138B–​138D: [5.80], [5.100] s 138C(1): [5.90] s 138D(1): [5.80] s 138D(2): [5.80] s 139(2): [5.65] s 140: [5.45] s 141: [5.30] s 141A: [5.60], [5.100] s 142: [5.65] ss 146–​150: [5.230] s 180: [4.70] cxxvii

s 184: [3.430] s 187: [4.65], [8.35] s 188(1): [4.395] s 188(3): [4.395] s 188(4): [4.400] s 188(6): [4.400] s 188(7): [5.25] s 189(1): [4.395] s 196: [4.470] s 196(1): [4.470] s 199: [4.105], [4.245] s 201: [4.435], [4.440], [4.445], [4.450], [4.460], [4.485] s 202: [4.110] s 203: [4.65] s 205: [4.460], [4.465] ss 205–​211: [4.435] s 211: [4.470], [4.475], [4.480] s 221: [4.65] ss 222–​223A: [3.390] s 223A: [5.25] s 227: [4.65], [8.40], [12.70] s 229A: [17.420] s 229A(2): [17.410] s 230: [17.420] s 234: [4.65] Transfer of Land Amendment Act 2003: [4.45] s 15: [4.45] s 48B(3): [4.45] s 48B(4): [4.40] s 57(c): [4.50] s 74B(2): [4.50] s 75(1A): [4.50] Tree Plantation Agreements Act 2003: [4.60] Trustees Act 1962: [13.195] s 5(3): [13.200], [13.250] s 10(1): [12.60] s 27: [12.260], [13.245] s 27(1)(a): [13.250] s 27(4): [13.250] s 30(1): [13.225] s 68: [2.495] s 89: [13.205], [13.250] Wills Act 1970 s 4: [2.270] s 6: [2.270], [10.110] s 26(e): [2.185] s 31: [11.90] Wills Act Amendment Act 1987 s 9: [8.30]

Australian Real Property Law

CANADA Limitation Act RSBC 1979 s 198: [3.15]

NEW ZEALAND Family Homes Act 1964: [12.20] Joint Family Homes Act 1964: [12.20] Land Transfer Act 1952: [4.395] Land Transfer Act 2017: [4.160] s 6: [4.205] s 76(2): [10.105] Land Transfer (Computer Register and Electronic Lodgment) Amendment Act 2002 s 80(2): [4.395] s 81(2): [4.395] Matrimonial Property Act 1976: [12.20] Perpetuities Act 1964: [11.20]

SINGAPORE Land Titles Act 1993 s 49: [5.130]

UNITED KINGDOM Abolition of Feudal Tenures etc (Scotland) Act 2000: [2.40] Australian Courts Act 1828 s 24: [14.435] Bodies Corporate (Joint Tenancy) Act 1899: [12.75] Chancery Amendment Act 1858: [1.275], [18.245] Civil Aviation Act 1949 s 40(1): [16.130] Civil Aviation Act 1982 s 76(1): [16.130] Commons Registration Act 1965: [17.450] Commonwealth of Australia Constitution Act 1900 s 52(1): [1.80]

s 61: [1.80] s 100: [1.100] s 114: [1.80] s 51(xxxi): [1.80], [1.160] Commonwealth of Australia Constitution Act 1901 s 51(xxvi): [6.275] s 51(xxxi): [6.400] s 109: [4.335] Contingent Remainders Act 1877: [10.130] s 1: [10.120] Conveyancing Act 1882: [2.490] Fines and Recoveries Act 1833 s 250: [2.125] s 251: [2.125] Human Rights Act 1998: [3.25] Judicature Act 1873: [1.75], [1.215], [2.365], [7.235]

Law of Property Act 1969 s 23: [2.530] Limitation Act 1939: [3.05], [3.70] Limitation Act 1980: [3.05], [3.25], [3.235] s 15(6): [3.105] s 17: [3.235] s 21(1): [3.205] s 21(1)(a): [3.205] s 29(5): [3.235] s 29(6): [3.235] s 32(1): [3.285] Sch 1, para 3: [3.265] Sch 1, para 8: [3.265] Sch 1, para 8(4): [3.105] Limitation Amendment Act 1980 s 3(1): [3.235] Lord Cairns’ Act: [1.275], [18.245] s 2: [18.250]

Land and Conveyancing Law Reform Act 2009: [2.50] s 9(2): [2.40]

Mental Health Act 1963 Pt VI: [17.235]

Landlord and Tenant (Covenants) Act 1995: [14.270]

Perpetuities and Accumulations Act 1964: [11.20]

Land Registration Act 1925: [2.515], [3.25] s 70(1)(g): [2.505], [2.515] s 75: [3.340] s 75(2): [3.340] Land Registration Act 2002: [3.05], [3.15], [3.25], [3.325], [3.340], [3.380] s 70(1)(g): [2.515] Sch 3, para 2: [2.505], [2.515] Landlord and Tenant (Covenants) Act 1995: [14.270] Law of Property Act 1925 s 62: [14.115] s 78: [18.83] s 79: [18.83] s 141: [14.275] s 142: [14.275] s 199: [2.490]

cxxviii

New South Wales Constitution Act 1855: [6.55]

Perpetuities and Accumulations Act 2009: [11.20], [11.95] Prescription Act 1832: [17.210], [17.235] s 1: [17.465] s 2: [17.235], [17.465] s 4: [17.235] s 7: [17.235] s 8: [17.235] Prescription Act 1934: [17.210] Pretenced Titles Act 1540: [3.300] Real Property Act 1845 s 8: [10.120] Real Property Limitation Act 1833: [3.65] Recoveries Act 1833: [2.115]

Table of Statutes

Rentcharges Act 1977 s 1(1): [17.480] Sale of Waste Lands Act 1842: [6.55] Settled Land Act: [13.35], [13.40], [13.120], [13.130], [13.140] Statute of Uses 1535: [10.05], [10.80], [10.90], [10.135], [10.145]

Statute of Wills 1540: [1.240], [2.20], [2.185], [10.05], [10.80], [10.90] Statute 10 Will 3 c 22 (1698): [10.65] Tenures Abolition Act 1660: [2.20], [2.355] Wills Act 1837 s 3: [8.30] s 28: [2.185]

cxxix

UNITED STATES Uniform Simultaneous Death Act [12.80]

TREATIES AND CONVENTIONS European Convention on Human Rights 1950: [3.30] Art 1: [3.25] Art 17: [3.30]

THE CONTEXT OF REAL PROPERTY LAW

PART I

CHAPTER 1

Concept of Real Property Law [1.05] NATURE OF REAL PROPERTY LAW IN AUSTRALIA............................................................. 3 [1.55] DEVELOPMENT OF REAL PROPERTY LAW IN AUSTRALIA.................................................. 9 [1.145] SOCIAL PURPOSE OF REAL PROPERTY LAW................................................................... 20 [1.185] NATURE OF PROPERTY RIGHTS...................................................................................... 25 [1.235] CLASSIFICATION OF PROPERTY RIGHTS........................................................................ 30 [1.250] REMEDIES...................................................................................................................... 31 [1.280] LAND RIGHTS AND LAND USE...................................................................................... 33 [1.310] ARRANGEMENT OF THE TEXT....................................................................................... 36

NATURE OF REAL PROPERTY LAW IN AUSTRALIA [1.05] The beginning of the 21st century has been generally acclaimed as the era of the

information technology revolution. Features of computer records have a particular appeal for dealings in land. Those dealings rely on a considerable mass of information about the land, as to both the range of interests in respect of any one parcel of land and the physical attributes (including boundaries) of that parcel. This text emphasises the role under the Torrens system in maintaining centralised land records. Reliance on central records represents a final conversion from a primary recognition of possession as evidence of ownership (see [2.50]) and the handing over of a clump of earth as a symbol of transfer of ownership (livery of seisen: see [2.285]). The records of title and the legal principles which give them force are readily convertible to a computerised form. However, the process of conversion involves a change from paper records to computer records. The change requires a reconsideration of some principles1 and an abandonment of the sentimental attachment to title deeds as paper instruments which are physically preserved and revered.2 Title does disappear into cyberspace. Recording of land dealings shares one problem with access to computerised financial records: the verification of the person attempting to use those records. Just as a fraudulent party may seek to obtain my PIN number to access my bank account, so might such a person seek to impersonate me to deal with my land and procure money from a transferee.3 In respect of electronic conveyancing what this has demanded is reconsideration of the allocation of risk within the conveyancing process and how verification of identity, the right to deal with land and ownership of land will be proven. It may mean that subscribers to an electronic conveyancing system, such as lawyers, mortgagees, conveyancing and settlement agents will share an increased burden of responsibility if something goes awry. Electronic conveyancing very squarely raises the issue as

1 2 3

See particularly the analysis of priority for unregistered interests under the Torrens System at [5.150]. On the introduction of computerised title, see Lang, “Computerised Title and Land Information” (1984) 10 Mon LR 196. See Low, “From Paper to Electronic: Exploring the Fraud Risk Stemming from the Use of Technology to Automate the Australian Torrens System” (2009) 21 Bond Law Review 107; Low and Foo, “The Susceptibility of Digital Signatures to Fraud in the National Electronic Conveyancing System: An Analysis” (2009) 17 APLJ 303. [1.05]  3

PART 1 The Context of Real Property Law

to what are the fundamental elements of a secure land registration system,4 with this concern about security seeing blockchains (the technology behind bitcoins), being mooted as the latest proposal to protect the records of land ownership.5 [1.10] The evolution of Australian real property law as an individual identity has been

confirmed over recent years. The most significant development in that time (and probably the most significant decision of the Australian High Court since its establishment) is the decision in Mabo v Queensland (No 2) (1992) 175 CLR 1. That case recognised as a matter of common law, rights to land of indigenous persons who occupied land from the time of the assertion of British sovereignty. The case and those following also revised fundamental concepts for the holding of land in Australia. The extent of the individual identity of Australian real property law has been the subject of controversy. The authors of this text contend that Australian real property law is peculiarly Australian and cannot properly be understood unless it is recognised that its fundamental concepts are different from those of the English feudal system. Although much of the structure of interests has been retained, the content of those interests has fundamentally changed. Land law in Australia had to respond to the vast spaces and a less structured social system. This less-​ structured social system meant that that social function of land changed. Instead of a stable asset tied up within families for generations, it became a commodity the worth of which was the income it could produce.6 Having said this though, the particular way in which Australian courts have given content to native title rights may be seen as a reversal of that trend.7 [1.15]  As with the rest of the constitutional and legal structure, real property law in Australia

brought from England an elaborate edifice that supplied the range of interests in land and the processes for its transfer. Much of that structure seems to remain. The Crown is the ultimate owner of all land and the Crown grants estates in the land to natural and corporate persons. The interests those persons can create remain as inherited from English law: the fee simple, fee tail and life estates; leases; mortgages; easements; and profits à prendre. These interests were applied in a dual system of courts of common law and equity. After settlement, a new interest, the restrictive covenant, was based on English developments. Some have argued that Australian law is simply the adaptation of English law to the colonies and that the dominant principles are derived from that law. English real property law is generally recognised as the most distinctively English branch of the law in England.8 It is derived from the feudal order established after the Norman conquest.

4

5

6 7 8

Thomas, Griggs and Low, “Electronic Conveyancing in Australia –​Is Anyone Concerned about Security” (2014) 23 APLJ 1. See also the Model Participation Rules and the Model Operating Rules for electronic conveyancing, accessible from www.arnecc.gov.au. For discussion of the role of blockchains in land administration see Thomas, “Blockchain’s Incompatibility for Use as a Land Registry: Issues of Definitions, Feasibility and Risk” (2017) 6(3) EPLJ 361; Griggs, Thomas, Low and Schneider, “Blockchains, Trust and Land Administration: The Return of Historical Provenance” (2017) 6 PLR 179. Blockchains are also central to the potential introduction of “bricklets” in South Australia –​designed as a way for people to enter the property market: https://​premier.sa.gov.au/​news/​ sa-​based-​innovation-​to-​revolutionise-​property-​investment-​bricklet-​by-​bricklet. See Macpherson, “The Meaning of Property” in CB Macpherson (ed), Property: Mainstream and Critical Positions (University of Toronto Press, Toronto, 1978), pp 7–​10. See Grattan and McNamara, “The Common Law Construct of Native Title: A ‘Re-​feudalisation’ of Australian Land Law” (1999) 8 Griffith Law Review 50. The term “English law” is used deliberately to exclude analysis of the law in Scotland.

4 [1.10]

Concept of Real Property Law  Chapter  1

The Crown is recognised as the owner of all land in England and rights of the subject are derived from the Crown. The relationship of the Crown and the subjects is described by the doctrine of tenure and the interests of the subject are estates in land.9 It is certain that the doctrines of tenure and estates caused real property lawyers from an early time to conceive property in land to consist of rights in relation to the land, as distinct from the physical object. [1.20]  Application of the concept of tenure to Australia was generally assumed to mean that,

upon British acquisition of the various colonies (South Australia and Western Australia were never part of New South Wales), the land in that colony vested in the Crown and all private rights were derived from a grant by the Crown. This concept was then combined with the constitutional classification of Australia as a settled colony without any previous social order or social regulation (terra nullius). Consequently, the existing aboriginal inhabitants were denied any rights to the land where those rights were based on possession of the land prior to British acquisition. The Australian High Court in Mabo v Queensland (No 2) (1992) 175 CLR 1 rejected this conclusion and held that alongside the holding of the Crown were existing land rights. These rights were based on a relationship with the land prior to European settlement and were defined by native social regulation. Although very important, this decision did have an inherent limitation: it described native land rights as a qualification to the Crown’s acquisition of land ownership. A redefinition of the Crown title now seems to be the result of the perhaps more controversial decision of Wik Peoples v Queensland (1996) 187 CLR 1. That case concerned the potential extinguishment of native title by the grant of a Crown lease. The rights of the lessee were characterised as those of utilisation of the land without total control; other uses could co-​ exist, but it was argued that by creating the lease the Crown reserved an interest to itself (a reversion) at the end of the lease and this reversionary interest was inconsistent with any continuing native land rights. In rejecting this argument, the High Court pointed out that the Crown lease was a unique interest and a product of statute and held that the Crown’s interest was that of an ultimate or radical title. Most analysis favours the interpretation that the court has adopted a position that, as a result of tenure, the Crown does not have a beneficial interest in the same way as a grantee, but rather a supervisory or governmental role.10 This analysis draws some support and ideological strength from a more explicit conclusion that the interest of the Crown under legislation that vests ownership of all wild fauna in the state is regulatory in character.11 The fundamental nature of the interest of the Crown has therefore potentially been redefined for Australia. [1.25]  Assessment of the impact of the Torrens system is central to the controversy as to the

identity of Australian real property law. This system should be seen as changing the nature of interests in land. The system is one where title to land is derived from registration –​it is a system of title by registration and not one of registration of title.12 The system attempts to 9 10

11 12

These doctrines are analysed in [2.10]–​[2.40] and [2.85]–​[2.275] . Secher, “A Common Law Doctrine of Suspension of Native Title?: Judicial Interpretations of the ‘Reversion Expectant Argument’ and the Concept of ‘Operational Inconsistency’ –​Part 1 and Part 2” (2005) 12 APLJ 179 and Hepburn, “Feudal Tenure and Native Title: Revising an Enduring Fiction” (2005) 27 Syd L Rev 49. See further [2.35]. Yanner v Eaton (1999) 201 CLR 351. This characterisation is one of the most repeated descriptions of the Torrens system and its popular source is the judgment of Barwick CJ in Breskvar v Wall (1971) 126 CLR 376. [1.25]  5

PART 1 The Context of Real Property Law

designate the one person or persons who together hold all the interests in the land; it thus fundamentally departs from the concept of relativity of title whereby the courts determine which of the parties before them has the better title. The only registered interests that can exist in relation to Torrens system land are those recognised by the system. Nonetheless, the system does accept interests that cannot be set out in the central register. Consequently, there are both registered and unregistered interests, and unregistered interests are defined by case law. Unregistered interests are more susceptible to defeat. The unfriendly onlooker can dismiss the Torrens system as being concerned with the transfer of interests in land, rather than the nature of interests in land. The system can then be said to be relevant to conveyancing, rather than land law. It is true that the Torrens system builds from the range of interests in land at common law. However, any interest can only exist in so far as the system allows it to exist. For example, the enforceability in Australia of restrictive covenants has not flowed as readily as in England because of the difficulties of bringing those interests (which post-​dated the Torrens system) within the registration process. The system both describes the range of recognised interests and establishes the process for transferring those interests from one person to another. In addition to the existence of interests within the Torrens system depending on the system’s willingness to allow them to be registered or otherwise protected, the system has delivered vast changes to the nature of interests. It is customary, though not entirely accurate, to equate registered interests with legal interests and unregistered interests with equitable interests. In general, registered interests are enforceable against the whole world, but that quality derives from the absolute and indefeasible status conferred by the Torrens system legislation and is subject to its qualifications –​principal of which is the ease of being displaced as the registered proprietor.13 Furthermore, although unregistered interests (like equitable interests) are vulnerable, they are far more vulnerable than equitable interests because of the exemption of registered proprietors from the doctrine of notice. The protection of unregistered interests and priority between such interests also depends largely upon the caveat system. The Torrens system has retained the common law’s range of interests.14 The fee simple and life estates continue, as (in some jurisdictions) do fee tail estates. But in Australia traditional settlements have been virtually unknown and estates other than present fee simple estates have usually been given equitable form. The doctrine of tenure (whether or not fundamentally different) has little meaning for those who hold an estate, as the Crown’s tenurial interest has been largely theoretical. Furthermore, although mortgages have been retained as the primary form of security interest, they have been reformed to express the mortgagor or borrower as the owner of the land subject to the mortgagee’s right to take the land on non-​payment of the debt. Leases and easements have continued in form as they were received, but their content has developed considerably.

13

14

See the discussion of the difference between “static” and “dynamic” security in O’Connor, “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edinburgh Law Review 194 at 198–​199. “Static security” is the protection afforded to the current title holder to remain owner of the property until he or she voluntarily transfers it to another. “Dynamic security” refers to the protection afforded to a person, who can acquire good title, even in the face of a defective transfer or pre-​ existing interests. With the adoption of “immediate”, rather than “deferred”, indefeasibility, the Torrens system favours dynamic security over static security: see [4.135]–​[4.160]. Brendan Edgeworth has questioned whether this need be the case: Edgeworth, “The Numerus Clausus Principle in Contemporary Australian Property Law” (2006) 32 Mon U LR 387.

6 [1.25]

Concept of Real Property Law  Chapter  1

[1.30]  Beyond the reshaping of the interest of the Crown and the Torrens system, Australian

history has produced many other examples of individual expedients. The first departure from the English model came from a successful resistance to authority. Early colonial governments sought to restrict settlement to confined areas around Sydney and later what were to become Hobart, Brisbane and Melbourne. However, the interiors attracted sheep graziers in particular and they simply took such land as they desired; they became known as “squatters”. When their power became such that they were able to legitimate their position, a new form of landholding –​a Crown lease –​was created. A wide variety of leasehold forms were adopted and most of rural Australia was held under some form of lease. As has been seen above, the nature of interests under a Crown lease was to become significant in argument as the extinguishment of native title. The rights of many Crown lessees were held to be less than total control of the land and therefore not inconsistent with the existence of other rights over the land. There is a measure of justice in this limited interpretation of the interests of lessees whose claims originated with the legitimation of the rights of squatters who took the land unlawfully and evicted (and did worse to) native inhabitants. [1.35]  Even the definition of “land parcel” was affected by differences in Crown grants and

the definitions of boundaries. Crown grants differed from the English model in that they were subject to reservations, commonly of minerals, and later subject to depth limitations. Reservation of minerals meant that the Crown could make separate grants of mineral rights. Boundaries have been a particular focus of change. Again, Crown grants were the means to set back boundaries from river courses and deprive adjoining landholders of claims to the water; in England such claims were provided by riparian rights. Procedures were established for the resolution of fencing disputes with compulsory contributions to construction and repair; implied acquisition of easements was restricted to assist city building; boundary realignment could be ordered where buildings encroached; more recently, the grant of easements could be required again to assist development. Ownership of spaces within buildings together with procedures to manage shared space was enabled by the system of strata and community title. Persons wishing to live in communities of retirees have been given protection for their occupation and entitlements in the operation of the community. [1.40] While much of Australian real property law has been reshaped by legislation, little

attention has been given to the principles underlying much of the legislative reform. An understanding of real property law requires analysis not just of leading cases, but also of detailed legislation. For failings in this regard much blame must be attributed to academic neglect and the shortcomings of Australian legal education. Two great works on the Torrens system in the early part of the last century (by Hogg15 and Kerr16) seem to have had no connection with the universities. Two significant writers who published well-​known books, Baalman17 and Voumard,18 were practitioners with conveyancing specialisations in Sydney and Melbourne respectively. After World War II a study of land law principles19 was written 15 16

17 18 19

Hogg, The Australian Torrens System (W Clowes, London, 1905). Kerr, The Principles of the Australian Lands Titles (Torrens) System (Law Book Co, Sydney, 1927). Dr Kerr was an Adelaide practitioner, who received a doctorate for work on public law: see Castles, Ligertwood and Kelly (eds), Law on North Terrace (University of Adelaide, Adelaide, 1984), p 27. Baalman, The Torrens System in New South Wales (Law Book Co, Sydney, 1951). Voumard, The Sale of Land in Victoria (5th ed, Law Book Co, Sydney, 1996). Hargreaves and Helmore, Introduction to the Principles of Land Law (Law Book Co, Sydney, 1963). [1.40]  7

PART 1 The Context of Real Property Law

by Dr Helmore of the University of Sydney on the law of New South Wales alone, a constant feature of works on land law emanating from Sydney.20 [1.45] In Australia, real property law has had an important part in law school curricula

throughout the history of legal education in the country. Similarly, real property transactions have formed a significant aspect of legal practice. Nevertheless, the content of tertiary real property education has reflected the controversy discussed above as to the nature of Australian real property law. The emphasis through much of the 20th century was on English concepts and the mental exercises of applying the rules relating to future interests, in much the same way that composition of Latin verse was seen as a basis for training for international diplomacy. As argued by the authors, most of the developments fundamental to the principles of Australian real property law were the product of practitioners whose practical solutions have involved significant conceptual developments. [1.50]  The first edition of this text in 1991 was the first attempt to provide a comprehensive

text on Australian real property law. Various aspects of real property law had been dealt with in other works. There have been several important texts on the Torrens system21 and on the sale of land;22 other texts have covered specialist topics ranging from strata titles23 to retail tenancies to easements and covenants24 to Crown lands25 and native title;26 real property law generally in New South Wales has also been analysed.27 Since that first edition, introductory texts were produced28 and a detailed analysis provided of land principles of Queensland and Western Australia were produced. 29 Unlike areas such as torts and contract, real property 20 21

22

23

24 25

26 27

28 29

For example see Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, 2017). Edgeworth, Rossiter, O’Connor and Goodwin, Sackville & Neave: Australian Property Law (10th ed, LexisNexis, 2016). These texts include Hogg, The Australian Torrens System (W Clowes, London, 1905); Kerr, The Principles of the Australian Lands Titles (Torrens) System (Law Book Co, Sydney, 1927); Baalman, The Torrens System in New South Wales (Law Book Co, Sydney, 1951); Ruoff, An Englishman Looks at the Torrens System (Law Book Co, Sydney, 1957); Francis, The Law and Practice Relating to Torrens Title in Australasia (Butterworths, Sydney, Vol 1, 1972; Vol 2, 1973); Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982). These texts include Voumard, The Sale of Land in Victoria (5th ed, Law Book Co, Sydney, 1996); Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979); Butt, The Standard Contract for the Sale of Land in New South Wales (Law Book Co, Sydney, 1985); Duncan and Jones, Sale of Land in Queensland (LBC Information Services, Sydney, 1996). Bugden, Strata Title Management Practice in New South Wales (6th ed, CCH Australia, Sydney, 1992); Collins and Robinson, Strata Title Units in New South Wales (2nd ed, Butterworths, Sydney, 1982); Ilken, Strata Title Management and the Law (Law Book Co, Sydney, 1989); Moses and Tzannes, Strata Titles (Law Book Co, Sydney, 1978); Sherry, Strata Title Property Rights: Private Governance of Multi-​Owned Properties (Routledge, London, 2017). Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011). Lang, Crown Land in New South Wales (Butterworths, Sydney, 1973); Fry, Freehold and Leasehold Tenancies of Queensland (UQ Press, Brisbane, 1946); Brierley and Irish, The Crown Lands Acts of New South Wales (3rd ed, Law Book Co, Sydney, 1914). Bartlett, Native Title in Australia (1st ed, LexisNexis, Sydney, 2000; 2nd ed, 2004). Hargreaves and Helmore, Introduction to the Principles of Land Law (Law Book Co, Sydney, 1963); Butt, Introduction to Land Law (Law Book Co, Sydney, 1980); Oxley-​Oxland and Stein, Understanding Land Law (Law Book Co, Sydney, 1985). For example, Chambers, An Introduction to Property Law in Australia (13th ed, Thomson Reuters, Sydney, 2013). Webb and Stephenson, Focus: Land Law (4th ed, LexisNexis, Sydney, 2015). MacDonald, McCrimmon and Wallace, Real Property Law in Queensland (LBC Information Services, Sydney, 1998), the latest edition of which is Wallace, McCrimmon and Weir (4th ed, Thomson Reuters,

8 [1.45]

Concept of Real Property Law  Chapter  1

law has an extensive statutory base and those statutes differ markedly from State to State. Practitioners and law teachers acquire familiarity with the laws of their State but are inhibited by the strangeness, or at least the appearance thereof, of the laws of other States. One of the aims of this text is to enable simplified interstate comparisons. A significant part in the academic recognition of a unique Australian real property law comes from the work of the Law School of the University of Queensland. After World War II, the University of Queensland’s local focus can be seen in Fry’s published notes and Professor Harrison’s casebook.30 To today’s eyes what is peculiar about Professor Harrison’s work is its emphasis on fixtures  –​but he argued that he reflected the emphasis of the volume of cases in the Australian Digest. His work was also an attempt to support property teaching through case materials and publications. This effort received the backing of the then Australasian Law Teachers Association with New South Wales opposition. A  considerable change in legal education came with the publication of Sackville and Neave’s Property Law Cases and Materials in 1971. Not only did the work adopt an Australian bias and focus on socially relevant problems in Australia at that time, but it examined what was special about property rights.31 Professor Sackville also chaired the Law and Poverty section of the Poverty Commission Inquiry and, again, investigation instigated by the national government, and thus outside the academic world, led to property law reform particularly in relation to residential tenancies. The publication of Professor Harrison’s casebook was, as noted above, assisted by the body representing law teachers in Australia and New Zealand. As the number of law schools in Australia has grown to more than 40, collaboration between law teachers has been more at the level of specialist subject groups. Australasian real property law teachers now meet on an 18-​month cycle. One particular area where there is a large degree of support is the call for uniformity of Torrens system statutes: to date, little progress has been made.32

DEVELOPMENT OF REAL PROPERTY LAW IN AUSTRALIA [1.55]  Upon settlement of the various Australian colonies in the early 19th century, British

statute and common law was received and applied. The immediate impact was the now qualified feudal doctrine that all land is owned by the Crown and that private rights depend upon a grant from the Crown. There was also a large body of law relating to proprietary rights in land. Much of the conceptual framework was well established:  the doctrines of tenure and estates, the role of equity in the protection of trusts, the nature of mortgages as a result of redemption and foreclosure, and the concept of incorporeal hereditaments such as profits à prendre and easements. Case law in the 19th century marked out the implied

Sydney, 2014); Honey, Mugambwa and Webb, Real Property Law in Western Australia (Thomson Reuters, Sydney, 2017). 30 31

32

Harrison, Cases on Land Law (Law Book Co, Sydney, 1958). A second edition appeared in 1965. Conceptually it owes much to Jackson, Principles of Property Law (Law Book Co, Sydney, 1970). On property teaching in universities generally, see Carruthers, Skead and Galloway, “Teaching Property Law in Australia in the 21st Century: What We Do Now, What Should We Do in the Future” (2012) 21 APLJ 57. Such a call was also made by some participants at “The Integrity of the Register” symposium held at Bond University in December 2008. See Weir, “Preface” (2009) 21 Bond Law Review i. See also Hunter, “Uniform Torrens Title Legislation: Is There a Will and a Way?” (2010) 19 APLJ 201, which is a revised version of a paper delivered at the symposium. [1.55]  9

PART 1 The Context of Real Property Law

covenants of a lease, defined the characteristics of an easement, created restrictive covenants as new proprietary interests and specified equitable intervention in response to common law formality rules. The contribution of the Australian courts to this legal growth was insignificant. [1.60]  The feudal system as applied in Australia was uncomplicated and all grants were by

way of free socage tenure. As has been noted (see [1.30]), the early spread by the squatter pastoral class of unlawful settlement well beyond the official limits resulted in the development of unique interests in land. Subsequently some security of title was sought for this illegal landholding and the early colonial legislature was sympathetic to the squatters’ claims. A system of Crown grants of leasehold interests33 evolved. There were many different forms of leasehold tenure and special rules applicable to the various forms. In recent times, the various tenures have been simplified, but much of rural Australia remains subject to Crown leasehold arrangements. The squatters gained some security of tenure through the system of leasehold grants. But they also needed access to money. Mid-​19th century banking practice was averse to accepting land as a security.34 Bank charters and banking regulations forbade loans on the security of a mortgage over land.35 Moreover, the squatters’ title was not permanent. From 1843, legislation was introduced to allow for security to be granted over stock and crops through stock mortgages, wool liens and fruit or crop liens. These arrangements conferred interests in crops yet to be harvested and wool yet to be shorn. The legislation paid particular attention to the problems of possible invalidity on the subsequent bankruptcy of the squatter.36 [1.65] The special place of real property as opposed to personal property in the English

legal system was never wholeheartedly adopted in Australia. From 1813 debt recovery laws treated real and personal property almost alike.37 In 1862 the New South Wales legislature changed the law of inheritance on intestacy so that real and personal property were treated alike and the preference for eldest males with respect to real property was abolished (as a result of what is described as “Lang’s Act”). The New South Wales legislature was reflecting Australian public opinion and not merely copying English reforms that were moving in the same direction at the same time. The laws of dower which gave rights to widows were also subject to colonial review.38 [1.70]  The initial settlement along the east coast commenced as penal colonies. Subsequently,

a government effort was made to establish a colony of free settlers where small landholders and agricultural workers were to be encouraged. A policy of land sales at substantial prices was adopted largely for South Australia from the ideas of Edward Gibbon Wakefield.39 This system failed in part because land speculation led to fraudulent dealings that exploited the cumbersome English process of land transfer. The colony came close to insolvency. Land

3 3 34 35 6 3 37 8 3 39

On Crown grants of leasehold interests generally, see [6.15]–​[6.135]. Holden, Securities for Bankers’ Advances (2nd ed, Pitman Publishing, London, 1957), p 15. Davidson and Wells, “The Land, the Law and the State: Colonial Australia 1788–​1900” (1982) 2 Law in Context 89 at 109. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 2002), p 499. Kercher, “An Indigenous Jurisprudence? Debt Recovery and Insolvency Law in the New South Wales Court of Civil Jurisdiction, 1788 to 1814” (1990) 6 Australian Journal of Law and Society 1 at 15–​49. Buck, “Torrens Title, Intestate Estates and the Origins of Australian Property Law” (1996) 4 APLJ 8. The Wakefield theories are outlined at [6.70].

10 [1.60]

Concept of Real Property Law  Chapter  1

speculation had encouraged acquisition and dealing in land by absentee landholders, with this done without regard for the development of the land. As the transactions were little more than paper exchanges, the opportunities for bogus chains of title and even bogus land areas were considerable. Land speculation continued as a feature of Australian land dealings; land booms were the precursors to the busts of the 1890s and 1920s. Land grants were used to support public works and knowledge of public works used to purchase land the price of which was to benefit from those works.40 One such schemer was Thomas Bent, who bought land adjoining Melbourne’s south-​east railways. Even irrigation schemes involved public expenditure for the benefit of private landholders. The First Mildura Trust involved $2 million in debts.41 The Torrens system was introduced to simplify the land transfer process and make land titles more certain.42 The Torrens system provided a register which described the land and designated the owners of interests in that land. Dealings in the land were effected by entries upon the register. The Torrens system was first introduced in South Australia in 1858 and quickly followed in the other Australian States and subsequently in many overseas jurisdictions. However, the system has not become universal because land alienated prior to the system’s coming into force was not automatically brought under the system. Some land in Victoria and New South Wales, in particular, remains outside the system. Only in Queensland and South Australia is the process of bringing all land within the system practically complete. Alongside the Torrens system, all States and Territories had statutes dealing with property matters in general. In most cases, these statutes dealt with personal, as well as real, property. In all jurisdictions, in some instances, the statutes are intended to apply to Torrens system land, but in many cases provisions overlap in a confusing way.43 [1.75] In Britain in the second half of the 19th century land law was to be significantly

affected by two main issues:  the freeing of land for development through the settled land legislation and the reforms of the court structure put in place by the Judicature Act 1873 (UK). Settlements had historically been a device for the spreading of land title throughout a family for generations and were thus a denial to the current holder of any absolute title. The settled land legislation empowered that holder of the land to deal with the land and to transfer rights of family members to the proceeds of any disposition. In Australia, formal settlements had not been common, so the settled land legislation was not needed to free land in the same way as in Britain, but there were many common situations where the legislation did facilitate dealings. This legislation was copied in all jurisdictions. Later the legislation was reformed in some jurisdictions through the use of trustees with power to deal with the land and to translate the rights of the beneficiaries into rights over the proceeds of any dealing. The existence of separate interests at common law and equity was a peculiar feature of the British system: the different interests were protected by different courts. The Judicature Act 1873 meant there was one court hierarchy. The separate system of courts had been inherited in Australia and all jurisdictions adopted some parts of the Judicature Act 1873, although it was not until 1970 that New South Wales did so. The single court continued to administer separate

40 1 4 42 43

Gates, History of Public Land Law Development (Gaunt, Washington DC, 1968). Frith and Sawer (eds), The Murray Waters (Angus & Robertson, Sydney, 1974), p 163. Torrens, The South Australian System of Conveyancing by Registration of Titles (1859), p 8. The preamble to the Law of Property Act 1838 (SA) refers to this goal. [1.75]  11

PART 1 The Context of Real Property Law

legal and equitable principles with little attempt, until very recently, at fusion of principles. The intermixture of legal and equitable rights and remedies is still frowned upon by some writers, and those, including the current authors who argue for a single system, are accused of “fusion fallacy”.44 The current authors argue for intermixture in order that the courts may better assist the parties before them. The combination of legal and equitable jurisdictions in a single court was moreover confined to the superior courts and the lowest civil courts typically lacked an equitable jurisdiction. As a consequence, an action like nuisance, where annoying conduct of a neighbour is sought to be restrained, effectively remained confined to the superior courts, which could issue the equitable remedy of an injunction. Reform further extending equitable jurisdiction has therefore transformed the availability of a right by providing a remedy. [1.80]  The Commonwealth of Australia came into being on 1 January 1901, its existence in

formal legal terms deriving from the British Commonwealth of Australia Constitution Act 1900. The Constitution provides for the executive government of the Commonwealth and under s  61 the executive power is vested in the Queen and exercisable by the Governor-​ General as the Queen’s representative. The executive power includes the power to acquire land. The Commonwealth may also gain land by the surrender of territory by a State, although any surrender must be approved by the Parliament of the State and accepted by the Commonwealth.45 Compulsory acquisition of property by the Commonwealth may be authorised by laws of the Commonwealth Parliament. Under s  51(xxxi) of the Constitution, the Commonwealth may make laws for the acquisition of property on just terms from any State or person for any purpose for which the Commonwealth has power to make laws. While this section is an enabling provision and makes it clear that the Commonwealth may acquire property from the States, the section places significant limits on the exercise of power. Any acquisition must be on just terms and for a purpose that is a subject of Commonwealth power. Just terms involve reasonable compensation, a concept that is the subject of much judicial consideration.46 The protection from compulsory acquisition without reasonable compensation is not applied by the Constitution to acquisitions by the States.47 The States confer power by legislation upon State instrumentalities to acquire property compulsorily and that legislation provides for compensation. However, there is no constitutional base to attack the compensation thus provided as being, in any particular instance, unjust, or to attack any restriction on land use by planning legislation, for example, as a taking for which no compensation is paid. The property of the Commonwealth and the property of a State is each protected from taxation by the other. Under s 114 of the Constitution, a State shall not impose any tax on property of any kind belonging to the Commonwealth, and the Commonwealth shall not impose any tax on property of any kind belonging to a State. A limited interpretation has been

4 4 45 46 47

Tilbury, “Fallacy or Furphy” (2003) 26 UNSWLJ 35. Constitution, s 111. The early seminal cases on this issue include Grace Bros Pty Ltd v Commonwealth (1946) 72 CLR 269 and Bank of New South Wales v Commonwealth (1948) 76 CLR 1. Unless, however, the Commonwealth has granted financial assistance to the State on conditions that require the State to acquire property on other than just terms. In such a case, s 51(xxxi) of the Constitution will apply: ICM Agriculture Pty Ltd v Commonwealth (2009) 240 CLR 140 at 170 per French CJ, Gummow and Crennan JJ, at 206 per Heydon J.

12 [1.80]

Concept of Real Property Law  Chapter  1

given to this protection in that a customs duty has been held to be not a tax on property, but a tax on the act of importation.48 The Commonwealth is given exclusive legislative power by s 52(1) of the Constitution with respect to all places acquired by the Commonwealth for public purposes. The exclusive nature of this power means that State laws cannot apply to such places.49 To overcome an absence of civil and criminal laws in such places, the Commonwealth Places (Application of Laws) Act 1970 (Cth) adopts for them the laws in force from time to time in the States in which the places are situated. The statement of legislative powers in the Constitution says little about land. Of its nature, land was regarded as local and thus an appropriate subject for State laws. As the States predated the Commonwealth, vacant land had vested in the States. Land for the Australian Capital Territory and the Northern Territory was transferred to the Commonwealth by New South Wales and South Australia respectively. The structure of the Constitution is such that State laws apply in the absence of any exclusive Commonwealth power and in the absence of any inconsistent Commonwealth law on a subject on which the Commonwealth has a non-​exclusive power (the effect of ss 108 and 109 of the Constitution). The non-​exclusive legislative powers of the Commonwealth are extensive in relation to intangible property (currency, coinage and legal tender: s 51(xii); bills of exchange and promissory notes: s 51(xvi); and copyright, patents and trademarks: s 51(xviii)). In relation to land, some of the Commonwealth non-​exclusive powers enable laws that may affect land transactions (interstate trade and commerce: s 51(i); bankruptcy and insolvency: s 51(xvii); and trading or financial corporations: s 51(xx)). The bankruptcy power was not significantly used by the Commonwealth until introduction of the Bankruptcy Act 1924 (Cth) and the trade and commerce and corporations powers were not significantly used to make laws with respect to commercial transactions until the introduction of the Trade Practices Act 1974 (Cth).50 [1.85]  One legislative reform of the turn of the century affecting land was the enactment by

all States of fences legislation: see [16.320]. This legislation establishes a procedure for the sharing of fencing costs. A landowner proposing to erect a boundary fence serves notice on the neighbour setting out details of the proposal. Counter-​proposals may be made. Disputes may be determined by local courts. The legislation establishes a general liability between neighbours to share fencing costs and provides a relatively simple and inexpensive means of enforcing the liability and resolving disputes. The legislation appears to have been unique at the time to Australasia, perhaps drawing on practices of local courts. To some extent, the law is reflecting the Australian concern for a detached dwelling on a defined quarter acre. This concern is now being reflected in contests between neighbours, one of whom is arguing vociferously for a right to privacy, the other the right to a view that is currently being blocked by large trees or hedges planted on the neighbouring land. Jurisdictions such as New Zealand, England and Wales, New South Wales, Queensland and Tasmania have already legislated in respect of this issue.

48 49 50

Attorney-​General (NSW) v Collectors of Customs (NSW) (1908) 5 CLR 818; cf Essendon Corporation v Criterion Theatres Ltd (1947) 74 CLR 1; Queensland v Commonwealth (1987) 162 CLR 74. Worthing v Rowell and Muston Pty Ltd (1970) 123 CLR 89; R v Phillips (1970) 125 CLR 93. Trade Practices Act 1974 (Cth) is now titled the Competition and Consumer Act 2010 (Cth). [1.85]  13

PART 1 The Context of Real Property Law

[1.90] The relationship between owners of neighbouring allotments was affected by the

aspect of British property law involving the ability to acquire easements through long use as a result of the doctrines of prescription and lost modern grant. The applicability of these doctrines produced a rare judicial outburst of colonial independence. In Sheehy v Edwards, Dunlop & Co (1897) 13 WN (NSW) 166 at 168 Manning J stated: Can one say that a [prescriptive right to light] is reasonably applicable …? When people were looking forward to the future of this country, to large cities and towns being established, when the streets and roads were first laid out in spots still then uncultivated, was it reasonable that a man, by acquiring a plot of ground and building as they did in those days a small shanty … should be able after 20 years’ enjoyment to prevent his neighbour building so as to interfere with the light entering into that one window? If that were so, a man by buying alternate allotments through … Sydney would have had it in his power to block completely the erection of any buildings of a more substantial size.

This view was not to prevail, at least in courts. In Delohery v Permanent Trustee Company (NSW) (1904) 1 CLR 283d the High Court ruled that rights of light could be acquired through the doctrine of lost modern grant. However, the legislatures acted and, in the case of Western Australia, in 1902, even before the High Court decision. Between 1902 and 1911 all Australian States enacted legislation to prevent the coming into existence of any right to the access or use of light by reason of the enjoyment of such access to use for any period. [1.95] Concern over boundary disputes also led some States from the 1920s to enact

encroachments legislation.51 A landowner can apply for a determination that a building or structure encroaches onto her or his land. If an encroachment exists, an order may be made for its removal. But, most significantly, the court is given a discretion to amend the boundary to allow for the encroachment on the condition of payment of compensation for the land thus gained. More recently, encroachment onto adjoining land, not just for buildings, has been enabled in some jurisdictions through a power given to courts to order the grant of an easement to the owner who seeks to encroach. [1.100]  The Crown has generally been entrusted with rights to resources and separate regimes

created for their allocation. Water law was reformed at the end of the 19th century. English law had emphasised rights of those whose land bordered rivers (riparian rights).52 However, in Australia boundaries were largely retained in Crown ownership and then legislation such as the Water Rights Act 1895 (Qld) vested rights of the flow and control of all waters in rivers and lakes in the Crown.53 [1.105] The interaction of urban development, economic circumstances and the necessities

of war caused the more significant legislative actions with respect to land from the early part of the 20th century to the 1950s. This interaction is reflected in controls on land use and subdivision, housing standards and arrangements between property owners and tenants. The general trends flowed from concerns after World War I for a more pleasant urban environment; after the Depression to eliminate slums and curb exploitation by speculators and property

1 5 52 53

The legislation in its current form is analysed at [16.295]–​[16.310]. Chasemore v Richards (1859) 7 HLC 349; Gartner v Kidman (1962) 108 CLR 12. See generally Fisher, Water Law (LBC Information Services, Sydney, 2000), Ch 5.

14 [1.90]

Concept of Real Property Law  Chapter  1

owners; during World War II to regulate extensively in the national interest; and, after World War II, to set a framework for orderly reconstruction. After faltering initial steps in the 1920s, land-​ use planning was a central concern of 54 reconstruction after World War II. More effort was probably directed to the preparation of elaborate schemes for the dominant and ever-​ sprawling capital cities than to the implementation of sensible and workable controls, but the landholder’s freedom to develop as he or she pleased was controlled. Public housing authorities were set up after the Depression to tackle the physical manifestations of unsatisfactory living conditions and, in particular, the disadvantage faced by children growing up in such conditions.55 The establishment of these authorities may be viewed as simply adding another landowner, albeit public, but the authorities did have extensive powers of compulsory land acquisition (which caused much dislocation) and powers to order works by private landowners to eliminate substandard housing conditions. Moreover, because efforts were directed to governmental housing construction, little attention was given to private landlord and tenant relationships and, at a policy level, to more subtle economic measures to alleviate substandard housing conditions. Private landlord and tenant relationships56 were controlled during the First and Second World Wars on the basis of housing shortages caused by emergency conditions. Security of tenure and rental controls were imposed.57 These controls were taken over by the States after the war and somewhat haphazardly lingered on thereafter. An emphasis upon home ownership and the growth of the major metropolitan areas led in the 1960s to a need for alternatives to the suburban quarter-​acre allotment. While high-​ rise accommodation tended to be rented public housing, the combination of land ownership and housing that is more compact tested the ingenuity of Australian property lawyers. The most common technique adopted was the formation of a company to own the allotment and the grant of shares in that company to persons seeking to acquire residences within that allotment. Those shares carried with them rights of occupation, but the company was the legal beneficial owner of the land and the individuals’ shares conferred rights against the company. Ultimately, legislation was introduced in all jurisdictions for the system of strata and community titles which kept the company structure and company ownership of common property, but gave the individuals a registered title to their residences: see [13.70]. [1.110] The reformist period of the 1970s produced little by way of change in property

law. In the longer term, the general regulation of commercial practice by the Trade Practices Act 1974 (Cth) (renamed the Competition and Consumer Act 2010 (Cth) from 1 January 2011)  has probably more significance for land dealings than other reforms.58 The 1976 amendments to the Trade Practices Act 1974 introduced specific proscriptions against misleading statements on the sale of land (s 53A, see now Australian Consumer Law, s 30, Competition and Consumer Act 2010 (Cth), Sch 2). However, more significant has been the

54 55 56 7 5 58

Hutchings and Bunker (eds), With Conscious Purpose: A History of Town Planning in South Australia (Wakefield Press, Adelaide, 1986). Bradbrook, MacCallum and Moore, Residential Tenancy Law and Practice –​Victoria and South Australia (Law Book Co, Sydney, 1983), pp 27–​36. See Bradbrook, “The Evolution of Australian Landlord and Tenant Law” in Ellinghaus, Bradbrook and Duggan (eds), The Emergence of Australian Law (Butterworths, Sydney, 1989), pp 114–​118. See Bellhouse, “National Security (Landlord and Tenant) Regulations” (1947) 20 ALJ 470. The Competition and Consumer Act 2010 (Cth) provisions are set out in detail in Chapter 9. [1.110]  15

PART 1 The Context of Real Property Law

general prohibition of misleading or deceptive conduct (now Australian Consumer Law, s 18 (Competition and Consumer Act 2010, Sch 2)) and the resultant remedies of damages and contractual avoidance for those injured by breach.59 In the late 1980s these provisions were copied in State and Territory fair trading laws. The general prohibitions were extended to unconscionable conduct affecting both consumers and small business.60 Credit transactions underlying land mortgages are particularly susceptible to unconscionability attack. Today, remedies and norms in this area largely derive from cooperative arrangements between States and Territories that has led to what it is, in theory, if not quite in practice, a national regime of consumer and credit law.61 [1.115] The problem of perpetuities was tackled during this period. The complexity of

the common law rules had long been exploited to the suffering of law students and the embarrassment of legal practitioners. Reform was not a uniquely Australian movement and has had a theoretical rather than practical bent with little regard for the needs of legal simplification. Again, the Australian States all went in separate directions with legislative changes through the 1970s, 1980s and 1990s.62 The rule was designed to prevent schemes whereby for a long period into the future no-​ one is permitted to be the absolute owner of land. These schemes would prevent land from being the subject of market dealings and deprive society of the utilisation of the asset for its most efficient purpose, which market availability for the highest bidder is designed to achieve. A person setting up a scheme, commonly on death through the provisions of a will, is able to project that his or her intention into the future. By promoting alienability, the rule against perpetuities is a necessary concomitant to those rules allowing the legal alienation of land.63 While reform in Australia has been described as largely derivative, a fundamentally different approach has been adopted in South Australia by the abolition of the rule against perpetuities.64 The South Australian legislative provisions do not invalidate dispositions (as occurs under the rule), but rather allow the land to be claimed after a nominated period by the persons with the greatest interest. South Australia relies upon fiscal measures to achieve much of the aim of the rule. However, the abolition of the rule occurs alongside an earlier abolition of death duties. Today, capital gains taxation is the most important fiscal legislation affecting long term landholdings, so that in the absence of perpetuities invalidity, interesting possibilities arise as to the avoidance of such taxes upon the operation of family trusts if the trust avoids capital realisation.65 Outside South Australia, perpetuities reforms have retained the basic prohibition but have softened the often technical bases of invalidity.

59 60 61

62 63 64 5 6

Moore and Tarr, “Consumer Protection” in Baxt and Kewley (eds), Annual Survey of Law 1986 (Law Book Co, Sydney, 1987), pp 176–​180. Moore and Tarr, “Consumer Protection” in Baxt and Kewley (eds), Annual Survey of Law 1986 (Law Book Co, Sydney, 1987), pp 181–​182 and 185–​186. For example, Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Sch 2) applies throughout all jurisdictions. As regards credit law, the applicable national legislation is the National Consumer Credit Protection Act 2009 (Cth). See [11.20]. The rules supporting alienability flow from the Statute of Quia Emptores of 1290 (see [2.20]) and are discussed at [2.245]. They are subject to the family restraint allowed by the fee tail estate as discussed at [2.110]. See now Law of Property Act 1936 (SA), Pt 6. The South Australian legislation could potentially be applied more widely by the adoption in the drafting of settlements of the law in South Australia as the governing law.

16 [1.115]

Concept of Real Property Law  Chapter  1

[1.120]  Throughout the period between 1960 and 1985, Queensland had been regarded as

politically the most conservative of the States. However, that State did achieve a fundamental restatement of general property law in the Property Law Act 1974 (Qld). While the passing of the Act can probably be attributed to its technical nature and lack of radical change, it does achieve a modern, coherent and cohesive statement of the law. The Property Law Act 1974 adopts the English position that all future interests are equitable rather than legal. It adopts a preference for tenancy in common over joint tenancy and establishes third-​party rights under contracts and conveyances. It sets out rights and obligations of landlord and tenant and mortgagee and mortgagor, including the imposition of a duty of care on sale by a mortgagee. Complete rewritings of the Torrens system statutes were undertaken in four jurisdictions. In 1994 Queensland followed its reform of the general property law statute by a reform of the Torrens system statute in the Land Title Act 1994 (Qld).66 This Act maintained the pattern of systematic review and overall cohesion in place of the often confusing interaction of the 1861 and 1877 Real Property Acts. In 1980, Tasmania adopted a Land Titles Act (Tas), most notable for its definition of “indefeasibility” in s  40. In 1995, the Australian Capital Territory substantially amended the Real Property Act 1925 (ACT) by the Land Titles (Amendment) Act 1995 (ACT) to create the Land Titles Act 1925 (ACT). In 2000, the Northern Territory passed the Land Title Act (NT), which is very similar to the 1994 Queensland Act. All jurisdictions have adjusted to computerised land title records with New South Wales now the lead jurisdiction for the introduction of a national system of electronic conveyancing.67 Property Exchange Australia Ltd (PEXA)68 will be the land equivalent of the Australian Stock Exchange, though other exchange operators are looking to become an option for stakeholders; which ultimately will raise questions in relation to the interoperability of different land exchanges. Stakeholders involved within the conveyancing process, such as banks, solicitors and conveyancing agents will become subscribers to PEXA and will be bound and regulated by the model participation and model operating rules.69 These rules will impose greater responsibility on these stakeholders than what occurred under the previous, largely paper based, conveyancing system. Some of these increased responsibilities will see these stakeholders having to verify identity of the clients with a failure to do so leading to penalties under the regulatory regime (such as suspension from the system), or, as has happened in some jurisdictions, and specifically relating to banks, with loss of the benefits of indefeasibility. [1.125] Although much of the framework of the received law of easements and freehold

covenants has been retained, its substance has been reshaped by legislative developments. Rules as to the creation of easements and covenants have been eased as a result of statutory creativeness in the introduction of strata or community title schemes.70 Powers to impose easements upon unwilling landholders have been granted to encourage more intensive urban development.71 Powers to modify or extinguish easements and covenants have been

66 67 68 69 70 71

See Wallace and MacDonald, “A New Era in Torrens Title in Queensland –​The Land Title Act 1994” (1994) 68 ALJ 675. Electronic Conveyancing (Adoption of National Law) Act 2012 (NSW). www.pexa.com.au. See www.arnecc.gov.au for the latest version of the model participation and model operating rules. See [13.70]. See Grattan, “The Name(s) of the Rose: Personality, Preferences and Court Imposed Easements” (2004) 10 Canterbury Law Review 329. [1.125]  17

PART 1 The Context of Real Property Law

enacted: see [17.440] and [18.285]. The place of freehold covenants, particularly under the Torrens system, has not been readily resolved.72 At least in Queensland, a substantial rejection of the place of freehold covenants as restraints on title has occurred.73 Some of the rigidity of the principles relating to easements and covenants has been outflanked as the result of the use of similar interests by government instrumentalities for planning purposes. Planning laws have sought to preserve natural and artificial features of the environment. Restrictions upon owners of heritage buildings have become onerous.74 Reform measures go beyond the regulation that occurs under building controls and land-​use planning laws and use private law property techniques.75 Consequently, many easements operate in favour of public instrumentalities76 (now often privatised) and they do not meet the basic common law requirement of being for the benefit of the owner of neighbouring land.77 Agreements relating to future land-​use exist between landowners and government instrumentalities to achieve heritage or planning aims.78 Resort to property techniques rather than regulation has been evidenced in the development of land-​management agreements between landowners and government agencies.79 These agreements extend beyond the negative covenants between neighbouring owners enforced by equity to impose positive obligations for land management and are registered as encumbrances on title. Even burdens for environmental clean-​up are imputed in a manner similar to securities by way of mortgages by the form of charges on land upsetting traditional priorities.80 [1.130] One social reform in the land law area given attention by the national Poverty

Commission Inquiries of 1974 was that of residential landlord and tenant law.81 Reform was urged on the general basis of the imbalance caused by reliance on freedom of contract, the procedural difficulties of the local court system and the inappropriateness of rules based on a feudal agricultural society to the 20th-​century urban situation. A  comprehensive restatement of the law came first in South Australia with the Residential Tenancies Act 1978 (SA). Similar comprehensive statements of the law now exist in all jurisdictions and in some instances protection extended to boarders and lodgers and caravan park residents: see [15.115]–​[15.150] and [15.155]–​ [15.175]. Attention has focused on a detailed statement of the rights and obligations of the parties and remedies to provide more ready enforcement. Reform may thus have concentrated on contractual provisions at the loss of proprietory rights; little has been done to provide security of tenure or to provide some claim against the land for the value of improvements. Furthermore, tenants, as opposed to other land occupiers, have been subject to eviction for neighbourhood disturbance. 72 3 7 74 5 7 76 77 78 79 80 81

See Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), p 864. See, for example, Ryan v Brain [1994] 1 Qd R 681. Jensen, “Conversion of Historic Buildings, Redevelopment and Town Planning: A Problem of Environmental Design” (1984) 1 EPLJ 212. For a discussion of land use controls, see [1.280]–​[1.305]. See Gas and Fuel Corporation of Victoria v Barba [1976] VR 755. The principle was affirmed in Concord MD v Coles (1905) 3 CLR 96. See, for example, Development Act 1993 (SA), s 57. Sames v City of Mount Barker [2004] SASC 374. See, for example, Environment Protection Act 1993 (SA), s 101. Sackville, Australian Government Commission of Inquiry into Poverty: Law and Poverty in Australia: second main report, October, 1975 (known as the Sackville Report), c­ hapter 3.

18 [1.130]

Concept of Real Property Law  Chapter  1

[1.135]  Further reforms in the landlord and tenant area have been directed towards retail

tenancies and retirement villages. Retail tenancy legislation has been designed to address in particular the problems of small retailers in large shopping centres. The different needs caused by compact housing forms have resulted in particular problems for the aged who have been encouraged into specialist accommodation through such factors as the existence of a more compatible community and the availability of nursing care. Regulation in this area has come from retirement villages legislation: see [15.180]–​[15.350]. [1.140]  While the adoption of the Torrens system has been the most defining feature of the

Australian land law, even that step has not been achieved by uniform legislation among the States. South Australia was the first State to adopt the system in 1858, but perhaps because of that position it undertook substantial revisions of its statute between 1858 and 1886. New South Wales and Western Australia have only tinkered with their legislation. The Victorian Act has undergone substantial changes and rewriting. As pointed out at [1.120], Queensland, Tasmania, the Australian Capital Territory and the Northern Territory have adopted rewritten statutes. In all jurisdictions adaptation to technology has provoked interest in amendment. A plea for uniformity of the Torrens system was made by Hogg in 192782 and repeated by Whalan in 1982.83 Professor Whalan added his concern for land data banks. Whereas Whalan was describing the registration system, the current authors are describing real property law in Australia. They must therefore not only cope with a lack of uniformity of Torrens system statutes, but also a lack of universality of the Torrens system. There are registration procedures outside the Torrens system that affect such land, but generally land outside the system is governed by a mix of common law and general property law statutes. Again, those property law statutes vary markedly from State to State. Equally distressing is that their relationship with the Torrens system statutes varies and can often be obscure. The general property law statutes may have been seen as having only a limited life once the Torrens system was introduced, but there is a pressing need today to examine which of the principles can meaningfully apply to the Torrens system land. The Torrens system statutes adopt common principles as to indefeasibility of title and agree in the restructuring of the form of a mortgage. But even with respect to title, there may be differences as to the effect of forgery and the protection of volunteers. There are differences as to the prima facie form of co-​ownership and as to the recognition of claims based on adverse possession, the recognition of implied easements and of restrictive covenants. The point at which to divide between informal and formal leases and the extent or protection for informal leases is not agreed upon and, if anything, is made more obscure by recent legislation. The differences between the property law statutes reflect more the extent to which common law technicalities have been overcome by statute. The differences between the States with respect to the content of Torrens system and general property law statutes might be ascribed to the greater independence from one another, both politically and geographically, of the then Australian colonies of the 19th century. Related statutes, such as those concerning settled land and limitation of actions, might be similarly explained. However, the States continue to frame statutes about real property matters with a diversity that can only be described as perverse. For example, the boundary between unit

82 83

In the preface to Kerr, The Principles of the Australian Lands Titles (Torrens) System (Law Book Co, Sydney,  1927). Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p viii. [1.140]  19

PART 1 The Context of Real Property Law

property and common property is placed differently in the strata titles legislation84 and the definition of “retirement village”85 is different in each statute on the topic. The differences in no way appear to reflect peculiar circumstances in the various States. Legal resources are wastefully consumed on analysis of differing wordings. Differences in land-​use planning laws are so great that it has been almost impossible for planning lawyers to get together nationally to discuss common problems.86

SOCIAL PURPOSE OF REAL PROPERTY LAW [1.145] The historical survey of real property law developments in Australia is based on

an initial assumption that land will be subject to private ownership. That assumption has not been seriously questioned during the period of European occupation. The acceptance of the principle of tenure has meant that there is a relationship between the individual and the State in relation to all land, but this relationship has been largely theoretical and for a long time private freehold owners have been free from any obligations to the State arising from the tenurial relationship. The system of leasehold tenure has been used where there has been a desire to impose obligations towards the State. The only other consideration of financial burdens on landowners has arisen in the context of the imposition of rates and taxes in favour of local and State governments. Some experimentation has occurred through the levying of rates on the unimproved value of land on the theory that landowners are thereby encouraged to seek an economic return from the land.87 [1.150] Private land ownership has been supported by traditional economic analysis on

the basis that it not only encourages maximum utilisation of the land, but also ensures consideration of the future condition of the land. The rational landowner will not exploit the land to the point where current returns are outweighed by future loss of productivity. Nonetheless, the position of the private owner is contrasted with public enjoyment of physical resources. Each individual with access to public facilities is encouraged to overexploit the facilities because that individual will derive the total benefit from overexploitation, but the burdens will be shared by everyone with rights of access.88 It is therefore suggested that the success of the agrarian revolution is tied to enclosure and the removal of rights of commons. By contrast, pollution is blamed on public access to air and water. The polluter reaps the profit of the polluting activity but the burdens are transferred to society as a whole. The economic basis for private land ownership leads to the conclusion that the initial allocation of land should be made to the person who is likely to make the most efficient use of that land.89 This conclusion lends support for the selling of Crown land by public auction (a process which has occurred in the Australian Capital Territory) and the related and highly publicised process of tendering for new radio and television broadcasting licences.

4 8 85 86 87 88 89

On strata boundaries, see [13.305]. On the retirement village definition, see [15.195]. Ryan, “Metropolitan Planning in Australia: The Instruments of Planning –​Regulation” (1988) 5 EPLJ 147. Hagman, “The Single Tax and Land-​Use Planning: Henry George Updated” (1963) 12 UCLALR 762; Osborne v Commonwealth (1911) 12 CLR 321; Stein, Urban Legal Problems (Law Book Co, Sydney, 1974), pp 49–​59. Hardin, “The Tragedy of the Commons” (1968) 162 Science 1243; Posner, Economic Analysis of Law (7th ed, Little Brown, London, 2010), Ch 3. Posner, Economic Analysis of Law (7th ed, Little Brown, London, 2010), pp 50–​55.

20 [1.145]

Concept of Real Property Law  Chapter  1

These processes are supported on the basis that the most efficient user is able to outbid others. Whatever the initial allocation, it is assumed that a more efficient user will be in a position to buy the land. The initial allocation is relatively unimportant in terms of ensuring the ultimate most efficient use of the land if land can be readily transferred. If the initial owner’s use of the land is the most efficient use of that land, the value placed on the land by that person will be higher than that of rival bidders. Conversely, if someone else’s use is more efficient, that person will offer the current owner an amount sufficient so that the current owner will agree to sell. Transaction costs are the major impediment to this movement. They may result not merely from the land transfer process but for example, from an excessive fragmentation of initial allocations. Urban redevelopment faces the problem of dealing with a number of holders of small allotments; this difficulty is then used to justify government intervention through compulsory acquisition. At the same time, initial allocation is relevant to the transfer process if it affects the ability to bid. At an extreme, if land is the sole resource and all land is allocated to one person, others have nothing with which to bid. This economic basis has, however, been questioned. For some, property today is as much about access to those things we call property, as it is the proprietary owner being able to exclude others from that property. This idea that citizens are entitled to access some forms of property, particularly those items of property where there is government regulation and for which the privilege of ownership may well carry a sense of obligation to the citizens is described by Gray as the jurisprudence of the quasi-​public trust.90 So for example in Telstra Corporation v Commonwealth (2008) 234 CLR 210 Telstra were unsuccessful in suggesting that there had been a deprivation of their proprietary interests associated with the public telephone network and the unbundling or opening to competition of those networks to other competitors. Telstra’s entitlements could not be considered in isolation from the origins of the public network and its ownership within the Commonwealth at the time of Federation. It was statutory property always subject to bureaucratic oversight.91 As to how this notion of quasi-​public trust will extend over the next decade is hard to predict. Certainly, in respect of government owned or regulated proprietary interests, arguments will be strongly made that access should be given to all. But it leaves unresolved issues around privately owned areas, but to which the public has largely unimpeded access. For example, should a privately owned shopping mall be able to deny access to citizens in the absence of any criminal charges being laid. Just as you and I can largely deny access to any individual to our own private residence without this in any way being qualified, does that proprietary right in the shopping mall owner grant them a similar unfettered entitlement to deny access as they see fit. Should it? [1.155]  Private ownership is increasingly favoured even as a means to overcome poverty.

One of the successful economic movements in developing countries has been the concept of microfinancing. Small loans have been granted to enable the commencement of cottage industries.92 Granting persons an interest in the premises they occupy has been a means

90 91 92

Gray, “Regulatory Property and the Jurisprudence of the Quasi-​Public Trust” (2010) 32 Sydney Law Review 237 at 238. See also O’Connor, “The Changing Paradigm of Property and the Framing of Regulation as a Taking” (2010) 36 Monash University Law Review 50. See the discussion in Bakhtiari, “Microfinance and Poverty Reduction: Some International Evidence” (2006) 5(12) International Business and Economic Research Journal 65. [1.155]  21

PART 1 The Context of Real Property Law

to encourage property improvement and social commitment and to provide a security for loans. [1.160] Property concepts have also been used to tackle pollution problems.93 Global

warming is generally accepted to result from a range of emissions. Australia is now a party to the Kyoto Protocol94 and the States have enacted a scheme creating carbon sequestration interests.95 Because of existing emission levels, the scheme must find a way to set the levels at which charges commence and to impose charges without an undue impact on disadvantaged energy users.96 Similarly, water supply and quality has deteriorated and urban users have moved from a wealth-​based charging system to one based on consumption. For rural users a system of transferable water rights is designed to promote efficient use.97 Constitutional challenges to the New South Wales scheme for the extraction of groundwater for irrigation, which replaced bore licences with less generous aquifer access licences, have failed.98 [1.165]  English real property law centred on obstacles to the acquisition of land for its most

efficient use. The strict settlement gave the current landholder only a limited interest in the land and guaranteed the right of future generations. The purpose of the settlement was to prevent the alienation of land away from the families by which it was held. The retention of personal power was sought even at the price of a less efficient use of land. On the other hand, efforts were made to pierce the settlement and allow the transfer of the land. How successful settlements were in preserving the position of the landed families is unclear; what is commonly accepted is that at the start of World War I much of the land in England was owned by a small group of persons.99 One of the key issues affected by real property law in Australia was the control of rural land. The legal theory that all land was owned by the Crown and that title depended on Crown grant was used to exclude Indigenous Peoples from much of the land they had occupied. Conversely, legal recognition was given to the claims of squatters who seised land beyond the official limits of settlement. Again, control of rural land was affected by the rights of free selection. The success of legal resistance to the selectors  –​legal resistance involving manipulation of processes established by statute –​ensured the wealth and power of the squatters.

93 94 95 96 97 98

99

Power, “Emissions Trading in Australia: Markets, Law and Justice under the CPRS” (2010) 27 EPLJ 131 at 145–​148. See Livingstone, “Who Will Be Liable for Australia’s Solution to Pollution? An Analysis of the Scope of Businesses’ Liability under the Carbon Pollution Reduction Scheme” (2009) 26 EPLJ 292. Hepburn, “Carbon Rights as New Property: The Benefits of Statutory Verification” (2009) Sydney Law Review 239. Power, “Emissions Trading in Australia: Markets, Law and Justice under the CPRS” (2010) 27 EPLJ 131 at 154–​155. Fisher, Water Law (LBC Information Services, Sydney, 2000), Ch 5; McKenzie, “Water Rights in NSW: Properly Property?” (2009) 31 Sydney Law Review 443. ICM Agriculture Pty Ltd v Commonwealth (2009) 240 CLR 140 (no acquisition of property in contravention of s 51(xxxi) of the Constitution) and Arnold v Minister Administering the Water Management Act 2000 (2009) 240 CLR 242 (no abridgement of the right to the reasonable use of the waters of rivers in contravention of s 100). See Fisher, “Water Law, the High Court and Techniques of Judicial Reasoning” (2010) 27 EPLJ 85. Langbein, The Twentieth Century Revolution in Family Wealth Transmission (University of Chicago Occasional Papers, No 25, 1989).

22 [1.160]

Concept of Real Property Law  Chapter  1

The Australian system of landholding has been pre-​eminently a capitalist enterprise.100 Land was granted on conditions as to its development. The insecurity of the squatters’ title emphasised that the value of the land lay in the capacity to exploit it. Pastoral development where, for example, fencing was a key to increased returns involved heavy reliance on borrowings so that efficient use was necessary to pay back the financiers. The Torrens system meant that land could be readily transferred or mortgaged. Land thus became (in Whalan’s words) a commodity. Australian real property history may be seen as a triumph for efficiency of land use over attempts to provide greater equity through the distribution of land rights. Attempts to provide for small landholders have generally failed: from Governor Macquarie’s attempts to create a peasant farming class, to free selection, to soldier settlements as reward for those who served in the world wars. These small holders were generally unable to compete with the large pastoralists. [1.170] If the battle for control of rural land was vital to the acquisition of wealth and

power, the rights of the landholders have been long established and current signs of rebellion seem very dim. A  study of real property law might then seem today to be irrelevant to an understanding of the holding of wealth in society. The study seems to be confined to an analysis of the processes for the transfer of land.101 If that characterisation is true, then the central role of real property courses should properly be challenged. The criticism that a study of real property law is confined to relatively unimportant land transfer processes vastly underestimates the scope of that law. Many significant relationships are regulated by real property law and the balance struck by the law greatly affects (and sometimes effects) wealth and power. Probably the relations between property owner and tenant and mortgagee and mortgagor are the most significant power contests affecting land. Rights for strata unit holders and retirement village residents have enhanced the position of these persons. Real property law also has many gender aspects: the rights of married women to own land are now assumed, but often the interests of a female partner stem from informal arrangements and real property law has emphasised formality. Moreover, the economic significance of the processes of transfer102 has already been stated: see [1.150]. The Torrens system has been important in allowing the cheap alienation of land with certainty as to the title obtained as a result of a land transfer. Similarly, the system has facilitated the use of land as a security through the Torrens system mortgage. The greatest impediment to the cheapness of land transfers has come from the impositions of State governments who have seen the opportunity for revenue through stamp duties. Moreover, government authorities have been reluctant to allow the paramountcy of the register to defeat any of their claims by way of charges over the land for unpaid rates and taxes. Much recent effort in the development of rules governing sale of land processes has been directed to provide protection for purchasers from these claims by government authorities.

100 Davidson and Wells, “The Land, the Law and the State: Colonial Australia 1788–​1890” (1982) 2 Law in Context 89. 101 See Mossman, “Toward ‘New Property’ and ‘New Scholarship’: An Assessment of Canadian Property Scholarship” (1985) 23 Osgoode Hall LJ 633; Ackerman, Economic Foundations of Property Law (Little Brown, London, 1975), Ch IX. 102 Johnstone, “Land Transfers: Process and Processors” (1988) 22 Val ULR 493.

[1.170]  23

PART 1 The Context of Real Property Law

[1.175]  While fears about the value of the study of real property law may be allayed, it should

be acknowledged that its relative importance has been diminished by the lesser significance of land as a source of wealth and power. Attention has turned to the processes of manufacture carried out by organisations and the issues of the control of corporate organisations, their access to finance and their dealings with the workforce. In a technological society, value comes more from ideas than from the exertion of physical labour. Intangible rights that protect those ideas, such as trademarks and patents, assume greater significance. The creation and protection of these rights requires greater sophistication than regulation of dealings in land or goods. These tasks impose demands and provide opportunities for lawyers. And because the capacity for ideas is most unevenly distributed among members of society, the significance of property in intangibles as a wealth-​creator has implications for relative equality within society. Not only have corporations law and intellectual and industrial law assumed greater significance, the scope for development of these areas of law is less restricted. The need for certainty in real property law because of the ordering of affairs on the basis of that law is most pronounced. Thus, the courts have established a range of interests in land with new situations being dealt with by way of application of the definitions of these interests. The Torrens system has further restricted the creative scope of the courts. Largely a registration system defines the things which can be registered and limits the range of things that can be recognised to those which can be registered. The scope for creativity is greater in disputes relating to the exploitation of land than those dependent on the definition of interests in land and the processes for their transfer. Exploitation of land is affected by aspects of real property law controlling neighbour relations through easements and covenants and the rights of strata or community unit holders against one another. But the extent to which one landholder can interfere with another landholder is largely the province of the law of nuisance and, in Australia (as in England), this branch of the law is regarded as part of the law of torts. Similarly, the statutory land use planning and environmental laws have been treated separately from real property law. It is significant as an indication of their importance and scope for creativity that many of the illustrations of the application of economic analysis to land law concern nuisance cases. The authors accept the established practices as to the treatment of these areas of law with some misgivings and suggest that those practices produce a fragmented analysis of the rights of exploitation of land. [1.180]  Real property law is not confined to the issue of the nature of interests in land and,

as has been already emphasised, much development has occurred in defining the relationships between holders of different interests and the processes by which transfers occur. Nevertheless, even new interests have been recognised by the courts and by the legislatures. As will be explained more fully in the substantive analysis, the constructive trust has been developed by the courts to protect investments of both money and labour against what has been described as unconscionable appropriation (see [9.120]), and the legislatures have acted with surprising speed to protect residents of retirement villages: see [15.285]. In terms of values to which the courts and legislatures have responded in real property matters, that of reaping without sowing has a special place. The idea that the fruits of a person’s labour belong to that person has long been regarded as an almost natural principle.103

103 See Tooher and Dwyer, Introduction to Property Law (5th ed, LexisNexis Butterworths, Sydney, 2008), p 3; Hamilton, Property According to Locke (1932) 41 Yale LJ 864. 24 [1.175]

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It has clear utility connotations in that a person is encouraged to labour if that person retains the results of the effort. In its application, the idea relates not just to the products of physical exertion but also to those of financial exertion. At the same time, the retirement village example indicates that protection is most readily afforded to those who already have some degree of power. Even in the current society, the distribution of real property matters in terms of wealth and power. The Commission of Inquiry into Land Tenures observed that the relatively high level of home ownership (approximately 70% of households) was the greatest factor in favour of equality of wealth in Australia.104 Apart from the value of equality in terms of individual dignity, the spread of home ownership does assist social cohesion and stability. Persons become petty capitalists; they work and conform to maintain their mortgage commitments. The value placed upon this spread of real property interests has been most pronounced under the Commonwealth-​ State Housing Agreements under which government assistance was directed to assisting house purchasers rather than the less advantaged residential tenants.105 Similarly, strata titles can be seen as enabling ownership even of limited spaces. Today, housing affordability has become a key political and community concern, particularly in the major capital cities. For some this has been driven by foreign investment, for others the taxation regime that permits negative gearing. Whatever may be the key influences, and there is likely to be a plurality to these, the Australian dream of home ownership is under considerable strain.

NATURE OF PROPERTY RIGHTS [1.185]  Protection of residents of retirement villages by the creation of a new proprietary

interest has been remarked upon as a rapid legislative intervention: see [1.180]. That interest is designated as proprietary because residents have been protected from eviction, not just against a management authority with whom they contracted, but against holders of security interests over that land and subsequent purchasers of the land. The fact of the existence of the village is recorded on title and rights have flowed on to residents of the village. Whereas retirement village residents have been given statutory rights thus classified as proprietary, boarders and lodgers have until recently been explicitly denied the protections given to occupants of residential premises. Some of the protections were regarded as inappropriate for boarders and lodgers, but such persons have been totally denied status as holders of proprietary rights. A  dependence by them on individual contractual rights is seen as a denial of all rights. This denial is perceived because of the emphasis on freedom of contract and the assumption that landlords would frame contracts in their own interests and that few contractual rights of substance would be afforded to boarders and lodgers. [1.190]  Understanding the differences between retirement village residents and boarders and

lodgers necessitates an analysis of what is special about property rights.106 In its simplest form 104 Commission of Inquiry into Land Tenures, Final Report (1976), pp 12–​13. 05 Bradbrook, MacCallum and Moore, Residential Tenancy Law and Practice? Victoria and South Australia (Law 1 Book Co, Sydney, 1983), p 34. 106 See generally Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Australian Property Law (8th ed, LexisNexis, Sydney, 2008), pp 3–​8. The role of the judiciary in the creation of property rights is discussed in Rotherham, “Proprietary Relief for Enrichment by Wrongs: Some Realism about Property Talk” (1996) UNSWLJ 378. An example of the judicial process is provided by Breen v Williams (1996) 186 CLR 71, where [1.190]  25

PART 1 The Context of Real Property Law

property inherently involves a thing. When I say, “That is my pencil”, I am referring to an object that is in my possession, is mine to do with as I please, is free from any obligations to other persons and may be disposed of as I see fit. Ownership and possession are merged and there is only a single relationship with the object. The notion of property becomes more sophisticated and involved with power and politics as things serve purposes other than to provide for the enjoyment of a single owner. Thus, a landowner might protest at the restrictions on the owner’s rights if the owner is told that he or she may not enter “his” or “her” land because a tenancy has been granted, or that he or she cannot develop it because of planning controls. The hypothetical application of such restrictions illustrates the conclusion that proprietary rights in land, at least, cannot serve simply the interest of a single person. Moreover, we must recognise that the concept of “ownership” can be problematic, and that legal relationships often exist based upon limited rights that relate to a thing, rather than an all-​encompassing, exclusive right over that thing. Once the concept that something can be “mine, but not totally mine” is accepted, the focus turns to rights in that object. Private property can usefully be contrasted with the enjoyment of unappropriated natural resources. A  public lake provides water to swim in or to drink. But I cannot claim any of that water from anyone else. Similarly, property can be contrasted with contractual rights. A right of occupation could be either a proprietary or a contractual right; the essence of the distinction lies in the range of persons against whom enforcement is possible. A right of occupation which is enforceable merely against a grantor is not a property right since, if a third party interferes with the occupation, the grantee has no complaint against that third party. Likewise, my enjoyment of the public lake gives me no legal standing to complain against a polluter. The essence of the idea that something “is mine” is that I have rights to prevent interference by third parties. Thus in our legal system both property owners and tenants can claim that a house is theirs since they will be protected against third parties. The exclusion of others from something is a significant act only if others want that thing. If there are ready alternatives for the thing, then others will not want it and exclusion is pointless. There is thus a sense in which property is a factor of scarcity. A  limited supply of a thing causes competition for that thing. But scarcity can be created even though there is a sufficient supply of things to meet  all demands for consumption of that thing. Patents created a scarcity of particular applications of knowledge. Things may be appropriated to an individual and thus excluded from others even though that individual has more of the things than the individual can consume. Control of a thing can enable an individual to impose terms for the transfer or even mere use of that thing. Property is thus a source of power over others. The exercise of that power in turn requires an enforcement mechanism. In Australia, private property exists because it is protected by the legal system. The ability of that legal system to impose its decision depends on the common acceptance of the system of government and the Rule of Law. [1.195]  In terms of this basic definition, a retirement village resident has a proprietary interest

because that interest can be enforced against third parties generally. These parties include purchasers and credit providers. On the other hand, the existence of a proprietary interest does not necessarily mean that all third parties are subject to it. The dividing line is drawn

the High Court rejected an argument that a patient had property rights in medical records held by a doctor in relation to that patient. 26 [1.195]

Concept of Real Property Law  Chapter  1

between rights enforceable only against another party and those enforceable generally against others. [1.200] “Property” is a concept describing relationships and the term should be seen as a

description of loosely similar relationships rather than one of precision. The High Court has emphasised that the term should be understood in the context in which it is used, rather than by a universal definition. In Yanner v Eaton (1999) 201 CLR 351 the High Court had to consider the meaning of a legislative provision whereby property in all native fauna in Queensland was vested in the State. Provisions in the same spirit have vested property in all water in rivers in the State. The High Court in Yanner v Eaton pointed out that the term “property” can be used to describe very many different kinds of relationships between a person and a subject matter. The High Court rejected a conclusion that full beneficial or absolute ownership was vested in the Crown as a result of the legislation. It rejected a parallel with individual ownership of a domestic animal where there is an entirety of powers of use and disposal. The court pointed out that fauna moved in and out of State boundaries and asked if property existed only so long as migratory birds flew over Queensland or if the Crown owned every bird that ever crossed the Queensland border. Under the Fauna Conservation Act 1974 (Qld), the subject matter was intended to be outside the possession of and beyond disposition by humans. There were open seasons for wild birds and provisions for forfeiture to the Crown –​of birds theoretically already owned by the Crown. The High Court held that under the legislation the vesting of property in the State meant that the State had power to preserve and regulate the subject matter and to keep fauna from private interests. [1.205] Not all arrangements relating to land confer proprietary interests in relation to

that land. As well as the freehold and leasehold estates, the principal proprietary interests in land recognised by the common law (and/​or equity) are mortgages, rent charges, profits à prendre, easements and restrictive covenants. To determine whether an arrangement confers a proprietary interest, the arrangement must be examined to see if it satisfies the definition of any one of the recognised proprietary interests.107 As lawyers are often involved in the framing of arrangements relating to land, arrangements may be given particular features to bring them within one of the definitions. The right to display advertising signs was held by the House of Lords in King v David Allen & Sons Billposting Ltd [1916] 2 AC 54 to confer only personal rights. However, in Claude Neon Ltd v Melbourne & Metropolitan Board of Works (1969) 43 ALJR 69 a similar arrangement was extended to include exclusive possession of outside walls so that the High Court held that the rights amounted to a lease of those outside walls108 and thereby conferred a proprietary interest. [1.210]  While not all rights to be on land are proprietary rights, grants of proprietary interests

usually confer rights to be on land –​rights under negative easements and restrictive covenants are the chief exceptions in this regard. Those without permission to be on land are trespassers.

107 Some statutory licences may be so defined as to create a proprietary interest in land; a fishing licence for a lake would be a right in relation to land and can be framed so as to be enforceable against third parties. 108 Kitto and Windeyer JJ dissented on the basis that since no arrangements were made with the so-​called tenants on matters such as exterior cleaning, the tenants did not genuinely have control and thus exclusive possession. [1.210]  27

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The great bulk of those who are on land with permission do not have a proprietary interest, rather some form of licence. Some licences are attached to proprietary interests so that the right to remove gravel (a profit à prendre) carries with it a right to cross the land to get to the gravel. These licences are described as licences coupled with an interest and take on the qualities of the proprietary interest to which they are attached. A bare licence is a gratuitous permission. Since our legal system does not enforce promises without consideration, the permission can be withdrawn at any time; dinner guests can be asked to leave before the main course. The bare licensee must be given a reasonable time to get off the premises but thereafter becomes a trespasser and the legal system allows a degree of self-​help through the use of physical force to remove a trespasser.109 [1.215]  Many licences arise from commercial arrangements. Permission to be on the land

is granted pursuant to a contract. Contractors or employees performing work on the land, students at a fee-​paying institution, paying spectators at a theatre or a sporting event, and boarders and lodgers are all contractual licensees. Does the fact that they do not have a proprietary interest mean that their licence may be revoked at any time? Obviously, the licence must be subject to some limits which are not express but must be implied. For example, theatre-​goers may be asked to leave in the event of a fire or bomb threat, a student may be suspended for drug dealing or a punter may be removed for illegal gambling. But these problems relate to the definition of the contract. The issue under discussion is the revocability of the licence in breach of contract. Breach of contract gives rise to an action in damages. Normally in the contractual licence context, this right is dismissed as an entitlement to a refund of the entrance fee. But substantial damages for breach of contract are not inconceivable. If I  can prove that I  had $1,000 committed to what turned out to be the 50 to 1 winner of the last race, is my $50,000 loss too remote? If the anguish of upset travel plans is compensable,110 should not a football fan receive something for missing her or his team’s first Premiership in 25 years? If removal is taken as a sign of wrongdoing, are not damages available for the loss of reputation among those who have witnessed or learnt of the removal? The right of the contractual licensee to stay put came before the High Court in Cowell v Rosehill Racecourse Co (1937) 56 CLR 605.111 In that case a spectator had been asked to leave a race meeting and when he refused to do so he was forcibly evicted. He sued for damages for assault on the basis that the licence had not been validly revoked. One issue which entered the analysis but which was properly irrelevant was that of formalities. Nineteenth-​century decisions on similar facts were claimed to rest on the absence of a deed granting the right to come onto the land. With the passing of the Judicature Act 1873 (UK), rules of equity became relevant and they would relieve against the absence of a deed. But a deed is only needed and its absence only a matter of concern if one is involved with the grant of a proprietary interest. That issue was made clear by the High Court. It further rejected the view that the category of licences coupled with an interest extended beyond licences associated with the grant of proprietary interests to licences whereby the grantee had some contractual interest in being on the land. 09 For example, see Hemmings v Stoke Pages Golf Club Ltd [1920] 1 KB 720. 1 110 Baltic Shipping Company v Dillon (1993) 176 CLR 344; Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), pp 1096–​1097. 111 See also Graham H Roberts Pty Ltd v Maurbeth Investment Pty Ltd [1974] 1 NSWLR 93. 28 [1.215]

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Cowell’s case has nothing to do with proprietary interests or formalities connected with such interests. It concerns the effectiveness of an action (withdrawal of a licence) in breach of contract. At an extreme would be the approach of Oliver Wendell Holmes, that a contractor has the choice of performing or paying damages for breach.112 But Latham CJ in one of the majority judgments in Cowell took the narrower ground that a contract to provide an entertainment was not one in respect of which equity would decree specific performance or whose breach equity would restrain by an injunction. Therefore, the licence had been withdrawn and the only redress was a claim for damages for breach of contract. In dissent Evatt J challenged this limited view of equitable intervention. It was, he stated, a broad and just principle of equity to restrain revocation of the licence in breach of contract. Evatt J further reasoned that if equity would restrain the revocation, the position of the parties would be no different if the timing meant they were unable to seek equitable assistance until after the event. Subsequent English decisions have lent support to the dissenting judgment.113 It is clear that in some cases at least a revocation of a licence in breach of contract will be restrained and, certainly, equitable remedies will not be made available to assist the revocation. Some doubts on the decision in Cowell were cast by dicta in the High Court decision in Forbes v NSW Trotting Club Ltd (1979) 143 CLR 242. [1.220] The analysis of licences to be on land is an orthodox application of the definition

of proprietary rights as those enforceable against third parties generally. Thus, the issue of sphere of enforceability is separated from that of remedies to enforce the right. This division should not be overstated. One of the reasons why some rights are denied recognition as proprietary is that specific performance is inappropriate. The relationship between boarders or lodgers and their landlord is customarily one of close residential contact. Similarly, students living at university colleges have been excluded from residential tenancy legislation. Specific performance of whatever contractual rights these persons have would involve compelling them and the other parties to sustain a living relationship in what might be unpleasant circumstances. [1.225]  Normally something that can be excluded from others has value not only for its use

by its owner but because of the ability to dispose of it.114 However, the right of alienation is not a universal aspect of a proprietary interest. Thus a right of personal residence has been classified as a proprietary interest, as a conditional life estate –​a person has an interest for the person’s lifetime provided he or she lives on the property. However, the right of alienation is normally associated with a proprietary interest and, in relation to tenants, the courts have reasoned that because they have proprietary interests they have interests which are prima facie assignable.115 [1.230]  If specific enforceability is not confined to proprietary interests in relation to land,

specific enforceability is normally assumed to be available to protect proprietary interests.

12 1 113 114 115

The approach is discussed in Gilmore, The Death of Contract (Ohio State University Press, Columbus, 1974). Winter Garden Theatre (London) Ltd v Millenium Productions Ltd [1948] AC 173; Hounslow London B C v Twickenham Garden Developments Ltd [1971] Ch 233. This attribute is identified in Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 171 as being one of the usual incidents of proprietary rights. See Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47. [1.230]  29

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However, that protection is not assumed in relation to goods. Damages are asserted to be a sufficient remedy because goods can be replaced.116 Obviously, an exception for heirlooms, artwork and similar objects can be justified. The general position in relation to goods means that the owner’s right of exclusion does not enable the owner to retrieve the object itself. Nevertheless, a range of legal rights do attach to what would commonly be regarded as the owner’s property. There are limited rights of self-​defence to prevent taking by others; the criminal law and its enforcement processes operate to apprehend a taker and return the goods. In addition, objects do acquire personal significance so that the loss felt on a housebreaking is more than the economic setback.117 Similarly, while the holder of contractual rights can directly enforce those rights only against other contracting parties, remedies may affect third parties. If the holder learns of a prospective attempt to induce the other party to breach the contract, injunctive relief may be available to prevent that action.118 In the same way, the tort of interference with contractual relations provides damages against third parties in some cases where those third parties have induced non-​performance by a contracting party.119

CLASSIFICATION OF PROPERTY RIGHTS [1.235]  Like all definitions, that of “proprietary interests” aids understanding but should not

be used in a mechanistic fashion. The classifications or subdivisions of property rights adopted by a common law were far more rigid. These classifications were often applied with significant consequences, but few of those consequences remain. The terms are still frequently used in legal documents including statutes and wills. The greatest problems arise where technical words are used without full appreciation of their precise meaning. [1.240]  The most basic division was that between real and personal property. This division

lives on in common language, such as the term “real estate agent”, where real property is assimilated to land. This division comes from the late Norman period and “real property” means that which can be recovered in kind –​the thing (res) is recoverable. At the time, the only things recoverable in kind were the freehold estates in land. Everything else was personal property. The freehold estates were those of indefinite duration (the fee simple, fee tail and life estates); those estates of definite duration were less than freehold and thus termed “leasehold”. It is an anomaly that an estate for a thousand years is less than one for a lifetime. But for the process of classification, because the only forms of real property were the freehold estates, leasehold estates were personal property. The basis of the distinction was to disappear with the development of the action of ejectment whereby a leaseholder could be restored to possession. Nonetheless, the division had been made and, as a result, personal property encompasses leasehold interests, interests in goods and intangible rights. Because of this scope personal property was divided between chattels real (leasehold interests) and chattels personal (other forms of personalty). Legal consequences flowed from the division between real and personal property. Until the Statute of Wills 1540 (Eng), real property could not be left by will, but passed automatically

116 117 118 119

Fleming, The Law of Torts (9th ed, LBC Information Services, 1998), pp 76–​78. Reeve, Property (MacMillan, Melbourne, 1986), p 5. Woolley v Dunford (1972) 3 SASR 243. Whitfield v De Lauret and Co Ltd (1920) 29 CLR 71 at 77.

30 [1.235]

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to the heir (a concept giving preference to males over females and, among males, to the first-​born over others). Even after that statute, a difference flowed in the passing of real and personal property on the death of an owner without a will. Again, real property passed to the heir, whereas personalty passed to the next of kin (a concept giving priority according to the closeness of the relationship). In the 19th century statutes in all Australian jurisdictions providing for the administration of estates removed this residual vestige of male preference. The categories of real and personal property are still part of legal language. One consequential linguistic distinction is that to leave realty by will is to devise, whereas to leave personalty by will is to bequeath. [1.245]  A less significant and less understood general distinction is that between corporeal

and incorporeal hereditaments. The term “hereditament” denotes an interest that passes to the heirs (basically freehold estates other than the life estate). The distinction between “corporeal” and “incorporeal” is a distinction between “tangible” and “intangible”. In the sense that property is a form of right, all property is intangible. However, the division depended upon whether the right involved possession and enjoyment or some more limited use of the land. Thus the estates are corporeal interests, whereas rights of access (easements) are incorporeal.

REMEDIES [1.250]  In the discussion of Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605 at

[1.215] the relationship between the classification of a right as proprietary in nature and the available remedy was explored. The majority argument was that because the contractual licence conferred nothing more than contractual rights, the only remedy was that of damages. Certainly, in dissent, Evatt J argued that in appropriate cases an injunction would be granted to restrain actions in breach of contract. Whatever the position in relation to the revocability of a contractual licence, it is clear that specific performance and injunctions are available remedies in relation to breaches of contract where there is no element of a proprietary interest in land involved. The general proposition expounded by Windeyer J in Coulls v Bagot’s Executor and Trustee Co Ltd (1967) 119 CLR 460 at 503 is that there is no reason today for “limiting by particular categories, rather than by general principle, the cases in which specific performance will be made”. The availability of specific performance and injunctions with respect to breaches of contract depends on whether the remedy of damages is adequate to protect the interests of the party seeking relief.120 On the other hand, because each parcel of land is regarded as unique, any contract for the sale of an interest in land is viewed as appropriate for the remedy of specific performance.121 [1.255]  The remedy of damages was one of a limited range developed by the common law.

Other remedies included orders for the recovery of land and for a liquidated sum due as a debt. A plaintiff who demonstrated that the criteria for a particular cause of action existed was automatically entitled as a right to the appropriate legal remedy. With respect to a breach of contract, a plaintiff who could not demonstrate any loss was nonetheless entitled to at

120 121

JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 294. Chan v Cresdon Pty Ltd (1989) 168 CLR 242. [1.255]  31

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least nominal damages, although the difficulty of assessment is no excuse for non-​award of damages.122 [1.260]  In contrast, equitable remedies were always discretionary. For instance, even where

the plaintiff proves that a cause of action exists, equity may refuse to assist the plaintiff if it would be unconscionable in the circumstances to grant a remedy. The use of this discretionary power is exercised according to settled principles which have developed over the years.123 For example, a plaintiff who has acted dishonestly (“equity assists only those who come with clean hands”), delayed inordinately in bringing the action (“he who seeks equity must do equity”) or instituted a trivial claim may be deprived of the benefit of an equitable remedy. Reference has already been made to specific performance and the injunction that are the main forms of equitable relief, but there are other forms of equitable relief, such as the order for rectification of a document for fraud or mistake.124 [1.265]  Specific performance is an order directing a person to carry out his or her obligation.

Generally, the plaintiff must establish the existence of a contract enforceable at law.125 Specific performance may then be granted in two instances. First, where the contract is executory, the plaintiff may seek specific performance in order to make the other party perform his or her side of the bargain.126 Secondly, where the contract is executed, the plaintiff may seek specific performance in order to enforce one or more particular obligations contained in the contract.127 Apart from refusing to grant the remedy where equity took the view that it would be unconscionable to do so, a decree of specific performance will also usually be refused if the decree would involve the court in constant supervision128 or compel the performance of services or the maintenance of a personal relationship.129 [1.270]  The injunction is an order to restrain a person from doing a particular act (prohibitory)

or to compel a person to do some act (mandatory). The mandatory injunction may issue against a person who has acted unlawfully (for example, the erection of a building in breach of a covenant) and require that person to put right the wrong (demolish the building erected unlawfully). The courts issue mandatory injunctions sparingly.130 [1.275]  Equity may today award damages under the Chancery Amendment Act 1858 (UK)

(Lord Cairns’ Act) even where specific performance or an injunction might be denied. Formerly, equity could not award the legal remedy of damages for breach of contract. It could make an order for specific performance that a money payment be made where no remedy lay at law.

122 123

Bowen v Blair [1933] VLR 398; Kizbeau Pty Ltd v WGB Pty Ltd (1995) 184 CLR 281. Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectifications, and Equitable Damages (9th ed, Thomson Reuters, Sydney, 2013). 124 Smith v Jones [1954] 2 All ER 823; Downie v Lockwood [1965] VR 257. 125 There are exceptions to this rule. See, for example, the equitable doctrine of part performance as discussed at [8.155]–​[8.170]. 126 See Wolverhampton & Walsall Rly Co v London & North Western Rly Co (1873) LR 16 Eq 443; Turner v Bladin (1951) 82 CLR 463. 127 See JC Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at 297; Bridge Wholesale Acceptance Corp (Aust) Ltd v Burnard (1992) 27 NSWLR 415 at 423. 128 J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282; cf Wolverhampton Corporation v Emmons [1901] 1 KB 515 (building contract). 129 In this context consider Hartleys Ltd v Yukich [2002] WASC 184. 30 Redland Bricks Ltd v Morris [1970] AC 652. 1 32 [1.260]

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For example, where a trustee had dissipated the trust funds, equity could order the trustee to pay the sum to the beneficiary. It was not until Lord Cairns’ Act that equity was given any power to award damages for breach of contract. The provisions of Lord Cairns’ Act have been adopted in the Australian States.131 This statute only permitted equity to award such damages if an equitable remedy (specific performance or an injunction) was available.132 The terminology of the legislation allows an application for equitable damages where the court has “jurisdiction to entertain an application” for specific performance or an injunction. The wording does not seem to require that the court would, in the exercise of its discretion, be prepared to grant specific performance or injunction.133 The question of the availability of damages in equity where no order for specific performance or injunction would be made was considered by the Court of Appeal in Jaggard v Sawyer [1995] 1 WLR 269. In that case, the plaintiff sought to restrain entry by the defendants onto part of their land. That portion of the land was set aside for use as a roadway by neighbours other than the defendants. The Court of Appeal held that an injunction should be denied. Such an injunction would have restrained any trespass by the defendants. Denial of an injunction was justified on the ground that an injury to the plaintiff was small because there was only a minimal increase in traffic and no effect on the use of the remainder of the plaintiff’s land. The injury was capable of being compensated by a money payment. With respect to the capacity to award damages under Lord Cairns’ Act, Millett LJ commented: When the plaintiff claims an injunction and the defendant asks the court to award damages instead, the proper approach for the court to adopt cannot be in doubt. Clearly the plaintiff must first establish a case for equitable relief, not only by proving his legal right and an actual or threatened infringement by the defendant, but also by overcoming all equitable defences such as laches, acquiescence or estoppel. If he succeeds in doing this, he is prima facie entitled to an injunction. The court may nevertheless in its discretion withhold injunctive relief and award damages instead. How is this discretion to be exercised? In a well known passage in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 at 322–​323, A L Smith LJ set out what he described as “a good working rule” that “(1) If the injury to the plaintiff’s legal right is small, (2) And is one which is capable of being estimated in money, (3) And is one which can be adequately compensated by a small money payment, (4) And the case is one in which it would be oppressive to the defendant to grant an injunction: –​then damages in substitution for an injunction may be given.” Laid down just 100 years ago, A L Smith LJ’s check-​list has stood the test of time; but it needs to be remembered that it is only a working rule and does not purport to be an exhaustive statement of the circumstances in which damages may be awarded instead of an injunction.134

LAND RIGHTS AND LAND USE [1.280] Concern for the future of the planet has grown as acceptance of climate change

has become more widespread. One suggested consequence of climate change is rising sea levels. The emission of greenhouse gases may lead to a melting of the polar ice caps and thus

131

Supreme Court Act 1970 (NSW), s 68; Supreme Court Act 1935 (SA), s 30; Supreme Court Civil Procedure Act 1932 (Tas), s 11(13); Supreme Court Act 1986 (Vic), s 38; Supreme Court Act 1935 (WA), s 25(10). In Queensland, see Conroy v Lowndes [1958] Qd R 375 and Barbagallo v J & F Catelan Pty Ltd [1986] 1 Qd R 245; Civil Proceeding Act (Qld), s 8. 132 Lavery v Pursell (1888) 39 Ch D 508; Johnson v Agnew [1980] AC 367 at 400. 133 Jolowicz, “Damages in Equity –​A Study of Lord Cairns’ Act” (1975) 34 CLJ 224 at 246. 34 Jaggard v Sawyer [1995] 1 WLR 269 at 285, 287–​288 per Millett LJ. 1 [1.280]  33

PART 1 The Context of Real Property Law

rising sea levels. Readers in Cairns and other low-​lying areas may find little comfort in the continuation of their land rights if they are underwater rights! Even the capacity of trees to absorb greenhouse gases may be reduced by temperature pressure. Over the past 30  years, environmental awareness has become part of Australia’s social and political thinking. The great bulk of the Australian population clings to the rim of the island continent. The greatest environmental threat –​the greenhouse effect –​is likely to lead to a rise in sea levels due to the melting of the polar ice caps and could pose serious problems for a coastal population. Localised pollution problems also pose immediate problems:  the great beaches around Sydney threaten to become sewerage wastelands; the sprawling cities are heavily dependent upon private motor cars and consequently prone to smog alerts; and increasing salinity in the Murray River poses risks for Adelaide’s water supply. Preservation of natural areas ranging from Kakadu and the tropical rain forests in the north to the Tasmanian wilderness has provoked bitter confrontation. Social problems arising from the segregation of many of the nation’s poor into the western suburbs of Melbourne and Sydney also reflect on urban planning. [1.285]  These problems and the significance of the legal responses to them cannot be denied.

However, they fall outside the subject matter of this text.135 This text is about property rights which, as explained above, are claims to land as against other people. The use and development of land is then regulated by general laws, almost exclusively statutory. However, the property rights themselves can be so delineated as to provide restraints on land use. The tenure system has the potential to be so used but it has been only in Crown leases that conditions relating to land use have been imposed. Recently developed land management agreements do combine land use conditions into the definition of land rights by setting out those conditions as an encumbrance on the land. Leasehold covenants, easements and restrictive covenants are recognised property interests that impinge upon land use and can be used as planning devices. They tend to provide more for local adjustments of neighbouring land use as they can be enforced only by landlords or neighbouring landowners. Leasehold covenants allow the property owner of a shopping centre, for instance, to balance and integrate commercial activities. Easements allow for the supply of utilities and for access without public roads and are particularly useful for housing that is more compact. Restrictive covenants allow minimum standards to be set for neighbourhoods, though their name has been sullied by their use in the United States for racial segregation.136 The value of some property law principles to restrain development should not lead to any conclusion that the direction of the development of legal principle has been in favour of conservation. The legal significance of the existence or absence of a Crown grant has allowed almost total displacement of the Aboriginal communities. Conditions attached to Crown leases have been overwhelmingly designed to ensure the clearing and development of land. While property settlements were uncommon in Australia, holders of interests less than a fee simple were constrained by their limited powers of disposition and limits on use flowing from the law of waste. The settled land legislation sought to overcome these limits. The utility of easements and restrictive covenants for broad community planning was severely curtailed by

135

McLeod, Planning Law in Australia (Thomson Reuters, Sydney). https://​ legal.thomsonreuters.com.au/​ planning-​law-​in-​australia/​productdetail/​18998 136 Such covenants were declared unconstitutional in Shelley v Kraemer 334 US 1 (1948). 34 [1.285]

Concept of Real Property Law  Chapter  1

the rule that they could only be enforced by neighbouring landowners. Indeed, most easements in Australia exist in favour of government utilities because of special statutory provisions. [1.290] While environmental awareness has increased in recent times, pollution problems,

in particular, date from the industrial revolution. Even such advances as the elimination of coal-​burning trains have been major environmental improvements. The protection of private rights of enjoyment of land was, in the 19th century, the province of the law of nuisance. Any unreasonable interference with the enjoyment of land was actionable at the suit of the owner of that land. [1.295]  The more formal segregation of conflicting land uses has been one of the functions

of planning laws. In their simplest form, these laws aim to prevent glue factories in residential areas. At a more sophisticated level they seek to provide proper intercommunication, a balance of residential forms and access to service, retail and commercial activities. Segregation has not met with universal acclaim as some critics claim that a mix of uses is preferable to suburban sterility. All Australian States now have elaborate planning systems, involving specialist planning authorities and local government. General planning standards and zoning charts have been established. Any development –​usually defined to include any building or change of land use –​requires permission from the relevant authority. One feature of Australian planning systems has been the right of appeal to independent judicial bodies. These bodies have produced an enormous outpouring of planning law principle, most often, unfortunately, on a State-​by-​State basis. Segregation of land use is a crude and localised method of combating environmental degradation. Planning laws can include standards for development to reduce that degradation. Major projects can be subject to detailed analysis and investigation to assess environmental impact. The preparation of environmental impact statements began as a technique to catch projects (particularly of government authorities) and dimensions not provided for by the planning process. However, the process of preparation of these statements had gradually been integrated into the planning process and different levels of detail are required according to the magnitude of the project.137 [1.300]  Environmental harm must come from activity on land or sea or in the air. But not all

activity on land can be related to the development of the land by landowners. Activities such as the use of motor cars or of aerosols cannot usefully be regulated as part of controls upon land development. Therefore, pollution laws are necessary. However, land development and use is a significant polluting activity and is subject to a range of pollution laws in addition to planning controls.138 These laws seek to restrain noxious discharges into seas, rivers and other waters or into the air, to control noise and to enhance soil conservation. Typically in Australia, a government agency has been established with responsibility for a particular problem. That agency is then empowered to set standards, issue permits and enforce compliance. [1.305] A major form of land use with significant environmental consequences is the

extraction of minerals. Rights to land may include rights to minerals in that land and the extent to which they do is discussed at [16.150]. However, as a general proposition, rights to

37 Fowler, “Legislative Bases for Environmental Impact Assessment” (1985) 2 EPLJ at 200. 1 138 Pollution control and regulation is a mixture of Commonwealth, State and local government planning instruments. At the apex of this tripartite arrangement sits the National Environmental Protection Council. [1.305]  35

PART 1 The Context of Real Property Law

minerals and petroleum have been separated from the rights to the surface land and airspace, and mining rights have thus developed as a special form of proprietary interest in land. Today the acquisition of rights to minerals stems from separate legislation that does vary from State to State. Every State has separate regimes for petroleum and minerals, though even the statutory definitions of petroleum and minerals vary. Despite the considerable differences between the States’ legislation, each petroleum and minerals statute prescribes a similar framework for exploitation of the resource. This framework consists of the grant by the Crown in relation to petroleum or minerals of exploration licences or leases. These licences or leases permit works to be undertaken to ascertain the likely existence of petroleum or minerals. Actual mining is subject to the further grant of petroleum or minerals production leases or licences. The legislation also provides for the payment of royalties, the compensation of owners or occupiers of the surface land, a system of mine inspection and control and various environmental safeguards.139

ARRANGEMENT OF THE TEXT [1.310]  We have already emphasised the fact that this text is about Australian land law and

that for most land in Australia the key factor is that title is held under the Torrens system. Furthermore, as a property text, stress is placed upon competition between claimants to interests in land. Many interests arise from contracts and the nature of those interests cannot be adequately ascertained without reference to those contracts. Nonetheless, this is not a text about contractual rights and obligations between vendor and purchaser, landlord and tenant, mortgagee and mortgagor, or the Crown and holders of Crown leases. Detailed analysis of such contracts can be found in specialist texts. While equitable interests in land and management powers and responsibilities for land between trustees and beneficiaries are fully analysed, many aspects of the law of trusts again form a separate specialist area. Already mention has been made of the link between proprietary rights and specific remedies (normally equitable in nature). However, as discussed in [1.260]–​[1.270], specific remedies are not confined to the protection of proprietary interests. The availability of such remedies for the protection of contractual rights has been significantly advanced in recent times, both through the common law and the Competition and Consumer Act 2010 (Cth). However, contracts for the sale of land are ones where the courts are predisposed to grant specific performance on the basis that each parcel of land is unique.140 Furthermore, an owner of land will sometimes be seeking to eject someone unlawfully on the land and property owners seek eviction as a remedy against defaulting tenants. Orders with respect to the register of titles maintained under the Torrens system provide a means of giving effect to determinations about rights in land. The remainder of this text will be concerned with remedies peculiarly associated with land, rather than general principles of remedies whether at law or in equity. [1.315] In [1.05]–​[1.50], the text has commenced with a conceptual analysis of what is meant

by ownership of land and the nature of the interests conferring ownership.

139 140

For a detailed discussion of this legislation, see Forbes and Lang, Australian Mining and Petroleum Laws (2nd ed, Butterworths, Sydney, 1987). Pianta v National Finance & Trustees Ltd [1964] 180 CLR 146 at 151; Coulls v Bagot’s Executor & Trustee Co (1967) 119 CLR 460 at 502–​503.

36 [1.310]

Concept of Real Property Law  Chapter  1

The means of establishing ownership through the creation and transmission of documentary interests are then considered. With title to land potentially coming into conflict with actual control or possession, the law of adverse possession, which provides for adjustment of title to reflect sustained control, will be examined. The analysis of the operation of property principles will then be primarily directed towards the Torrens system of registered title, although allowance has been made for the continued existence in several States of land outside the Torrens system. The operation of the Torrens system is examined in detail, with a consideration of how the existence of registered and unregistered interests is mediated by the doctrine of indefeasibility of title and its exceptions. After a freehold grant by the Crown, a theoretical interest in the land is still retained by the Crown. However, in much of rural Australia the Crown has sought to retain a greater and more significant interest and has granted only leasehold rights. The nature of the interests created by these arrangements involves issues as to the applicability of many of the real property law principles. Attention then turns to the recognition of native title rights that have been undoubtedly the major property law development of the 1990s. The history of native land rights in Australia, the recognition of such rights as part of the common law and the emerging definitions of the incidents of such rights and their relationship with other interests in land are analysed. The interaction of Crown tenures and native title rights has been a dynamic one. The grant of Crown leases to squatters in the 19th century was one way in which the dispossession of Aboriginal people was sought to be legitimised. However, the decision of the High Court in Wik Peoples v Queensland (1996) 187 CLR 1, which established that the grant by the Crown of a statutory lease did not necessarily extinguish native title, has meant that these two forms of proprietary interest can co-​exist. Land is a stable, readily identified and valuable asset. As such it provides a useful security for the borrowing of money. Often the loan enables the purchase of the land itself. The lender can be confident of the availability of an asset to cover a debt in the case of default in performance of the primary personal obligation to repay the loan. The common form of security in land in Australian law is the mortgage. “Development of Real Property Law in Australia” (see [1.55]–​ [1.140]) is concerned with all of these various means of obtaining title to land. After examination of the nature of interests and means of establishing title, attention is directed to the major forms of dealings or dispositions of land. The converse problem is that of setting aside dealings because of some impropriety. “Social Purpose of Real Property Law” (see [1.145]–​[1.180]) is concerned with these dealings. Property rights are commonly shared among several persons. This sharing can involve rights at different points of time, such as rights for one person during that person’s lifetime and for others after the person’s death. Analysis of future interests and the rule against perpetuities covers this form of sharing. A simpler division is that between concurrent owners. Division of interests by the grant of rights of occupation is achieved by leases, and the landlord and tenant relationship normally reflects a lack of any capital investment by the tenant. The same is often true in respect of analogous relationships under which accommodation services are provided, such as in retirement villages and caravan parks. All divisions of the property in land create issues as to the responsibility for management. Special schemes for unit titles represent more sophisticated divisions and management responsibilities. “Nature of Property Rights” (see [1.185]–​[1.230]) follows the common theme of the division of property rights. Just as property rights in individual allotments may be divided and relationships between the holders of divided interests regulated, so relationships between neighbouring landholders [1.315]  37

PART 1 The Context of Real Property Law

gives rise to matters for determination. Parcels of land must be defined as to their extent both horizontally and vertically and as to the incidents within those physical dimensions. Total independence of one landowner from her or his neighbour may unduly impede the use of the land. Rights of access from one piece of land to another or shared drainage or communications systems may be achieved by easements and further optimum efficiency. Conversely, land use may need protection from adverse impacts and neighbours may restrict that use through covenants. “Classification of Property Rights” (see [1.235]–​[1.245]) is concerned with the definition and adjustment of rights between landowners. [1.320] Although this text considers principles relating to land subject to the Torrens system

and those relating to land outside that system (general law land), in Queensland, South Australia, the Northern Territory and the Australian Capital Territory the amount of land outside the Torrens system is insignificant. Therefore, the analysis of principles applicable to general law land will be confined to New South Wales, Victoria, Western Australia and Tasmania. Generally, however, the text will be concerned with the law in all six States and the two Territories. The difficulty facing the authors is that the differences between the eight jurisdictions threaten to fragment the text and destroy its cohesion. Nonetheless, the authors are attempting to state the law as it applies throughout Australia. The evident frustration caused by the need to explain differences between the jurisdictions may be thought to colour the authors’ plea for uniformity of the law in Australia but the frustration stems more from the lack of meaning behind the differences and the sense of individuality for individuality’s sake.

38 [1.320]

TITLE TO LAND

PART II

CHAPTER 2

Foundational Concepts: Tenure, Possession, Estates, Trusts and General Law Priorities [2.05] INTRODUCTION........................................................................................................... 42 [2.10] DOCTRINE OF TENURE................................................................................................. 42 [2.10] Overview...................................................................................................... 42 [2.15] Development of the doctrine of tenure......................................................... 43 [2.25] Doctrine of tenure in Australia....................................................................... 46 [2.45] POSSESSION AND SEISIN.............................................................................................. 52 [2.85] THE DOCTRINE OF ESTATES.......................................................................................... 57 [2.85] Introduction.................................................................................................. 57 [2.95] Estates of freehold......................................................................................... 58 [2.100] Fee simple......................................................................................... 58 [2.105] Fee tail............................................................................................. 59 [2.135] Life estate......................................................................................... 62 [2.150] Leasehold estates.......................................................................................... 63 [2.150] Overview.......................................................................................... 63 [2.155] Lease for a fixed term of years............................................................... 63 [2.160] Periodic tenancies............................................................................... 64 [2.165] Tenancy at will................................................................................... 64 [2.170] Tenancy at sufferance.......................................................................... 64 [2.175] Words of limitation........................................................................................ 65 [2.175] Overview.......................................................................................... 65 [2.180] Words of limitation for a fee simple estate................................................ 66 [2.190] Words of limitation for a fee tail estate.................................................... 67 [2.200] Words of limitation for a life estate......................................................... 68 [2.210] Equitable interests............................................................................... 69 [2.215] The rule in Shelley’s Case...................................................................... 70 [2.220] Determinable and conditional interests......................................................... 70 [2.220] Overview.......................................................................................... 70 [2.225] Determinable interests......................................................................... 71 [2.230] Conditional interests............................................................................ 72 [2.235] Void conditions.................................................................................. 73 [2.265] Remainders and reversions............................................................................ 78 [2.280] THE DEVELOPMENT OF THE USE AND THE TRUST: FRAGMENTATION BETWEEN LEGAL AND BENEFICIAL OWNERSHIP............................................................ 79 [2.280] Introduction.................................................................................................. 79 [2.285] Disadvantages of the common law................................................................ 80 [2.285] Rules relating to conveyancing............................................................... 80 [2.290] Inability to dispose of estate by will......................................................... 80 [2.295] Feudal burdens................................................................................... 80 [2.300] Origin and development of the use............................................................... 80 [2.325] The Statute of Uses....................................................................................... 83 [2.325] Overview.......................................................................................... 83 [2.330] Leaseholds........................................................................................ 83 [2.335] Active uses........................................................................................ 83 [2.340] Seised to own use............................................................................... 84 [2.345] Use upon a use.................................................................................. 84 [2.350] Re-​emergence of equitable interest............................................................... 84 [2.355] Statute of Wills 1540..................................................................................... 84  

41

PART 2 Title to Land

[2.375]

[2.360] Repeal of the Statute of Uses......................................................................... 85 [2.365] Judicature Acts.............................................................................................. 85 [2.370] The trust today.............................................................................................. 86 GENERAL LAW PRIORITIES............................................................................................. 88 [2.375] Introduction.................................................................................................. 88 [2.400] Legal estate and legal estate.......................................................................... 90 [2.410] Legal estate and subsequent equitable estate................................................ 90 [2.450] Equitable estate and subsequent legal estate................................................. 96 [2.460] Bona fide purchaser for value................................................................ 97 [2.470] Taking a legal estate without notice........................................................ 98 [2.490] Notice............................................................................................ 101 [2.555] Other principles................................................................................ 109 [2.565] Equitable estate and equitable estate........................................................... 110 [2.600] Registration of deeds system: effect on priorities......................................... 115 [2.600] Background..................................................................................... 115 [2.615] Operation of the deeds registration system............................................. 117

INTRODUCTION [2.05]  This chapter identifies the doctrinal basis for the existence of freehold interests in land,

as well as the rules governing the priority afforded to these and other interests when they are inconsistent. These principles reflect the distinction between real and personal property, and the distinction between the common law and equity outlined in [1.235]–​[1.245] and [1.250]–​[1.275].

DOCTRINE OF TENURE Overview [2.10]  The doctrine of tenure, and its influence upon modern land law, has been analysed in

detail by many writers.1 Although there is no intent to discuss the doctrine of tenure in detail here, some discussion of this area is necessary in order to understand clearly the historical underpinnings of the law of real property and, more specifically, to gain some insight into the reasons why the fragmentation of proprietary interests is so much an accepted part of the law. The applicability and, more particularly, the relevance of the doctrine of tenure to Australian land law has been questioned at various times since settlement.2 Despite doubts as to its 1

2

See, for example, Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), Chs 2 and 5; Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), Ch 2; Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), Ch 4; Hargreaves and Helmore, Introduction to the Principles of Land Law (New South Wales) (Law Book Co, Sydney, 1963), pp 8–​18 and 30–​36; Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 1” (2006) 13 APLJ 107 at 107–​128; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp 9–​26; Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 5–​25. Attorney-​General NSW v Brown (1847) 2 Legge 312; Millard and Millard, The Law of Real Property in New South Wales (Law Book Co,1905); Edgeworth, “Tenure, Allodialism and Indigenous Rights at Common Law: English, United States and Australian Land Law Compared after Mabo v Queensland” (1994) 23 Anglo-​American Law Review 397; Buck, “Attorney-​General v Brown and the Development of Property Law in Australia” (1994) 2 APLJ 128; Stuckey, “Feudalism and Australian Land Law: ‘A Shadowy, Ghostlike Survival’?” (1994) Uni Tas LR 102; Devereaux and Dorsett, “Towards a Reconsideration of the Doctrines of Estates and Tenure” (1996) 4 APLJ 30; Buck, “Torrens Title, Intestate Estates and the Origins of Australian Property Law” (1996) 4 APLJ 89; Hepburn, “Feudal Tenure and Native Title: Revising an Enduring Fiction”

42 [2.05]

Foundational Concepts  Chapter  2

meaning and relevance in the Australian context, until recently its application to Australia has always been upheld.3 Even in the High Court case of Mabo v Queensland (No 2) (1992) 175 CLR 1 at 47, where the High Court rejected the application of the principle of terra nullius and found that native title could exist, Brennan J stated that it was “far too late in the day to contemplate an allodial or other system of land ownership” and that the doctrine of tenure could not be overturned. It was clear, nevertheless, in view of the findings in Mabo (No 2), that the doctrine of tenure had a significantly different meaning. Although the doctrine of tenure continued to exist, native title rights fell outside the tenurial system and were a clear qualification on the Crown’s acquisition of ownership. As Brennan  J stated at 48–​49, “[t]‌he doctrine of tenure applies to every Crown grant of an interest in land, but not to rights and interests [eg native title rights] which do not owe their existence to a Crown grant”. After Mabo (No 2) a distinctly Australian doctrine of tenure could be seen to exist.4 In the subsequent decision of Wik Peoples v Queensland (1996) 187 CLR 1 the majority of the High Court5 has arguably redefined in a more fundamental manner the nature of the Crown’s interest in the land and rendered otiose the principle that the doctrine of tenure is the basis of beneficial Crown ownership.6 The relevance to Australian conditions of traditional property concepts derived from feudal England was questioned. The High Court recognised the need in the Wik Case and beyond for an examination of the significance of the unique common law and statutory developments that had occurred in Australian real property law.7

Development of the doctrine of tenure [2.15]  Although much land in England was held in feudal tenure before the Norman Conquest,

it was during the reign of William I that a feudalised regime became highly developed. After the Conquest, the king as sovereign asserted the power to grant land holdings to any person as

(2005) 27 Syd L Rev 49; Hepburn, “Disinterested Truths: Legitimation of the Doctrine of Tenure Post-​ Mabo” (2005) 29 MULR 1; Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 1” (2006) 13 APLJ 107 at 128–​129; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp 27–​35. 3 4

5 6

7

Attorney-​General NSW v Brown (1847) 2 Legge 312; Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141. See generally, Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 2” (2006) 13 APLJ 140; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), Ch 3. In four separate judgments of Toohey J, Gummow J, Gaudron J and Kirby J. Secher has argued that the majority of judges in Mabo v Queensland (No 2) (1992) 175 CLR 1 had already rejected the notion that the doctrine of tenure formed the basis of absolute beneficial ownership in the Crown of unalienated Crown lands: Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 2” (2006) 13 APLJ 140 at 140–​158; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp  81–​95. Wik Peoples v Queensland (1996) 187 CLR 1 at 128–​129 per Toohey J, at 177–​178 per Gummow J, at 243–​ 244 per Kirby J. See Godden, “Wik: Feudalism, Capitalism and the State. A Revision of Land Law in Australia” (1997) 5 APLJ 162; Secher, “A Common Law Doctrine of Suspension of Native Title?: Judicial Interpretations of the ‘Reversion Expectant Argument’ and the Concept of ‘Operational Inconsistency’ –​Part 1 and Part 2” (2005) 12 APLJ 1 and 26; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp 158–​190. See further [1.20], [6.85], [6.350] and [6.425]. [2.15]  43

PART 2 Title to Land

he wished.8 When making grants the king did not transfer absolute ownership, but instead set up complex feudal ties pursuant to which land was granted subject to the grantee performing and fulfilling certain duties and conditions (eg, rendering of services or payment of money). A person holding directly of the king was called the “tenant-​in-​chief”. In turn, the tenant-​in-​ chief granted part of the land to another who, in return, promised to fulfil certain conditions. This process could be repeated many times with respect to the same piece of land. The process was called “subinfeudination”. The “tenant-​in-​demesne” was the person in actual possession of the land and the persons in the pyramid between the king and tenant-​in-​demesne were called “mesne lords”.9 Feudal tenures were established throughout the Norman period and extended to all parts of the kingdom. A feudal pyramid emerged with the king at the top owning all of the land. Many tenurial relationships could and did exist with respect to one piece of land. Tenure could be free tenure or non-​free tenure. The forms of free tenure comprised spiritual tenure (frankalmoign) and lay tenure. Lay tenure took the form of tenure by knight service, tenure by serjeanty or socage tenure. Non-​free tenure comprised villeinage, which was later termed “copyhold”. Each of these forms of tenure involved various incidents and involved different rights and obligations.10 [2.20]  The tenure system became increasingly complex and gradually many services became

difficult to enforce. The first attempt to simplify the system and to prevent even more complex feudal ties developing was made in 1290. The Statute of Quia Emptores, enacted in 1290, changed the law in two respects. First, a person was able to alienate the whole or part of land without the consent of the lord. Secondly, further subinfeudination was prohibited. Thus, for example, if A held the land from a lord X, and alienated part or all of the land to B, B stood in A’s shoes: no new subtenancy between A and B could be created. A substitution only was permitted.11 The statute did not apply to land that was not held in a fee simple estate. Further, it did not prevent subinfeudination where the holder of a fee simple estate granted a fee tail or a life estate and the statute did not bind the Crown. Nevertheless, the result of the Statute of Quia Emptores was that the number of tenure relationships existing with respect to the one piece of land lessened. The statute, together with the incident of escheat, which provided that

8

9 10 11

See Hepburn, “Feudal Tenure and Native Title: Revising an Enduring Fiction” (2005) 27 Syd L Rev 49 at 69, where the author adverts to the fact that the king did not claim absolute beneficial ownership of all the land in England. For instance, many Saxons continued to hold allodial ownership over unalienated Crown lands. The holdings of the mesne lords were known as “seignories”: Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 34. See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp  36–​46. The Statute of Quia Emptores applies in Australia as part of the law received at settlement. In some jurisdictions the statute has been repealed and appears in other legislation. In New South Wales, Victoria, Queensland and the Northern Territory the provisions appear now in the following legislation: Imperial Acts Application Act 1969 (NSW), s 36; Property Law Act 1958 (Vic), s 18A; Property Law Act 1974 (Qld), s 21; Law of Property Act 2000 (NT), s 21. In the Australian Capital Territory, the Statute of Quia Emptores is no longer in force (see Sch 2, Pt 2 of the Imperial Acts (Substituted Provisions) Act 1986 (rep), which re-​enacted the statute, but was then itself repealed by the Law Reform (Abolitions and Repeals) Act 1996 (rep)). It was not necessary to retain the statute in the Australian Capital Territory –​it can have no application in the Australian Capital Territory as there is now no freehold land in the Territory. The terms and conditions on which Torrens leasehold land is held are determined by the conditions and covenants of the lease.

44 [2.20]

Foundational Concepts  Chapter  2

the land “escheated” (discussed below), led to a diminution in the number of persons involved in tenure relationships between the Crown and the tenant-​in-​demesne. The simplification of tenures in each piece of land was aided further by the disappearance of many services associated with tenure. Labour services, such as the provision of agricultural labour, arising from socage tenure were gradually converted into fixed money rents. With the fall in the value of money, the fixed payment became an insignificant amount, barely worth the trouble of collecting, and fell into oblivion. Mesne tenants had little reason to assert their rights and socage tenants gradually became tenants-​in-​chief.12 This process was aided by the rule that a tenant is deemed to hold the land directly of the king if there is no evidence to the contrary. By contrast, tenure by knight service did not disappear as readily because of the incidents of wardship and marriage which could, in certain circumstances, give the mesne lord the control of the land. Nevertheless, the mesne lords were also subject to these incidents and the king, who was the only person in the position with everything to gain but nothing to lose, was eventually the only person interested in the maintenance of tenure by knight service. Gradually, many parts of the tenure system fell into disuse. It was not until 1660, however, that statutory intervention occurred. The Tenures Abolition Act 1660 (Eng) abolished most of the incidents of tenure. It abolished the military tenures of knight service and grand serjeanty13 by converting them into socage tenure. The incident of most value in socage tenure, aids, was abolished.14 The only incident of value in socage tenure which was retained was that of escheat. This incident was of less practical importance after the Statute of Wills 1540 (Eng) permitting devise by will.15 Under the principle of escheat, land reverts (“escheats”) to the Crown where the tenant dies without an heir or where the tenant repudiates his or her obligations of personal loyalty by committing a felony. Theoretically, escheat and tenure are inseparable principles; under the doctrine of tenure the Crown is the ultimate owner and, if the rights of a person holding of the Crown terminate, the land reverts or “escheats” to the Crown. Legislation in Australia has expressly abolished or impliedly replaced escheat for want of an heir or devisee.16 If a person dies intestate and has no next of kin, the property (including

12 13 14

15 16

This in turn was aided by the Statute of Wills 1540 (Eng), which permitted the disposition of land by will and thus lessened the possibility of escheat. The honorary services relating to grand serjeanty were specifically retained. See Hargreaves and Helmore, Introduction to the Principles of Land Law (New South Wales) (Law Book Co, Sydney, 1963), p 36. The Tenures Abolition Act 1660 (Eng) was repealed but re-​enacted in other legislation in New South Wales, Victoria, Queensland and the Northern Territory. See now Imperial Acts Application Act 1969 (NSW), s 37; Imperial Acts Application Act 1980 (Vic), s 5; Property Law Act 1974 (Qld), s 20(1); Law of Property Act 2000 (NT), s 19(1). In the Australian Capital Territory, the Tenures Abolition Act 1660 is no longer in force: see n 11. Note that frankalmoign and copyhold were retained at this stage. See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 26. Succession Act 2006 (NSW), s 136 (previously the relevant provision was s 61B(7) of the Probate and Administration Act 1898 (NSW)); Administration and Probate Act 1958 (Vic), s 70ZL; Property Law Act 1974 (Qld), s 20(3), (4) and Succession Act 1981 (Qld), Sch 2, Pt 2; Administration and Probate Act 1919 (SA), s 72G(1)(e); Intestacy Act 2010 (Tas), s 37; Administration and Probate Act 1929 (ACT), s 49, Sch 6; Law of Property Act 2000 (NT), s 20 and Administration and Probate Act 1969 (NT), Sch 6, Pt 4. Compare the position in Western Australia, where statutory provisions provide for escheat and the procedures to be followed where there is no next of kin on an intestacy –​see Administration Act 1903 (WA), ss 13, 14 and Escheat (Procedure) Act 1940 (WA). There are also escheats for criminal offences abolished by statute: see, for example, Trustee Act 1925 (NSW), s 100. [2.20]  45

PART 2 Title to Land

real property) of that person passes on the principle of bona vacantia to the Crown.17 In this case, the Crown succeeds to the former owner’s rights and does not, as in the case of escheat, regain full rights because of the failure of an intervening interest.18 It is still possible, in some circumstances, for escheat to occur. Where a trustee in bankruptcy or a liquidator of a landowner disclaims the land under statutory powers, the land escheats to the Crown.19 Any charges on the land remain.20 It is interesting to note that, although tenurial incidents declined over a number of years, the settlement of Australia saw the growth of a system of land holding which contained many similarities to the old tenurial incidents. Often land was leased, licensed or sold on the basis that the holder of the land had to fulfil a variety of obligations (apart from the payment of money) in relation to the land.21 This is discussed further in [6.15]–​[6.135] and [6.185]–​[6.205].

Doctrine of tenure in Australia [2.25]  Despite the fact that feudal tenure had withered away in England and that feudalism

was never part of the social structure in Australia, it was assumed that, upon settlement of Australia, the doctrine of tenure operated.22 Australia was considered uninhabited land and, thus, upon settlement the Crown claimed absolute sovereignty.23 This conferred the power to control the territory and make laws with respect to it. Specifically, by the doctrine of tenure, it was held that the Crown had title to the land and thus the right to issue grants over any part of the land and to assert absolute beneficial ownership over unalienated lands.24 As Stephen CJ stated in Attorney-​General NSW v Brown (1847) 1 Legge 312, if this were not the case, there would be no other proprietor. This view was reaffirmed by Blackburn J in Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141, who stated (at 245): 17

The current South Australian, New South Wales, Tasmanian and Australian Capital Territory provisions do not expressly refer to the doctrine of bona vacantia in this context, but more neutrally refer to property vesting in the Crown (South Australia) or the State or Territory being entitled to the property (New South Wales and Australian Capital Territory). However, as the Crown (or State or Territory) only takes an interest where no other person within a requisite “next of kin” relationship is entitled, it is clear that the bona vacantia principle is operating in these jurisdictions.

18

Professor Edgeworth argues that the legislation abolishing escheat indicates the “the local Australian legislatures appear to have effectively abolished the basis of the doctrine of tenure”. The fact that land without any owner passes to the Crown is suggestive of an allodial system of absolute ownership, rather than one under which all land is held of the Crown: Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 17. Re Middle Harbour Investments Ltd [1977] 2 NSWLR 652; Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793; Sandhurst Trustees Ltd v 72 Seventh Street Nominees Pty Ltd (in liq) (1998) 45 NSWLR 556. However, in National Australia Bank Ltd v New South Wales (2009) 260 ALR 115 at 122, Rares J expressed the view that the process of escheat in these circumstances was subject to the power of the court to make an order vesting title to the disclaimed land in someone other than the Crown, pursuant to provisions of the Bankruptcy Act 1966 (Cth) and the Corporations Act 2001 (Cth). Also see Note, “Escheat: A Medieval Doctrine Revisited” (2010) 84 ALJ 76. Sandhurst Trustees Ltd v 72 Seventh Street Nominees Pty Ltd (in liq) (1998) 45 NSWLR 556 at 563. Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 24–​25. Attorney-​General NSW v Brown (1847) 1 Legge 312; Cooper v Stuart (1889) 14 AC 286. Note that one incident of socage tenure, a rental payment, was used in the early days of settlement in the nature of a quit rent reserved to the Crown: Hargreaves and Helmore, Introduction to the Principles of Land Law (New South Wales) (Law Book Co, Sydney, 1963), p 36. See generally Chapter 6. Attorney-​General NSW v Brown (1847) 1 Legge 312. Attorney-​General NSW v Brown (1847) 1 Legge 312.

19

20 21 22

23 24

46 [2.25]

Foundational Concepts  Chapter  2

On the foundation of New South Wales … every square inch of territory in the colony became the property of the Crown [and all] titles, rights and interests whatever in land which existed thereafter in subjects of the Crown were the direct consequence of some grant from the Crown.

This notion that the doctrine of tenure invested the sovereign with beneficial ownership of all lands was a gloss on the original medieval understanding of the doctrine of tenure. As Gummow J commented in Wik Peoples v Queensland (1996) 187 CLR 1 at 186: [t]‌he medieval notion of tenure was expressed by the proposition that all land was held directly or indirectly of the Crown. This involved relationships of reciprocal obligation between the respective parties at each level of the feudal structure, at the peak of which stood the sovereign. In an understanding of these relationships, including those between intermediate or mesne lord and tenant, “proprietary language is out of place” and the dominium of any particular dominus “was always a relative thing”.

The idea that the Crown was actually the “true owner” was incongruous.25 However, in the 17th and 18th centuries, the concept developed that the proper interpretation of the doctrine of tenure was that the Crown was the true owner of all of the land. The acceptance of this interpretation into the law was no doubt related to imperial expansion.26 The political motivations and advantages of an interpretation of the doctrine in a manner which entrenched the Crown’s beneficial ownership of all land in the colonies are clear.27 As has been argued in the context of the settlement of Australia, “[it] functioned as an apparatus for colonial imperialism because it allowed the Crown to take complete control and possession of all land in the colony without having to take into account the interests of indigenous occupants”.28 The interpretation was, however, flawed.29 Historically, the correct analysis of the Crown’s title required a distinction between the Crown’s radical or ultimate title to the whole of the land and the proprietary rights the Crown granted to its subjects or itself.30 Radical or ultimate title, a public law concept, gives the sovereign or paramount lord the ability to grant proprietary interests over his or her territory. It is not a proprietary interest at all in the private law sense, but rather a governmental supervisory power.31 Nevertheless, at the time

25 26 27

8 2 29

0 3 31

See Milsom, The Legal Framework of English Feudalism (Cambridge University Press, 1976), p 39. See Jenks, A History of the Australasian Colonies (1896), p 59, quoted in the judgment of Gummow J in Wik Peoples v Queensland (1996) 187 CLR 1 at 187. Hepburn, “Feudal Tenure and Native Title: Revising an Enduring Fiction” (2005) 27 Syd L Rev 49; McNeil, “A Question of Title: Has the Common Law Been Misapplied to Dispossess the Aboriginals?” (1990) 16 Mon LR 91. Hepburn, “Feudal Tenure and Native Title: Revising an Enduring Fiction” (2005) 27 Syd L Rev 49 at 67. See Secher, “The Meaning of Radical Title: The Pre-​Mabo Authorities Explained –​Part 1” (2005) 11 APLJ 179 at 181–​183 and Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp 36–​38, where the author relies on writings and reasoning of Maitland, Domesday Book and Beyond-​Three Essays in the Early History of England (Cambridge University Press, Cambridge, 1897). Also see Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 1” (2006) 13 APLJ 107 at 107–​128; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp 9–​26. Secher argues that the term “radical title” has been misunderstood and that radical title is a bare legal title, not necessarily a full beneficial title in respect of land not subject to pre-​existing rights. Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 58. See Secher, “The Meaning of Radical Title: The Pre-​Mabo Authorities Explained –​Part 1” (2005) 11 APLJ 179 at 182; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), p 37; Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), pp 56–​57, 58. [2.25]  47

PART 2 Title to Land

Attorney-​General (NSW) v Brown (1847) 1 Legge 312 was decided, the notion which held sway, and was approved in the Brown Case, was that the operation of the doctrine of tenure in Australia conferred absolute beneficial ownership of all land in Australia on the Crown. The arguments of Windeyer, counsel for the defence, in Attorney-​General (NSW) v Brown that the doctrine of tenure was incongruous in a non-​feudal society and inappropriate to Australian conditions and that land was effectively held allodially in the colony failed.32 [2.30]  It was not until 1992 that the High Court in Mabo v Queensland (No 2) (1992) 175

CLR 1 rejected the long-​held view that, upon settlement, all land vested in the Crown and any interests could only be held as a consequence of direct grant from the Crown. The High Court confirmed that, upon settlement, the Crown acquired sovereignty over the territory and a radical title over the land. Through the doctrine of tenure this radical title enabled the Crown to grant interests in land (the grantees hold a tenure granted by the Crown) and, arguably, to hold absolute beneficial ownership of unalienated Crown land. As Brennan J stated (at 48): the notion of radical title enabled the Crown to become Paramount Lord of all who hold a tenure granted by the Crown and to become absolute beneficial owner of unalienated land required for the Crown’s purposes … if the land were desert and uninhabited, truly a terra nullius, the Crown would take an absolute beneficial title (an allodial title) to the land for the reason given by Stephen CJ in Attorney-​General (NSW) v Brown.

The High Court found, however, that the territory was not terra nullius and that areas of land occupied by Aborigines could not be considered uninhabited lands. In these circumstances, the High Court held that the radical title acquired on settlement did not confer on the Crown absolute beneficial ownership of land occupied by indigenous inhabitants. Effectively, the High Court recognised an exception or qualification to the vesting of all land in Australia in the Crown as an absolute owner. As Brennan J stated (at 48–​49 and 51): [t]‌he doctrine of tenure applies to every Crown grant of an interest in land, but not to rights and interests which do not owe their existence to a Crown grant … it is only the fallacy of equating sovereignty and beneficial ownership of land that gives rise to the notion that native title is extinguished by the acquisition of sovereignty.

Although Brennan J stated that the doctrine of tenure was still part of the law of Australia, it was clear that the doctrine had a very different meaning in light of the decision in Mabo (No 2).33 The Mabo case sets out the principles pursuant to which native title can be said to 32

33

See Buck, “Attorney-​General v Brown and the Development of Property Law in Australia” (1994) 2 APLJ 128 at 133–​135. See also Edgeworth, “Tenure, Allodialism and Indigenous Rights at Common Law: England, United States and Australian Land Law Compared after Mabo v Queensland” (1994) 23 Anglo-​American Bar Review 397; Millard and Millard, The Law of Real Property in New South Wales (1905); Devereux and Dorsett, “Towards a Reconsideration of the Doctrine of Estates and Tenure” (1996) 4 APLJ 30. On the other hand, it can be argued that the Crown’s position as ultimate “owner” has more meaning in the Australian context than it has had in England for hundreds of years. The minerals regime in Australia flows very much from the fact that, in many Crown grants, minerals were reserved to the Crown and, further, many forms of tenure created by statute in the 19th and 20th centuries ensured that the Crown retained some controls over the land granted: see Wilson v Anderson (2002) 213 CLR 401. Hepburn, Principles of Property Law (3rd ed, Routledge-​ Cavendish, Sydney, 2006), p 51; Edgeworth, “Tenure, Allodialism and Indigenous Rights at Common Law: England, United States and Australian Land Law Compared after Mabo v Queensland” (1994) 23 Anglo-​American Bar Review 397 at 421–​422; Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 1” (2006) 13 APLJ 107; Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing

48 [2.30]

Foundational Concepts  Chapter  2

exist. If native title is established, it exists outside the tenurial system; it is not “granted of or by” the Crown. It could no longer be stated that the doctrine of tenure conferred absolute beneficial ownership of all land on the Crown.34 It was also clear that native title, subject as it was to extinguishment, was inherently weaker and more vulnerable than any grant emanating from the tenurial system. “[I]‌t is not an estate held from the Crown nor is it protected by the common law as Crown tenures are protected against impairment by subsequent grant”.35 It seemed, however, that the High Court in Mabo (No 2) took the view that, in relation to unalienated land, not subject to native title, radical title of the Crown automatically equated to full beneficial ownership.36 As Brennan J remarked, if that were not the case “there would be no other proprietor” (at 48). As is evident from the discussion above, such an assumption does not accord with the historical meaning of radical title. Further, it has been strongly argued that a careful reading of the judgments of Brennan J (with whom Mason CJ and McHugh J agreed) and Toohey J suggests that absolute beneficial ownership of unalienated Crown lands unaffected by native title does not vest in the Crown pursuant to its radical title; rather, radical title supports a power of alienation in the Crown, but, until such alienation to others or itself, no-​one, including the Crown, has any interest in the land.37 The Mabo case did not concern unalienated Crown land unaffected by native title, and thus the findings of the High Court on this point are obiter dicta.38 [2.35] In Wik Peoples v Queensland (1996) 187 CLR 1 the High Court was required to

consider the issue of extinguishment of native title in relation to the grant of pastoral leases under the Land Act 1910 (Qld) and the Land Act 1962 (Qld). Brennan  CJ reiterated the view he expressed earlier in Mabo v Queensland (No  2) (1992) 175 CLR 1, that it was necessary to maintain for Australian land law the basic underlying principles of English land law. Accordingly, the “doctrines of tenure (with its incident of escheat) and estates ensure that no land in which the Crown has granted an interest is ever without a legal owner” (Wik at 90–​91).39 In the Wik case, however, Brennan  CJ (with whom Dawson and McHugh  JJ agreed) was in the minority in concluding that the pastoral leases in question conferred the right to exclusive possession on the lessees. His Honour further stated that the legislation demonstrated that the Crown acquired a reversion in fee simple on the grant of such a lease.

34 35 36 37

38

39

the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 2 (2006) 13 APLJ 140; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), Ch 3. Hepburn, Principles of Property Law (3rd ed, Routledge-​Cavendish, Sydney, 2006), p 53. Wik Peoples v Queensland (1996) 187 CLR 1 at 84 per Brennan CJ. Mabo v Queensland (No 2) (1992) 175 CLR 1 at 48 per Brennan J. See Secher, “The Doctrine of Tenure in Australia Post-​ Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 1” (2006) 13 APLJ 107; Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 2” (2006) 13 APLJ 140;Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), Ch 4. There are several aspects of the judgments of Brennan and Toohey JJ which support the view that it is only “when the Crown exercises its power to grant an estate in land [that] such land is brought within the regime of the doctrine of tenure”: see Secher, “The Doctrine of Tenure in Australia Post-​Mabo: Replacing the ‘Feudal Fiction’ with the ‘Mere Radical Title Fiction’ –​Part 2” (2006) 13 APLJ 140 at 142–​153; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp 84–​91. Secher, “The Meaning of Radical Title: The Pre-​Mabo Authorities Explained –​Part 1” (2005) 11 APLJ 179 at 180; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), p 151. Compare Secher’s interpretation of Brennan J’s judgment referred to in n 37. [2.35]  49

PART 2 Title to Land

The majority judges (Toohey, Gaudron, Gummow, Kirby  JJ) took a very different view. Their Honours held that, in light of the specific legislation, its background and its purpose, the rights capable of being granted under the legislation were not equivalent to common law leases and would not automatically extinguish native title.40 A corollary to the finding was that the Crown did not acquire, within the private law conception of proprietary interests, a reversion in fee simple (a reversion expectant on the termination of the pastoral lease). In other words, the Crown did not acquire full beneficial ownership, which would necessarily be inconsistent with any native title still subsisting. Rather, the Crown’s power to make grants after the termination of a pastoral lease would again be determined by the provisions of the relevant legislation. It has been argued that the judgments of the majority in Wik can logically support a position that, just as the Crown does not obtain a reversion expectant on the termination of a pastoral lease, neither does the Crown necessarily acquire a beneficial reversionary interest expectant on the expiration of a common law lease.41 In each case the factual and legislative matrix must be considered. The incidents of any proprietary right are to be gleaned from the relevant legislation and common law and reliance upon the concepts of English land law may not be helpful.42 As the Crown does not begin with absolute beneficial title, very clear words in enabling legislation would be required in order for the Crown to have a reversion expectant on the expiration of a limited grant. Although the High Court decision in Western Australia v Ward (2002) 213 CLR 1 rejected any common law concept of “suspension” of native title rights, and thus impliedly cast doubt on the rejection of the reversion expectant theory, the court’s acceptance of a concept of partial extinguishment supports the rejection of the reversion expectant theory: [T]‌ he concept of partial extinguishment acknowledges that the Crown does not acquire beneficial ownership of land at the time of making a grant of an interest in land, as such beneficial title would necessarily be inconsistent with all existing native title rights.43

The Mabo decision accepted that native title could exist outside the tenurial system, but arguably the High Court in that case left intact the doctrine of tenure for lands unaffected by native title. The Wik decision, however, makes it clear that the doctrine of tenure, insofar

40

41

42 43

Also see Western Australia v Brown (2014) 306 ALR 168, where the High Court, in a unanimous joint judgment, held that the grant of certain statutory mineral leases did not automatically extinguish native title because, unlike common law leases, they did not confer on the grantee a right of exclusive possession. For a detailed discussion of extinguishment of native title, see [6.325]–​[6.335]. See Secher, “A Common Law Doctrine of Suspension of Native Title?: Judicial Interpretations of the ‘Reversion Expectant Argument’ and the Concept of ‘Operational Inconsistency’ –​Part 1” (2005) 12 APLJ 1; Secher, “A Common Law Doctrine of Suspension of Native Title?: Judicial Interpretations of the ‘Reversion Expectant Argument’ and the Concept of ‘Operational Inconsistency’ –​Part 2” (2005) 12 APLJ 26; Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), pp 158–​180. The author argues that, despite the findings of the High Court in Western Australia v Ward (2002) 213 CLR 1 that tend to militate against this, the High Court’s rejection in Wik Peoples v Queensland (1996) 187 CLR 1 of the reversion expectant theory and its insistence on an interpretation of real property interests which take account of the relevant Australian common law and statutory provisions and conditions make this clear. Wik Peoples v Queensland (1996) 187 CLR 1 at 127–​129 per Toohey J, at 177–​178 per Gummow J, at 243–​ 244 per Kirby J. Secher, “A Common Law Doctrine of Suspension of Native Title?: Judicial Interpretations of the ‘Reversion Expectant Argument’ and the Concept of ‘Operational Inconsistency’ –​Part 2” (2005) 12 APLJ 26 at 31. Also see Secher, Aboriginal Customary Law: A Source of Common Law Title to Land (Hart Publishing, Oxford, 2014), p 188.

50 [2.35]

Foundational Concepts  Chapter  2

as it is understood as conferring beneficial ownership on the Crown, does not form the basis of Australian land law. The Crown is not the beneficial owner of unalienated Crown lands and, even where it has exercised power directly or indirectly to grant limited interests to its subjects, it does not thereby automatically secure to itself the reversionary beneficial title; rather, the High Court viewed Australian land law as having its own unique underpinnings.44 The High Court decision in Yanner v Eaton (1999) 201 CLR 351 to the effect that legislation vesting “property” in wild fauna in the State is regulatory in nature and does not confer full beneficial or absolute ownership, provides conceptual support for these views. [2.40]  The meaning attached to the doctrine of tenure in much earlier times still provides a

basic structure to Australian real property law. Upon settlement, the assumption of sovereignty gave to the Crown the right to confer “valid title to land on [its] citizens … a public rather than a private law concept”45 (radical title). Whether or not the Crown has so conferred beneficial title on its citizens or on itself depends upon a proper construction of relevant common law and legislation. In another sense, the doctrine of tenure, when considered as a system under which mutual rights and obligations existed between persons with rights in the land, has no relevance for Australian land law. As set out at [2.20], most of the incidents of tenure had disappeared by the time Australia was settled and the relationship between the Crown and its subjects to whom interests were granted was essentially non-​tenurial.46 The only incident of value in socage tenure was escheat and it has been argued that its abolition in Australia has, by inference, abolished any basis for a doctrine of tenure.47 It has been argued that there is now “no legal impediment to the abolition of the doctrine of tenure” and that its retention, even in a merely formal fashion, has hindered the development of a land system which can encompass and adequately deal with forms of land ownership which flow from essentially different cultures.48 An appropriately planned allodial model would allow property law to develop a balanced, pluralist land system.49

44

45

46

47 48

49

Wik Peoples v Queensland (1996) 187 CLR 1 at 127–​129 per Toohey J, at 233–​235 per Kirby J, at 177–​179 per Gummow J. See also Fejo v Northern Territory (1998) 195 CLR 96; Wilson v Anderson (2002) 213 CLR 401; Western Australia v Ward (2002) 213 CLR 1; Yanner v Eaton (1999) 201 CLR 351; Commonwealth v Yarmirr (2001) 208 CLR 1; Lansen v Olney (1999) 169 ALR 49. Edgeworth, “Tenure, Allodialism and Indigenous Rights at Common Law: English, United States and Australian Land Law Compared after Mabo v Queensland” (1994) 23 Anglo-​American Law Review 397 at 419. Compare comments at [2.25]. See Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), p 204 and Edgeworth, “Tenure, Allodialism and Indigenous Rights at Common Law: English, United States and Australian Land Law Compared after Mabo v Queensland” (1994) 23 Anglo-​American Law Review 397 at 413–​415 and 426–​428, where it is argued that the relationship between the Crown and grantees was always essentially non-​tenurial in Australia. Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 17; Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), p 167. Hepburn, “Disinterested Truths: Legitimation of the Doctrine of Tenure Post-​Mabo” (2005) 29 MULR 1 at 17. In Scotland, the system of feudal land tenure has been abolished under the Abolition of Feudal Tenures etc (Scotland) Act 2000, effecting the recommendations of the Scottish Law Commission’s Report on Abolition of Feudal System 1999 (Scots Law Com No 168). Ireland has also recently abolished the doctrine of tenure: s 9(2) of the Land and Conveyancing Law Reform Act 2009 (Ireland), effecting the recommendations of the Ireland Law Reform Commission’s Report on Reform and Modernisation of Land Law and Conveyancing Law (LRC 74 –​ 2005). Hepburn, “Disinterested Truths: Legitimation of the Doctrine of Tenure Post-​Mabo” (2005) 29 MULR 1 at 3. [2.40]  51

PART 2 Title to Land

POSSESSION AND SEISIN [2.45] The doctrine of tenure, as described at [2.10]–​[2.40], militated against any concept

of absolute ownership in land. The tenant in possession could not be regarded as having “ownership” as a failure to perform the requisite services resulted in the lord being able to recover the land. Neither could the lord be said to have absolute “ownership” as he had no right to possession of the land provided the services were performed by the tenant. [2.50]  In fact, English law never recognised a concept of absolute ownership of land. The

early real actions for the recovery of land demonstrated that English law, in analysing a person’s interest in or relationship to land, concentrated upon the right to seisin or possession, rather than a right to absolute ownership.50 As Cheshire commented, “[a]‌ll titles to land are ultimately based on possession in the sense that the title of the [person] seised prevails against all who can show no better right to seisin”.51 In disputes concerning land the question to be decided between the plaintiff and the defendant was which party had the better right to seisin. The courts were unconcerned as to whether the plaintiff or the defendant had a right enforceable against the whole world. The concept of relativity of title rather than absolute ownership was firmly established in English land law from very early times and has remained one of the cornerstones of Anglo-​Australian real property law.52 In recent times there has been a significant shift in England and, to a lesser extent in Australia, from possession to ownership in relation to the basis of title. The development of computerised land registration systems has seen a distinct movement away from reliance on fact-​based possessory interests to “a more modern view of property as the exclusive product of a state-​administered system of computerised entitlement”.53 Despite this movement, at this time possession remains a central concept in real property law. The ancient remedy for recovery of land, the writ of right, concentrated upon whether the plaintiff or the defendant had the earlier, and therefore the better, right to seisin. The fact that the plaintiff was unable to prove a title good against the whole world was irrelevant. The procedure relating to this old writ was complex and lengthy. In order to decide disputes concerning rights to land, simpler remedies, the possessory assizes, were introduced by the common law.54 These protected recent invasions of possession. The possessory assizes considered only the question as to whether the plaintiff had been wrongfully disseised by the defendant. An “owner” of land who was disseised and failed to regain possession quickly (within four days) lost seisin to the disseisor and the disseisor could use the possessory assizes to protect his seisin, even against the owner. The “owner”, having lost seisin, was no longer entitled to use the possessory assizes. The writ of right, where the question was who had the 50 51 52

53 4 5

See Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), Ch 5. Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 48. The emphasis on possession in English law is to be contrasted with the position in Roman law. In Roman law the doctrine of dominium meant that a person had either absolute and complete ownership of land or nothing at all. A person who enjoyed possession had some personal remedies for interference with his right, but was not considered to have any proprietary interest in or “ownership” of the land. See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 48; see also Waverley Borough Council v Fletcher [1996] QB 334 at 345. Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 150; see also [3.15], [4.40] and [4.80]. For a concise description of the various remedies, see Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), pp  90–​93.

52 [2.45]

Foundational Concepts  Chapter  2

earlier, and therefore the better, right to seisin, could still be used by the “owner” but, as stated above, its use involved a complex and lengthy procedure. Eventually, the writs of entry replaced the possessory assizes. They gave some further and simpler protection to the “owner” and covered the instances where the disseisin was not of very recent origin. Although the disseisor gained seisin, he was subject to a right of entry by the person disseised. The person disseised could thus attempt to regain possession of the land (he had a right of entry) and, in doing so, was not subject to any action by the disseisor for doing so. The right of entry, however, was not a right which the common law considered an alienable one.55 In contrast, seisin that remained in the disseisor was a fully alienable right. [2.55]  The above analysis demonstrates that it was seisin which was protected by the courts.

How then is this term defined? In early times, it appears that no distinction was drawn between seisin and possession.56 With respect to real property, the law developed in such a manner that a real and important distinction between the two evolved. Seisin means the possession of land by a person holding a freehold estate in land. Only a person seised of a freehold estate in land could use the old real actions for the recovery of land. At [2.85]ff, the doctrine of estates is analysed –​estates in land fall into two distinct categories: freehold estates and estates less than freehold (leasehold estates). A person holding a leasehold estate was regarded as being in possession of the land subject to the lease, but was not “seised” of the land.57 A leasehold interest was viewed as a personal transaction between the lessor and the lessee and gave the lessee a chattel interest or personal property only. The old actions for the recovery of land –​the real actions, the possessory assizes and the writs of entry –​could only be used to protect seisin. Thus, a lessee, who was dispossessed of the land, had no right to recover possession of the land.58 During the term of the lease, seisin remained in the lessor.59 This unsatisfactory situation, whereby a lessee had no right to recover land of which he or she was dispossessed, was remedied by the development of the action of ejectment. The action of ejectment permitted the lessee to recover the land.60 Because the action of ejectment provided a simpler means of recovering land than did the old actions, freeholders wished to

55

56 57 58 59 60

Pursuant to statute, the right of entry is now alienable. See Conveyancing Act 1919 (NSW), s 50(1); Property Law Act 1958 (Vic), s 19(1)(b); Property Law Act 1974 (Qld), s 31(1)(b); Law of Property Act 1936 (SA), s 10(b); Conveyancing and Law of Property Act 1884 (Tas), s 80(1); Civil Law (Property) Act 2006 (ACT), s 225(a); Law of Property Act 2000 (NT), s 31(1)(b). Query the position in Western Australia. See, however, s 50(2) of the Conveyancing Act 1919 (NSW), which limits the alienability of a right of entry by providing that the conveyance of such a right is only effective against the person in possession if the person conveying, or any person through whom he or she claims, has been in possession of the land within 12 months of the date of the conveyance. (Similarly, see s 226 of the Civil Law (Property) Act 2006 (ACT).) See Baalman, “The Mystery of Pretensed Titles” (1957) 31 ALJ 450, where it is argued that s 50(2) of the Conveyancing Act 1919 (NSW) should be repealed. See also Maitland, “The Mystery of Seisin” (1886) 2 LQR 481 and Note (1969) 43 ALJ 301; Mulcahy v Curramore [1974] 2 NSWLR 464 at 480–​481; Beever v Spaceline Engineering Pty Ltd (1993) 6 BPR 13,270. See Trust Company Ltd v Chief Commissioner of State Revenue (2007) 13 BPR 25,019 at 25,027 per Giles JA. Trust Company Ltd v Chief Commissioner of State Revenue (2007) 13 BPR 25,019 at 25,027–​25,028 per Giles JA. Balgra Office Enterprises Pty Ltd v Commissioner of State Taxation [2008] SASC 50 at [24]–​[25]. Perpetual Trustee Co Ltd v Valuer-​General (2008) 101 SASR 110 at 124 [54]–​[56]. Balgra Office Enterprises Pty Ltd v Commissioner of State Taxation [2008] SASC 50 at [25].

[2.55]  53

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use it too and, by the use of a fiction which the courts accepted,61 began to do so. In time, the action in ejectment largely replaced the older actions as a means of recovering land for freeholders. The modern actions for the recovery of land are based on the action of ejectment and concentrate upon relative rights to possession of land.62 The separate terms “seisin” and “possession” are still used by the courts and writers alike but it is clear that the use of the action of ejectment as a general action for the recovery of land and the subsequent abolition of the old real actions has rendered the distinction of little practical importance:  “there is little merit today in preserving … any distinction between seisin and possession;. It is possession that forms the recognised root of title. Ownership, as between two rival claimants, is the better right to possession”.63 [2.60]  A number of cases demonstrate the importance of possession in Anglo-​Australian land

law and illustrate the generally accepted view that there is no concept of absolute ownership. In a dispute concerning land, the courts approach the matter by considering whether the plaintiff or the defendant has a relatively better right to the land. Possession does give rise to an interest in the land and a plaintiff who is dispossessed of land by the defendant will succeed in recovering the land unless the defendant can prove a superior right to possession.64 The defendant may prove such a superior right by showing that he or she has the documentary title or that he or she has a prior and thereby superior right to possession. Because of the statutory principle of limitation of actions discussed in Chapter 3, it must be remembered that a person who has such a superior right does not retain the right indefinitely. After a set period of time, the person’s right to bring an action to recover the land is lost. [2.65] In Asher v Whitlock (1865) LR 1 QB 1 Williamson took possession of two pieces

of land in 1842 and 1850 respectively. Documentary title to the land was held by another. Williamson died in 1860 and in his will he devised the pieces of land he had enclosed to his widow for life or until her remarriage and then to his daughter. Williamson’s widow and his daughter remained in possession of the land. In 1861 the widow married Whitlock, who also came to reside on the land. In February 1863 the daughter died. The plaintiff in the action, Asher, was the daughter’s heir. In March 1863 the widow died. Asher brought an action in ejectment against Whitlock. The court held in favour of the plaintiff. Cockburn CJ stated the clear proposition that if Whitlock had dispossessed Williamson, Williamson would have had a right to recover the land from Whitlock. Williamson’s prior, and therefore better, possessory interest would have given him a better right to the land than Whitlock. “[P]‌ossession is good against all the world except the person who can shew a good title” (at 5 per Cockburn CJ). The court held that the

61 62

63 64

The nature of this fiction is described in Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 1364. See, for example, s 20 of the Civil Procedure Act 2005 (NSW), which provides that “[a]‌claim for judgment for possession of land takes the place of a claim in an action for ejectment that could have been brought under the practice of the Supreme Court as it was immediately before 1 July 1972”. See s 79 of the Supreme Court Act 1970 (NSW) (repealed by Sch 5.47[5] of the Civil Procedure Act 2005), which provided for actions for the recovery of possession of land by person who might previously have brought an action for ejectment in the period between 1 July 1972 and the commencement of the Civil Procedure Act 2005. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 260 (footnote omitted). See Dial A Dump Industries Pty Ltd v Roads and Maritime Services (2017) 94 NSWLR 557 at 567–​568 [49]–​[51].

54 [2.60]

Foundational Concepts  Chapter  2

possessory interest is clearly a devisable one and thus Asher, who was the heir of the daughter, stood on the shoes of her predecessors-​in-​title (Williamson and his daughter) and could rely upon the prior possessory right in the action in ejectment against Whitlock. The only way in which Whitlock could have succeeded is if he had maintained possession in his own right for the period of time (then 20 years) necessary to bar the right of action of the holder of the prior possessory interest. Although Cockburn CJ and Mellor J reached the same decision, it is interesting to note the differences in terminology used in their respective judgments. Cockburn  CJ discarded the distinction between seisin and possession and stated simply that possession itself gives rise to an interest which is enforceable against all but the true owner. In contrast, Mellor J retained the distinction in holding that possession is “prima facie evidence of seisin in fee” and thereby implying that the plaintiff’s proprietary interest was based on seisin, rather than simply possession. Although the judgment of Mellor  J is strictly more correct than that of Cockburn CJ,65 there seems little reason for continuing to use terminology which is effectively outdated. [2.70]  Although the issue was not raised directly in Asher v Whitlock (1865) LR 1 QB 1, the

case is often cited as authority for the proposition that the defendant in an action to recover land cannot raise successfully the plea of jus tertii. The plea of jus tertii is effectively a plea that if a third party to the proceedings has a better right to the land than either the plaintiff or the defendant, the plaintiff cannot succeed even if he or she has a better possessory interest than the defendant. With respect to the land enclosed by Williamson in 1850, the documentary title holder retained the best right to the land. The limitation period was 20 years and thus, in 1865, the limitation period had not expired. It appears that the plea was not raised by the defendant in Asher v Whitlock. Thus, although by inference the court rejected its use, the court was not required directly to consider the issue.66 The Privy Council in Perry v Clissold [1907] AC 73 rejected the use of the plea of jus tertii and, although there are some judgments in the High Court decision of Allen v Roughley (1955) 94 CLR 9867 which imply that the plea may be raised, on balance the law appears to be that such a plea cannot be raised successfully. [2.75] The fact situation in Allen v Roughley (1955) 94 CLR 98 was complex and the

following is a version sufficient for an understanding of its relevance to this area of the law. Cusbert took possession of the land in dispute in 1880 and remained there until his death in 1895. He did not hold the documentary title. By his will, Cusbert devised the land to his son, William, for life and the remainder in fee simple to his other children. The defendant, Allen, who was a son-​in-​law of Cusbert, took possession of the land in 1898 and remained there. William lived on the land with Allen and his wife from 1898 to 1900. From 1900 to 1915 he resided in New Zealand and, on his return, he lived in a hut on part of the land and, for some periods of time, with Allen in the homestead until his death in 1942. In 1950 an action to recover the land from Allen was commenced. It was effectively an action by the remaindermen pursuant to Cusbert’s will (ie, his other children). They claimed that their possessory interest deriving from Cusbert was prior in time to any such interest

5 6 66 67

See Hargreaves, “Terminology and Title in Ejectment” (1940) 56 LQR 376 at 381–​386. Compare Doe d Carter v Barnard (1849) 13 QB 945; 116 ER 1524 where the plea of jus tertii was raised successfully. See [2.80]. [2.75]  55

PART 2 Title to Land

claimed by Allen and that even if Allen had taken adverse possession, he had not barred their right to bring an action as their right only arose in 1942 upon the death of William, the life tenant. When the matter reached the High Court, Allen had accepted that he was unable to defeat the plaintiff’s claim by relying upon the fact that he had extinguished all other claims to the land through adverse possession. He claimed, however, that the plaintiffs could only defeat his interest if they could prove title to the land and that they could only do this by showing a good documentary title or a possessory title which was proved to be the best interest in the land by 20 years’ (the limitation period) uninterrupted possession. His argument was based on the views of Holdsworth.68 The High Court rejected the defendant’s argument and held, as had the court in Asher v Whitlock (1865) LR 1 QB 1, that possession for less than the statutory period gives rise to an interest in land which is sufficient to maintain an action in ejectment against a dispossessor.69 The court drew attention to the fact that a person who takes possession of land and then abandons it has no right of action to recover land against a person who subsequently takes possession. Thus, it may be that a plaintiff in ejectment is required to prove a prior possessory interest and to prove that the possessory interest has not been abandoned. [2.80]  The decision of the High Court in Allen v Roughley (1955) 94 CLR 98 demonstrates

clear approval of the theory of relativity of title. By inference it would be thought that such an approval would involve the unacceptability of the plea of jus tertii. If the task of the court is to determine whether the plaintiff or the defendant has the relatively better title, the implication must be that the proof of a better title than either the plaintiff or the defendant in a third party would be irrelevant to the dispute at hand. This conclusion is not, however, wholly clear in some of the judgments of the High Court. Fullagar J endorsed, in a stronger fashion than the other justices, that possession gives rise to an interest in the land which is enforceable against all possessors but a person with a superior interest and, unless the possession is abandoned, any subsequent possessor cannot hold a superior interest. The whole tenor of his judgment militates against the availability of the plea of jus tertii. Dixon CJ and Taylor and Williams JJ viewed possession as being prima facie evidence of title. It is possible to argue on this analysis that the plaintiff’s claim is based on prima facie proof of title and a defendant who could prove that title is in fact in a person other than the plaintiff (the plea of jus tertii) would succeed. However, the better view is that the justices would have rejected the use of the plea of jus tertii. When referring to possession as being prima facie evidence of title, it seems that Dixon CJ, in particular, was referring to possession as prima facie evidence of a possessory title, rather than prima facie evidence of an absolute title. Their Honours clearly supported the concept of relativity of title, a concept which involves an acceptance that a dispute concerning land must be decided according to whether the plaintiff or the defendant has the better right to the land. It is a little more difficult to conclude that Kitto J would have rejected the plea of jus tertii. Kitto J viewed possession as being prima facie evidence of a fee simple estate, of absolute ownership. Arguably, proof that the best title was in a third person would, on the analysis of Kitto J, have destroyed the plaintiff’s case.

68 69

Holdsworth, A History of English Law (2nd ed, Vol 7, Sweet and Maxwell, London, 1937), pp 62–​65. Compare the judgment of Williams J, who took a different view of the facts: see (1955) 94 CLR 98 at 118. On his Honour’s analysis, the periods of possession by Cusbert and William, the life tenant, taken together comprised a 20-​year period. Query whether, in view of the judge’s findings of fact, such a view was possible.

56 [2.80]

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Subsequent decisions have taken the view that jus tertii is not a good defence70 and, although doubt remains in view of some of the judgments in the High Court in Allen v Roughley, it is suggested on balance that the plea cannot be raised successfully.71

THE DOCTRINE OF ESTATES Introduction [2.85]  The essence of the doctrine of tenure was that the king “owned” or had paramount

title to the land. A question then arose as to the nature of rights of the “tenant” or occupier of the land. If the king “owned” all of the land, what did the “tenant” own? The answer was found in the doctrine of estates.72 As Lawson stated, the solution was “to create an abstract entity called an estate in land and to interpose it between the tenant and the land”.73 Thus the tenant owned not the land, but an abstract “estate” in the land. A variety of “estates” differing as to the length of time they could be enjoyed were able to be created.74 The doctrine of tenure has not formally been abolished in Australia, but the decision of the High Court in Wik Peoples v Queensland (1996) 187 CLR 1 (see [2.35]) demonstrates a strong shift from the “strictures of feudal tenure”.75 Many writers have commented on the inappropriateness of the use of the doctrine as a basis for Australian land law and suggested that an allodial system would better suit Australian conditions.76 If the doctrine of tenure were to disappear, the doctrine of estates would no longer be necessary; of course, the fragmentation of proprietary interests on the basis of time could still exist.77 Proprietary interests would still be created in the same manner and the rights and obligations flowing from specific proprietary rights would remain the same.78 The following material is to be read with the above comments in mind.

70 71 72 73 74 75 76

77

78

See, for example, Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd (1970) 92 WN (NSW) 1087; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464; Newington v Windeyer [1985] 3 NSWLR 555. See also the judgment of Toohey J in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 208ff, where his Honour comments on the nature of possessory title. Trust Company Ltd v Chief Commissioner of State Revenue (2007) 13 BPR 25,019 at 25,027 per Giles JA. Lawson, The Rational Strength of English Law (Stevens & Sons Ltd, London, 1951), p 87. Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 57. Hepburn, “Disinterested Truths: Legitimation of the Doctrine of Tenure Post-​ Mabo” (2005) 29 MULR 1 at 30. See, for example, Edgeworth, “Tenure, Allodialism and Indigenous Rights at Common Law: English, United States and Australian Land Law Compared after Mabo v Queensland” (1994) 23 Anglo-​American Law Review 397; Devereaux and Dorsett, “Towards a Reconsideration of the Doctrines of Estates and Tenure” (1996) 4 APLJ 30; Buck, “Attorney-​General v Brown and the Development of Property Law in Australia” (1994) 2 APLJ 128; Stuckey, “Feudalism and Australian Land Law: ‘A Shadowy, Ghostlike Survival’?” (1994) Uni Tas LR 102; Buck, “Torrens Title, Intestate Estates and the Origins of Australian Property Law” (1996) 4 APLJ 89; Hepburn, “Feudal Tenure and Native Title: Revising an Enduring Fiction” (2005) 27 Syd L Rev 49; Hepburn, “Disinterested Truths: Legitimation of the Doctrine of Tenure Post-​Mabo” (2005) 29 MULR 1. New Zealand Law Commission, Tenure and Estates in Land (Preliminary Paper No 20, June 1992); Scottish Law Commission, Report on Abolition of the Feudal System, Report No 168 (1999) at [9.4]; Hepburn, “Disinterested Truths: Legitimation of the Doctrine of Tenure Post-​Mabo” (2005) 29 MULR 1 at 32. Hepburn, “Disinterested Truths: Legitimation of the Doctrine of Tenure Post-​ Mabo” (2005) 29 MULR 1 at 32. [2.85]  57

PART 2 Title to Land

The doctrine of tenure demonstrated that several persons could hold interests in the one piece of land. The doctrine thereby laid the groundwork for the division of interests in land in ways other than pursuant to the tenurial relationship. From early times, it was recognised that the permanent nature of land lent itself readily to the concept of the creation of successive interests in land. The idea was that it should be possible for a person to have an interest in the land giving a present right to possession, while other persons would have interests which would give them rights to possession in the future. Although the holder of a future interest had no present right to possession, the interest was still a present and full one in the sense that the interest was capable of alienation. The doctrine of estates permitted this fragmentation of a proprietary interest on the basis of time. The estate was separate from the land. By viewing the estate as a thing separate from the land, it was simpler to accept, for instance, the notion of the alienation of a future right to possession of the land.79 The estate gives its holder a right to seisin or possession and the nature of the estate determines the extent and duration of the right to seisin or possession. For example, if A is the holder of a life estate in Blackacre, her right to seisin is limited to the duration of her life. Estates are classified into estates of freehold and estates less than freehold. The second category comprises what is more commonly termed the “leasehold estate”. Estates of freehold are created where the length of the duration of the estate is uncertain. Estates of less than freehold are created when the duration of the estate is certain or capable of being rendered certain.80 [2.90]  When the concept of the estate was first developed, it was only estates of freehold –​the

fee simple, the fee tail and the life estate, which were recognised as estates in land. Leases were seen as comprising a simple, personal transaction between the landlord and the tenant. While the tenant was entitled to possession of the land, seisin, and therefore the right to use the real actions to recover possession of the land, remained with the landlord. A tenant who was dispossessed of the land could not use the old real actions to recover possession of the land; the only remedy was to sue the landlord for a breach of contract. As explained at [2.55], in the 15th century the action of ejectment was developed and gave the dispossessed tenant the right to recover the land. Consequently, it was recognised that the lease gave its holder proprietary rights in the land, rather than simply personal rights pursuant to contract, and the estate less than freehold, the leasehold estate, became established.

Estates of freehold [2.95]  The three estates of freehold are the fee simple (see [2.100]), the fee tail (see [2.105])

and the life estate: see [2.135]. Fee simple [2.100] The fee simple is the largest estate in duration. It is the closest estate to absolute

ownership. As Megarry and Wade state, “its proprietor is commonly called the owner of the

79 80

Hargreaves and Helmore, Introduction to the Principles of Land Law (New South Wales) (Law Book Co, Sydney, 1963), p 40ff. Balgra Office Enterprises Pty Ltd v Commissioner of State Taxation [2008] SASC 50 at [24].

58 [2.90]

Foundational Concepts  Chapter  2

land”.81 It is only the doctrine of tenure which theoretically means the Crown is the owner of all land, which still prevents the holder of an estate in fee simple from being regarded as an absolute owner.82 At first, the fee simple estate was not such an enduring, absolute estate as it is now. The word “fee” denoted that the estate was an inheritable one and the word “simple” meant that the estate could pass to heirs generally and was not, like the fee tail, limited to a particular class of heirs. In early times, the heir was viewed as having a current clear interest in the land and the holder of the fee simple estate could not alienate the estate to another without the consent of the heir. The estate was considered to be one of inheritance in a strict sense and was enforced as such. By 1200 the situation had changed and the holder of a fee simple estate was able to alienate the estate, inter vivos. Nevertheless, the fee simple estate continued only for as long as the original holder or the heirs survived.83 Even if the holder had conveyed the estate to another person before his or her death, the estate failed if the holder died without leaving heirs. Gradually the fee simple estate became a more enduring interest. By early in the 14th century it was clear that if the holder of a fee simple estate alienated the estate and subsequently died without heirs, the fee simple estate would continue in the new holder as long as the new holder had heirs.84 The right of the holder of a fee simple estate to dispose of the estate by will and so defeat the claim of the heir was longer in coming. The “use” effectively made it possible to dispose of land in this way (discussed at [2.280]–​[2.360]) and in 1540 the Statute of Wills (Eng) enabled direct testamentary dispositions of fee simple estates. In modern law, the fee simple estate continues whether or not there are heirs. The holder may dispose of the estate during his or her lifetime or by testamentary devise. If the holder dies intestate, the estate passes to his or her next of kin.85 Where a person dies intestate and without next of kin, the Crown takes the property.86 Fee tail [2.105] The fee tail is an estate of inheritance but, unlike the fee simple, inheritance is limited to a particular person and his or her specified lineal descendants. As explained at [2.100], the fee simple estate as originally formulated and enforced could pass to collateral relations (eg, a brother) or ascendants if there were no direct descendants. The idea of the fee tail estate was to

81 82 83

84 5 8 86

Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 21. See, however, Mabo v Queensland (No 2) (1992) 175 CLR 1, where it is made clear that native title may exist independently of a Crown grant: see [2.10] and [2.30]. “Heirs” included blood relations and their heirs: Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 34. For a detailed account of the meaning of term “heir”, see Simpson, A History of Land Law (2nd ed, Clarendon Press, 1986), pp 57–​63. See also Clay v Karlson (1998) 19 WAR 287. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 35. This is according to statutory formulae: see [8.10]. At common law, the fee simple passed or escheated to the feudal overlord in certain circumstances, for example, where the holder of a fee simple estate died intestate and without next of kin. Under statutory provisions, the property now passes on the principle of bona vacantia to the Crown. For the relevant statutory provisions, see [2.20] and [8.10]. [2.105]  59

PART 2 Title to Land

keep the estate within a particular branch of the family: the estate would revert to the grantor when the grantee and the specified descendants were dead.87 Under the grant of an ordinary fee tail (“to A and the heirs of his body”), the land would descend to the grantee’s lineal heirs of any type. However, the grant of a fee tail could be restricted further, so as to descend only to a specified class of lineal descendants. For example, the instrument could specify that only female descendants (“to A and the female heirs of his body”) or male descendants (“to A and the male heirs of his body”) were to take under the grant. Such grants (the “tail female” and “tail male”, respectively), together with the ordinary fee tail, have been termed “general tail”. Alternatively, the grant could be restricted to heirs descended from a particular spouse (“to A and the heirs of his body begotten of his wife, Z”). This type of grant may be classified as a “special tail”.88 [2.110]  The common law interpreted these grants as the grants of fee simple estates subject

to the condition that heirs of the specified class existed. Once a descendant of the specified class was born, the common law deemed the condition to be fulfilled and the grantee was then deemed to be in the same position as the holder of a fee simple. Thus, the holder had the power to alienate to another and so defeat the intention of the grantor and the possible interests of persons falling within the specified class of descendants. The power to alienate in the grantee was so clearly against the intention of the grantor that the law was altered by the statute De Donis Conditionalibus 1285. This statute created the freehold estate of the fee tail. Pursuant to the statute, it was provided that conditional grants of the type described were to be interpreted as the grantor intended. Thus, even if the grantee purported to alienate, the estate descended to the specified line of descendants upon the death of the grantee. When the grantee and all the issue were dead, the estate reverted to the grantor.89 Effectively, the holder of a fee tail estate could only alienate an interest lasting for his or her lifetime. It follows then that the holder of a fee simple estate who created a fee tail from the fee simple retained an interest in the land; the whole of the estate had not been given away. In such circumstances, the holder of the fee simple held a reversion or a vested remainder in another person may have been created.90 [2.115] The fee tail estate effectively prevented alienation of the land. The specified

descendants were not bound by an alienation by the tenant in tail. More specifically, the rights of the issue could not be affected by partial forms of alienations, such as rentcharges and leases. The effective management of land became very difficult for the holder of the fee tail estate. Statutory change to remedy the situation was not possible as the large landowners still favoured the fee tail estate as a means of keeping the property in the family, tying descendants to the property and preserving it from forfeiture.

87 88 89

90

See Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 60; Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 95. Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp  589–​591. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 54; Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 585–​587. Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 113–​114.

60 [2.110]

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Various fictitious procedures evolved as a means of converting the fee tail estate into a fee simple estate. In order to effect such a conversion successfully, it was necessary to bar the rights of the specified line of descendants and the rights of any persons, reversioners or remaindermen, who would take in the event of the failure of heirs. The two devices which were used successfully were the common recovery and the fine. They involved the use of an established action at law and relied upon the binding nature of a court judgment. The ways in which these devices operated have been explained fully elsewhere. In view of the fact that estates in fee tail can no longer be created in most Australian jurisdictions, they are not discussed in detail here.91 It is sufficient to state that if the device of the common recovery was used properly, the fee tail estate was converted into a fee simple estate. The collusive action of the fine, being ineffective to bar the interests of persons holding estates in remainder or reversion, resulted in the creation of a base fee, an estate similar to a determinable fee simple. The result was that the estate continued only for as long as the entail would have continued had it not been barred. The fine, as a device to end an estate in tail, was therefore not as effective as the common recovery. Nevertheless, because its scope and use were not as limited as the common recovery, the fine was a popular means of barring an entail. The procedures for the use of the common recovery were simplified with the introduction of the Fines and Recoveries Act 1833 (UK). [2.120] The estate of fee tail was rarely used in Australia. Different social and economic

conditions existed in Australia and there was little interest by landowners in keeping land within the family, or a particular branch of it, by use of the fee tail estate: see [13.20]–​[13.40].92 Recoveries and fines were not used in New South Wales. However, s 8 of the Registration of Deeds Act 1825 (NSW) provided that a deed acknowledged in a particular manner would have the same effect as the suffering of a recovery or the levy of a fine.93 [2.125] In New South Wales, Victoria, Queensland, Western Australia and the Northern

Territory estates in fee tail can no longer be created at all.94 In these States any attempt to create a fee tail estate results in the creation of a fee simple estate. In New South Wales, Queensland, Western Australia and the Northern Territory it was provided further that all existing estates in fee tail were converted into estates in fee simple. These statutory provisions were reiterated by the repeal in New South Wales, Victoria, Queensland and the Northern Territory of the De Donis Conditionalibus 1285 statute.95 In Victoria, ss  250–​266 of the Property Law Act 1958 (Vic) provide detailed rules for the barring of the entail with respect

91

92 93 94

95

For an outline of those procedures, see Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), pp 54–​56; Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 487–​489. See generally, Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Australian Property Law (8th ed, LexisNexis, Sydney, 2008), pp 725–​730. See Hargreaves and Helmore, Introduction to the Principles of Land Law (New South Wales) (Law Book Co, Sydney, 1963), p 70. See now s 26(2) of the Conveyancing and Law of Property Act 1898 (NSW). Conveyancing Act 1919 (NSW), s 19 from 1 July 1920, s 19A from 1 January 1971; Property Law Act 1958 (Vic), s 249 from 1 January 1886; Property Law Act 1974 (Qld), s 22 from 1 December 1975; Property Law Act 1969 (WA), s 23 from 1 August 1969; Law of Property Act 2000 (NT), s 22 from 1 December 2000. Imperial Acts Application Act 1969 (NSW), s 8; Imperial Acts Application Act 1980 (Vic), s 5; Property Law Act 1974 (Qld), s 3(1), Sch 6 (prior to the enactment of ss 4 and 5 of the Property Law Amendment Act 1999 (Qld),); Law of Property Act 2000 (NT), s 221, Sch 4. [2.125]  61

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to estates in fee tail which came into existence before 1 January 1886. It is thought that few, if any, estates tail exist in Victoria.96 In Tasmania, it has not been possible to create an estate tail over Torrens land since 8 December 1886.97 Limitations coming into effect after that date which purport to create a fee tail estate create instead a fee simple estate. As in Victoria, it is thought that few, if any, estates in fee tail exist. There are provisions for the barring of the entail.98 In South Australia the fee tail estate continues to exist and, it seems, may still be created over Torrens land and any general law land which still exists. The Estates Tail Act 1881 (SA), which substantially adopted the English Fines and Recoveries Act 1833, provides the means by which the holder of an estate tail can bar the entail. [2.130]  The holder of a fee tail estate enjoys the same rights of enjoyment, apart from the

right of alienation, as the holder of a fee simple estate. As stated at [2.105], there are various types of entail (eg, tail male, special tail) and the entail may be determinable or conditional in the same way as the other freehold estates. Life estate [2.135] The life estate, although an estate of freehold, is not an estate of inheritance as it

clearly ends on the death of the tenant. The life estate may take one of two forms. First, it may be granted for the life of the grantee. Thus, a grant “to A for life” creates a life estate in A.99 Secondly, a life estate may be granted for the life of a person other than the grantee, an estate pur autre vie.100 A grant “to A for the life of B” creates an interest in A which lasts, not for the length of his lifetime, but for the length of B’s life. The cestui que vie, B in this example, is the person whose lifetime fixes the duration of the estate. An estate pur autre vie often arises, not by way of a direct grant, but by the holder of a life estate conveying his or her interest to another. For example, if B holds a life estate and conveys his interest to A, A holds a life estate pur autre vie (for the life of B). Problems arose with respect to the estate pur autre vie if the holder of the estate predeceased the cestui que vie. As the estate was not one of inheritance, the holder of an estate pur autre vie could not devise the interest in his or her will and nor would it devolve to his or her next of kin upon an intestacy. The doctrine of occupancy was invented by the common law to solve the problem. If the holder of the estate pur autre vie held the land pursuant to a grant which was

96

Whalan, The Torrens System in Australia (Law Book Co, Sydney 1982), p 99. Note that the provisions in ss 250–​266 differ in a number of respects from the Estates Tail Act 1881 (SA) adopting the Fines and Recoveries Act 1833 (UK). For example, a disposition by will of the tenant in tail subject to certain criteria, may bar the entail in Victoria but not in South Australia or Tasmania, s 251. In Victoria where a parent and child are granted successive life estates and the grandchild an estate tail in remainder, the parent and child may bar the entail as if the entail had been given to the child, s 250. This is not possible under the South Australian or the Tasmanian legislation. 97 See now ss 113–​116 of the Land Titles Act 1980 (Tas). 98 Estates Tail Act 1853 (Tas). This Act sets out a scheme for converting the fee tail to a fee simple absolute. The scheme is similar to the provisions in the Property Law Act 1958 (Vic) but still bears more of the trappings of the old actions of levying a fine or suffering a common recovery. 99 Other forms of life estate, dower and curtesy, arose by operation of law. They can no longer exist. See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 118, for a description of these forms of life estate. 100 Section 3 of the Law Reform (Abolitions and Repeals) Act 1996 (ACT) provided that “the estate pur autre vie is abolished”. This Act has now been repealed (see Law Reform (Miscellaneous Provisions) Act 1999 (ACT) and 62 [2.130]

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worded, as in the example above, “to A for the life of B”, the first person to enter the land after A’s death was entitled to the estate pur autre vie. He was so entitled as “general occupant” for the remainder of B’s life with no liability for A’s debts. If, however, the grant of the estate pur autre vie specifically mentioned A’s heirs, for example, “to A and his heirs for the life of B”, A’s heir was entitled to the land as “special occupant” for the remainder of the life of the cestui que vie’s life. The heir did not take by way of inheritance but simply because the word “heirs” was mentioned in the grant. As he did not take by descent, neither was the land held by the special occupant subjected to the debts of A. [2.140] The doctrine of occupancy is no longer part of the law. Statutory provisions now

ensure that the holder of an estate pur autre vie may leave the interest by will.101 If the holder dies intestate, the interest forms part of the intestate’s estate and devolves according to set statutory formulae: see [8.10]. [2.145]  In order to ensure the land was retained and maintained in a proper manner for those

who would succeed to the land upon the death of the life tenant, a number of restrictions regarding use and enjoyment were placed on the life tenant. The law of waste, in particular, restricted the life tenant’s use of the land. The law of waste and statutory provisions regarding the rights and duties of life tenants are discussed in Chapter 13.

Leasehold estates Overview [2.150] As stated at [2.55], leasehold estates may be distinguished from freehold estates

by the fact that their duration must be certain or capable of being rendered certain.102 The various types of leasehold estates are considered at [2.155]–​[2.170]. A detailed analysis of the substantive and formal criteria necessary for the creation of these estates and of the law, both common law and statutory, governing the landlord and tenant relationship is undertaken in Chapters 14 and 15. Lease for a fixed term of years [2.155]  A lease for a fixed term of years is, in fact, a lease for any fixed period of time which

comes to an end automatically at the expiration of the period.103 The rule is that the maximum period of duration must be certain and the fact that a lease may come to an end before that, does not invalidate it. For example, a lease, “to A for five years as long as she continues to live on the premises” is a valid lease for a fixed term of years.

Statute Law Amendment Act 2000 (ACT)) –​it is probable, in these circumstances, the estate pur autre vie can no longer exist in the Australian Capital Territory. See ss 215–​218 of the Civil Law (Property) Act 2006 (ACT) referring to life interests generally. 101 See Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Australian Property Law (8th ed, LexisNexis, Sydney, 2008), p 204, fn 18 for the current provisions in Victoria, Queensland, South Australia, Western Australia and the Northern Territory. The current relevant provisions in New South Wales and Tasmania are now ss 3 and 4 of the Succession Act 2006 (NSW) and ss 4 and 6 of the Wills Act 2008 (Tas). For a discussion of the New South Wales provision, see Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 117–​118. 102 See Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386. 103 See Chapters 14 and 15 for statutory exceptions to this rule. [2.155]  63

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Periodic tenancies [2.160]  A periodic tenancy continues from period to period until it is determined by proper

notice. Periodic tenancies may be created by reference to any period of time. The most common forms of periodic tenancy are yearly, monthly and weekly. The notice required to terminate the tenancy is usually equal to the length of the period (ie, one month for a monthly tenancy and one week for a weekly tenancy). However, a yearly tenancy is terminated by six months’ notice expiring at the end of the term.104 Periodic tenancies appear, then, to have an uncertain maximum duration. However, they have been treated as complying with the rules as to certainty of maximum duration as the tenancy is regarded as being one for a definite term of the relevant period (eg, one year, one month, one week).105 If the tenancy is not determined at the end of the relevant period, it is considered to continue for another term.106 Tenancy at will [2.165]  A tenancy at will is created when a tenant occupies the land as a tenant on the basis

that either party may terminate the tenancy at any time. There is no agreement as to duration and, usually, no agreement as to payment of rent. The tenancy at will arises in a variety of situations. The simplest example is where a person, with the permission of the landlord, takes possession of a property rent free and for an indefinite period. Such a tenancy may also arise where, at the expiration of a lease, the tenant holds over with the landlord’s consent and pays no rent. Of course, if the tenant subsequently pays rent on a periodic basis and the rent is accepted by the landlord, the tenancy at will is converted into a periodic tenancy. Although it has been argued that the tenancy at will should not be classified as a leasehold estate because the maximum duration is uncertain, it is generally accepted that the landlord and tenant relationship exists between the parties. The tenancy at will determines automatically if the tenant purports to alienate his or her interest or if he or she dies.107 Tenancy at sufferance [2.170]  The tenancy at sufferance arises when the tenant holds over at the expiration of a

lease without the consent of the landlord. The landlord may bring an action for recovery of 104 See Prudential Assurance Co Ltd v London Residuary Body [1992] 2 AC 386. 105 In some circumstances a short term periodic lease (eg, weekly or monthly) may be regarded as a lease for a longer term than the period. In New South Wales, Queensland and the Northern Territory, the relevant statutes set out circumstances in which statutory notices of breach must be given by landlords to tenants prior to forfeiting the lease by re-​entry: Conveyancing Act 1919 (NSW), s 129; Property Law Act 1958 (Qld), s 124; Law of Property Act 2000 (NT), s 137. The provisions set out that notice is not required with respect to “any lease or tenancy for a term of one year or less”. Where a monthly periodic tenant had in fact been in possession for over three years, the New South Wales Supreme Court held that the term of the lease could be determined by reference to how long it had run. Thus the statutory notice had to be served: see Easy Buy International Pty Ltd v Macquarie Goodman Property Services Ltd (2006) 13 BPR 24,655 [2006] NSWSC 148 discussed in Note, “What is the ‘Term’ of a Periodic Lease?” (2006) 80 ALJ 491. 106

Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47 at 50–​51; Mitchell v Weiriks; Ex parte Weiriks [1975] Qd R 100. 107 See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 742. The tenancy also terminates if the landlord assigns his or her interest or dies, but the tenant cannot be ejected unless he or she knows of the event terminating the tenancy: Doe d Davies v Thomas (1851) 6 Exch 854; 155 ER 792 at 857 (Exch). The tenancy at will is discussed further at [14.60]. 64 [2.160]

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possession against the tenant, but he or she cannot sue for damages for trespass as the original entry was lawful. The tenancy at sufferance is not strictly a leasehold estate as there is no agreement or tenure between the parties. Nevertheless, it often arises where such a relationship has formerly existed between the parties and some remedies normally applicable to the landlord-​ tenant relationship, such as a claim by the landlord for “use and occupation”, are available where the tenancy is one at sufferance.108 It seems that the designation of a “tenancy” for this situation may have originally occurred in order to prevent the occupation being viewed as “adverse possession”, which could in time bar the landlord’s title. The old rules of adverse possession have changed and a tenant at sufferance is now considered an adverse possessor from the commencement of the “tenancy”. As Megarry and Wade state, “[t]‌he old rules as to adverse possession have long disappeared, and this ‘tenancy’ might be permitted to go with them”.109

Words of limitation Overview [2.175]  The characteristics and nature of each type of freehold estate are set out at [2.100]–​

[2.145]. In order to create each of the estates, however, a particular form of words, “words of limitation”, had to be used. An incorrect formulation in a grant resulted in the grantor’s intention not being effected. The words of limitation mark out the type of estate which is to be taken. Words of purchase set out the person who is to take the estate. Before setting out the correct words for each grant, three important points must be noted. First, the courts treated grants inter vivos and dispositions by will very differently. If the grant was made inter vivos, the common law adopted a very strict approach and required the exact and proper words of limitation in order to effect the grant intended. If the gift was made by will, the courts adopted a far more lenient approach. Provided the testator’s intention (as to the type of estate he or she intended to create) was clear, the intention was effected despite any incorrect use of the words of limitation. Secondly, statutory provisions in all Australian States, except South Australia, have gradually modified the position. Strict adherence to the “correct” words of limitation is no longer required. Nevertheless, a knowledge and understanding of the words of limitation remain important as the statutory modifications apply only to grants made after the date of the relevant statutory provision. Thirdly, the use of correct words of limitation has never been necessary where the land falls under the Torrens system of land registration and it is a legal interest which is to be created or conveyed: see [4.75]. The statutory provisions relating to the creation and passing of interests in Torrens land set out particular forms which must be used for the transfer, mortgage and passing of interests in land. Further, unlike the position with respect to general law land, it is the registration of the particular form or document which passes the interest in the land, rather than the document itself: see [4.60].

108 109

Bayley v Bradley (1848) 5 CB 396; 136 ER 932 at 406 (CB); Leigh v Dickeson (1884) 15 QBD 60. There cannot be any claim for rent as such as there is no relationship of landlord and tenant. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (8th ed, Sweet and Maxwell, London, 2012), p 67 (footnote omitted). [2.175]  65

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Words of limitation for a fee simple estate

Dispositions inter vivos [2.180]  The correct formulation to create a fee simple estate at common law required the use

of the words “heirs” after the grantee’s name. Thus, a grant in fee simple to A was effected by the phrase, “to A and his heirs”. The words “and his heirs” were the words of limitation. They marked out the quantity of the estate –​a fee simple estate. Unlike the words “to A”, they were not words of purchase and therefore did not give A’s heirs any interest in the land. A’s heir had an expectation of succeeding to the estate if A died without having disposed of the estate, but the heir acquired no estate by virtue of the grant. An incorrect use of the words of limitation resulted in the grantee obtaining a life estate only. Thus, for example, a grant “to A in fee simple” meant that A obtained a life estate only and that there would be a reversion in the grantor.110 As a corporation cannot die or have heirs, a grant of land to a corporation without the use of the words “and his heirs” effected a conveyance of the fee simple estate.111 In Australia the correct use of the words of limitation was, and remains in relation to grants made before statutory modifications, necessary to create the fee simple estate.112 The common law position has been modified by statute. In all jurisdictions except South Australia, a disposition without the correct words of limitation now passes the fee simple estate unless there is a contrary intention. Therefore, dispositions such as “to A”, “to A in fee simple”, “to A forever” and “to A in fee” pass the fee simple estate.113 Estates in fee tail can no longer be created in New South Wales, Victoria, Queensland, Western Australia and the Northern Territory and words of limitation which would formerly have created a fee tail estate or, in some cases, which show an intention to create a fee tail result in the creation of a fee simple estate.114

110 See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 1358. 111 Re Woking UDC (Basingstoke Canal) Act 1911 [1914] 1 Ch 300 at 312. See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 1359 for the position regarding corporations sole. 112 Sexton v Horton (1926) 38 CLR 240; Fejo v Northern Territory (1998) 195 CLR 96 at 117. Note that the relevant interests created in Sexton v Horton were equitable, rather than legal, in nature. A discussion of legal and equitable interests in land is found in Chapter 8. Nevertheless, the rules concerning the creation of freehold legal estates were applied. Where technical conveyancing terms are used in the grant, as was the case in Sexton v Horton, the correct and strict words of limitation must be used for the creation or passing of an equitable fee simple. See also Perpetual Trustee Co Ltd v Griffin [1963] NSWR 465, which followed Sexton v Horton. Compare the view of Baalman, “Sacred Cow of the Common Law” (1965) 39 ALJ 197 and the decision of the Privy Council in Adeyinka Qyeckan v Musendiku Adele [1957] 1 WLR 876. 113 Conveyancing Act 1919 (NSW), s 47(1), (2), (3) after 1 July 1920; Property Law Act 1958 (Vic), s 60(6) from 31 January 1905 to 31 December 1918 –​the words “to A in fee” and “to A in fee simple” in addition to the correct words of limitation “to A and his heirs” passed a fee simple estate; s 60(1) –​after 31 December 1918 the fee simple passed without the use of correct words of limitation unless there was a contrary intention –​ “to A”, “to A forever”; Property Law Act 1974 (Qld), s 29(1)–​(3) after 4 December 1952; Property Law Act 1969 (WA), s 37(1), (2) after 1 August 1969; Conveyancing and Law of Property Act 1884 (Tas), s 61(2) after 18 September 1874; Law of Property Act 2000 (NT), s 29. 114 Conveyancing Act 1919 (NSW), ss 19(1) and 47(1) after 1 July 1920; Property Law Act 1958 (Vic), s 249 –​a limitation which would have created a fee tail (eg, “to A and the heirs of his body”) created a fee simple estate from 1 January 1886; s 60(6) –​a limitation which showed an intention to create a fee tail (eg, “to A in tail male”, “to A in tail”) created a fee simple estate from 31 January 1905; query a limitation “to A in fee tail”; Property Law Act 1974 (Qld), s 22 after 1 December 1975; Property Law Act 1969 (WA), s 23(1) 66 [2.180]

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In South Australia, there has been no statutory modification and the correct words of limitation, “to A and his heirs”, must be used to dispose of the fee simple estate.

Dispositions by will [2.185]  From 1540, when devises of land were recognised as being lawful and effective,115 the

courts took a more lenient approach where a disposition was by will. The courts did not insist on the use of the words “and his heirs” in order for a fee simple estate to pass. Nevertheless, the will had to evince an intention to pass the fee simple estate and the devisee had to prove that the will demonstrated such an intention. A devise “to A in fee simple” or “to A forever” demonstrated such an intention, but a devise “to A” was insufficient, without further evidence, to prove an intention to pass the fee simple. Statutory provisions in all Australian jurisdictions now provide that a disposition without the correct words of limitation passes the fee simple estate (or otherwise the whole interest of the testator) unless a contrary intention is shown.116 The onus of proof has been effectively reversed. Words of limitation for a fee tail estate

Dispositions inter vivos [2.190]  In order to create a fee tail estate, the word “heirs” had to be used (as for the fee simple

estate) and had to be followed by words which confined the estate to the lineal descendants of the grantee. These words were termed “words of procreation”. The most common form of words to create the fee tail were “to A  and the heirs of his body”. However, any words of procreation which indicated an intention to limit the estate to lineal descendants of the grantor sufficed. Other examples of words of procreation included “from him proceeding” and “of his flesh”. As stated at [2.105], the entail could be defined further by limiting it to a particular class of lineal descendants. For example, the descendants could be limited to female or male descendants (“to A and the female heirs of her body” or “to A and the male heirs of his body”) or to the descendants of a specified wife (“to A and the heirs of his body begotten of his wife, Z”). The words following the name of the grantee were considered words of limitation and not words of purchase and therefore did not give any estate to the heirs of A, but merely a “spec successionsis”.

after 1 August 1969; Law of Property Act 2000 (NT), s 22. In Queensland and Western Australia it appears that where there is a clear intention to create a fee tail, but where words are used which would not have been sufficient to create a fee tail (eg, “to A in tail”), the common law remains applicable and a life estate by default would result. None of the relevant provisions (Property Law Act 1974 (Qld), ss 22, 29 and Property Law Act 1969 (WA), ss 23(1), 37) appear to apply. See Note, “Conveyance –​Words of Limitation” (1953) 26 ALJ 648. 115 Statute of Wills 1540 (Eng). 116 The current legislation in many instances derives from earlier legislation. Succession Act 2006 (NSW), s 38 after 1 January 1840; Wills Act 1997 (Vic), s 42 after 1851 when Victoria became a separate colony; Succession Act 1981 (Qld), s 33K after 1 January 1840; Wills Act 1936 (SA), s 31; Wills Act 1970 (WA), s 26(e) after 4 July 1839; Wills Act 2008 (Tas), s 52(1) after 1 April 1841; Wills Act 1968 (ACT), s 27; Wills Act 2000 (NT), s 37. See In the Will of Hoare [1908] VLR 369; Re Ridgeway (1900) 26 VLR 254; Pead v Pead (1912) 15 CLR 510; Campbell v Glasgow (1919) 27 CLR 313. These statutory provisions are all very similar to s 28 of the Wills Act 1837 (UK). In Nichols v Hawkes (1853) 10 Hare 342; 68 ER 958 it was held that s 28 did not apply to the creation of new interests in a will; in this case, the correct words of limitation had to be used. Thus, for example, if T has a fee simple absolute in Blackacre and devises to X a rentcharge (without use of the correct words of limitation), X would take a rentcharge for life only subject to a contrary intention. [2.190]  67

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Up until the various times when statutory provisions in New South Wales, Victoria, Queensland and Western Australia made it impossible to create new fee tail estates,117 the correct words of limitation and of procreation as described above had to be complied with in order to create a fee tail estate. Dispositions such as “to A in tail”, “to A in fee tail”, “to A in tail female” were ineffective to create a fee tail estate and instead created by default a life estate in the grantee. In South Australia the common law requirements remain in force and the correct words of limitation must be used to create a fee tail estate (eg, “to A and the heirs of his body”). In Tasmania, where it remains possible to create a fee tail estate over general law land, strict adherence to the correct words of limitation has been unnecessary since 1884.118 Dispositions “to A in tail”, “to A in tail female” and “to A in tail male” are effective to create fee tail estates.

Dispositions by will [2.195]  As in the case of the fee simple, the courts adopted a more lenient approach when

construing dispositions in wills and did not insist upon strict compliance with the correct words of limitation in order to create a fee tail estate. Clear words which evinced an intention to create a fee tail estate sufficed. Thus, expressions such as “to A in fee tail”, to “A and his issue”, “to A and his seed”, “to A and his heirs male” created a fee tail estate if found in a will. In the jurisdictions where it is no longer possible to create fees tail –​New South Wales, Victoria, Queensland, Western Australia and the Northern Territory  –​limitations in wills which would formerly have created fee tail estates instead create fee simple estates. In South Australia and Tasmania the fee tail estate is created if there are clear words in the will showing an intention to create a fee tail estate. Words of limitation for a life estate

Dispositions inter vivos [2.200]  A life estate was created if the grantor evinced an intention to create a life estate, such

as in a grant “to A for life”. A life estate was also created by default when the grantor intended to create a fee simple estate or a fee tail estate, but failed to use the correct words of limitation. The statutory changes in New South Wales, Victoria, Queensland, Western Australia and the Northern Territory permitting the creation of fee simple estates in the absence of the use of the correct words of limitation have indirectly resulted in a situation where a grantor must now use clear words to create a life estate (eg, “to A for life”). The creation of a life estate by default in A would now be rare in these jurisdictions.119 In Tasmania, however, there is one area where a life estate, created by default, may still arise. It is still possible in Tasmania to create a fee tail over general law land, but it appears that only particular forms of words will suffice. These are the strict common law form of words “to A and the heirs of his body” or like terminology and the expressions “to A in tail”, “to A in tail female” and “to A in tail male”.120

117 See [2.125]. 118 Conveyancing and Law of Property Act 1884 (Tas), s 65 after 1 January 1884. 119 It is important to note that the changes in some jurisdictions occurred gradually and the life estate by default did not disappear at any particular point in time. Further, in Queensland and Western Australia dispositions which would have been ineffective to create estates fee tail (eg, “to A in tail”) may not take effect as fee simple estates, but rather take effect as life estates by default. See n 113. 120 Conveyancing and Law of Property Act 1884 (Tas), s 65 after 1 January 1884. 68 [2.195]

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If the grantor uses a form of words insufficient to create a fee tail estate, for example “to A in fee tail”, it is suggested that A obtains a life estate only. In South Australia, where there have been no statutory modifications, the life estate may arise pursuant to a direct grant or by default, where the grantor intends to create a fee simple estate or a fee tail estate but fails to use the correct words of limitation.

Dispositions by will [2.205]  A specific devise of the life estate (eg, “to A for life”) passes the life estate. Life estates

created by default were less common where the disposition was in a will. As the courts did not insist upon the use of the correct words of limitation to create a fee simple estate and a fee tail estate, a life estate passed only if the testator failed to show a clear intention to pass the fee simple or the fee tail. The statutory reversal of the onus of proof now means that a life estate is only created in a disposition in a will if there is a clear intention to create a life estate. Equitable interests [2.210]  The position in relation to the equitable estate in fee simple (where the trust was an executed one121 and was drafted in technical conveyancing terms) was the same as that for the legal fee simple: the correct words of limitation had to be used. Further, the same provisions which set out that the correct words of limitation do not have to be used for the creation of legal estates apply to equitable estates where the trust is created by a deed.122 If the trust is not created by a deed, however, the old principles may remain applicable.123 The position in relation to equitable interests under the Torrens system remains unclear. The rules demanding strict compliance with the correct words of limitation have never been applied to the creation or passing of legal interests in land falling under the Torrens system of land registration: see [2.175]. Statutory provisions set out particular forms and documents which must be used for this purpose. As under the general law land system, however, equitable interests may exist in land falling under the Torrens system and the question has arisen as to whether the strict requirement of correct words of limitation applies to documents creating or passing such equitable interests. Conflicting approaches to this problem have been taken by Australian courts. In Re Austin’s Settlement; Strachan v Austin [1960] VR 532 Dean J held that the principle expressed in Sexton v Horton (1926) 38 CLR 240124 applied to equitable interests under the Torrens system. His Honour (at 534) rejected the argument that, because the legal estate under the Torrens system could be transferred without words of inheritance, the equitable estate could be transferred in the same way because equity follows the law. Dean J (at 534) referred to the fact that the Torrens statutes do not make express provision for the transfer of equitable interests and stated that: [I]‌t would, therefore … be impossible for equity to follow the law in such a case and accordingly the freedom given in relation to the transfer of the legal fee simple cannot be extended to transfers of an equitable fee simple which remains in the same position as before.125

121 All terms and conditions are set out and clear. See Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 133. 122 See [2.180]–​[2.205]. 123 See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 121, fn 111. 124 See n 112. 125 See also Re Bennett; Union Trustee Co of Australia Co Ltd v Bennett [1951] St R Qd 202. [2.210]  69

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In contrast, Roper J in Carroll v Chew (1946) 47 SR (NSW) 229 at 232 stated that: “[T]‌he transferor of the legal estate having being freed from the purely technical requirements as to the use of words of limitation it appears to me that the creator of equitable estates should have the same freedom”. One of the aims of the Torrens system is to ensure that interests may be alienated in a simple and certain manner. At least where the grantor of an equitable interest accurately describes the equitable estate to be transferred (eg, “to A for an equitable estate in fee simple”), it is suggested that a non-​compliance with strict words of limitation should not invalidate the grant.126 Nevertheless, the matter remains unclear. The rule in Shelley’s Case [2.215] The rule in Shelley’s Case (1581) 1 Co Rep 93b; 76 ER 206 was a notorious one

and provided many difficulties for conveyancers: see [10.55]. It applied strictly to grants inter vivos and dispositions by will. The rule provided that a grant “to A for life, remainder to his heirs” or “to A for life, remainder to the heirs of his body” created immediately a fee simple in A in the first example and a fee tail in A in the second example. This was despite the clear intention of the grantor that A was to obtain a life estate only and the remainder in fee simple or fee tail was to be vested in his heirs. The heirs acquired no interest as the words used which purported to give them a grant were construed as words of limitation.127 For various reasons128 the rule survived and clearly outlasted any usefulness it ever had. In New South Wales, Victoria, Queensland, Western Australia and the Northern Territory the rule has now been abolished.129

Determinable and conditional interests Overview [2.220] Each of the estates could be further limited by the imposition in the grant or

disposition of factors designed to limit the duration of the estate in particular circumstances. These limits were permitted by placing a determinable limitation on the grant or by inserting a condition subsequent to the grant. The difference between a determinable limitation and conditional limitation is not easy to define precisely, but very different consequences result from a finding that a grant is determinable or conditional. Although the distinction has been

126 This suggestion was made in Note, “Creation of Trust –​Informal Words of Limitation” (1952) 25 ALJ 683 at 684, approved by inference in Dresdner v Scida (2004) NSW ConvR 56-​089. It is noted, however, that the author of the note did not consider that the facts of Carroll v Chew (1946) 47 SR (NSW) 229 should have resulted in the grantee obtaining an equitable fee simple. The actual words used were, in his view, insufficiently accurate to describe an equitable fee simple (“upon trust for A if and when she shall attain the age of 21 years”). 127 Even if the grant were “to A for life, remainder to B for life and then remainder to A’s heirs”, the rule applied so that A obtained a life estate in possession and a fee simple remainder to follow the life estate of B. 128 See [10.60]. 129 Conveyancing Act 1919 (NSW), s 17 after 1 July 1920; Property Law Act 1958 (Vic), s 130 after 12 February 1929; Property Law Act 1974 (Qld), s 28 after 1 December 1975; Property Law Act 1969 (WA) s 27 after 1 August 1969; Law of Property Act 2000 (NT), s 28 after 1 December 2000. See Croucher, “Quirks and Curios: Rescued Footnotes in the History of Succession Law” (2009) 83 ALJ 609 at 618–​620. In South Australia, Tasmania and the Australian Capital Territory it appears that the rule continues to exist: see [10.115].

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labelled “absurd”,130 there are logical and conceptual differences between the two and it is clear the distinction remains part of the law.131 Determinable interests [2.225]  A determinable interest is one which terminates on the occurrence or non-​occurrence

of a specified event. In the case of a determinable fee simple, the specified event must not be one which is bound to happen in the future as it is an essential characteristic of the fee simple that it may last forever. “The (determinable) limitation marks the bounds or compass of the estate, and the time of its continuance”.132 It sets out the type of estate and marks its extent by setting out the time for which it will last. As Megarry and Wade state, “the determining event in a determinable fee itself sets the limit for the estate first granted”.133 Where the grantor creates a determinable fee simple, he or she has a possibility of reverter as there is a possibility that the estate will revert to the grantor. If the determining event does occur, the fee simple reverts to the grantor or to his or her estate if the grantor is dead. It was not possible at common law to create a fee simple after a determinable fee simple (or a determinable fee tail):  see [10.50]. Thus, a limitation “to A  and his heirs until A  ceases to reside in Malvern and then to B and his heirs” was ineffective to give B any interest in the land even when the terminating factor had occurred.134 Statutory provisions have now ensured, however, that the possibility of reverter is an alienable right both inter vivos and by testamentary disposition.135 A grantor may create a determinable life interest. In this case, it is possible for the grantor to follow the determinable life interest with a gift over to another person if the determining event occurs. A grant “to A for life, or until he becomes bankrupt and then to B and his heirs” would be an effective one.136 A leasehold estate for a term of years may also be the subject of a determinable limitation. An example is “to A for three years or until he ceases his law studies at the University of Melbourne”. Once the determining event can no longer occur, the grant becomes an absolute one. Sometimes, the determining limitation may be a void one.137 If it is, the grant fails entirely for there is then no proper limitation of the estate. The terminating limitation marks the extent of the estate. If it is declared void, the grant fails altogether, for to sever the determining factor

130 131

132 133

Re Baillie, Faithful v Sydney Industrial Blind Institution (1907) 7 SR (NSW) 265. See Zapletal v Wright [1957] Tas SR 211; Perpetual Trustee Co Ltd v Gilmour [1979] 2 NSWLR 716; Caboche v Ramsay (1993) 119 ALR 215 at 227 per Gummow J; Cram Foundation v Corbett-​Jones [2006] NSWSC 495; Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd [2012] 1 AC 383 at 417–​418 per Lord Collins (Lord Phillips PSC, Lord Hope DPSC, Lord Walker, Baroness Hale and Lord Clarke JJSC agreeing), at 439–​440 per Lord Mance JSC, where the distinction was accepted. See Zapletal v Wright [1957] Tas SR 211 at 218 per Crisp J quoting from Preston on Estates (Vol 1), p 49. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 48.

134

If a grantor wishes to make such a grant effectively, the limitation must be in the form of an equitable future interest. See [10.50]–​[10.70] and [10.75]–​[10.90] for a discussion of the legal contingent remainder rules and equity’s role in the area of future interests. 135 See [2.50] and [2.270]; see also [10.110]. 36 A common form of determinable life interest is a protective trust. See Burn and Cartwright, Cheshire and 1 Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 615. 137 See [2.235]–​[2.260] for a discussion of this matter. Note that limitations in determinable interests are less likely to be declared void than conditions subsequent in conditional interests.

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from the grant and treat it as an absolute grant would be to change completely the nature of the estate intended to an estate intended to last only until the occurrence or non-​occurrence of a particular event. Although reference must always be made to the basic principle described above, the use of terms in a grant such as “while”, “as long as”, “until” and “during” tends to suggest a determinable interest rather than a conditional interest. Conditional interests [2.230]  A conditional interest comprises the grant of an estate (eg, a fee simple), which has

some condition subsequent attached to it pursuant to which the grantee’s fee simple may be cut short. For example, a grant “to A and his heirs on condition that A does not marry B” gives A a fee simple estate which may be lost if he marries B. The conditional subsequent “has its operation in defeating the estate before it attains the boundary or has completed the space of time described by the limitation”.138 It is an extra clause added to a limitation of a complete estate, for example, a fee simple estate.139 A passage from Cheshire sums up succinctly the difference between the determinable interest and the conditional interest: [I]‌f the terminating event is an integral and necessary part of the formula from which the size of the interest is to be ascertained, the result is the creation of the determinable interest; but if the terminating event is external to the limitation, if it is a divided clause from the grant, the interest granted is an interest upon a condition.140

If the event set out in the condition subsequent occurs, the grantor or his or her estate has a right of re-​entry. However, it is not until the grantor or his or her successor exercises this right of re-​entry (by gaining possession through a court order or by physically taking possession) that the interest of the grantee terminates. This is to be compared to the situation where the event set out in the determining limitation occurs. In this case the estate automatically reverts to the grantor. The use of terms such as “on condition that”, “provided that”, “but if” tends to suggest the creation of a conditional interest. As in the case of the determinable fee simple, it was not possible to create a fee simple to come into operation after a conditional fee simple. Neither was it possible for the grantor to alienate the right of re-​entry.141 However, statutory provisions now ensure that the grantor can dispose of the right of re-​entry. In contrast to the position relating to determinable interests, at common law it was not possible to create a remainder to come into effect after a life estate defeasible by a condition subsequent. A grant “To A for life on condition that if she marries then to B and his heirs” failed to give B any interest upon the marriage of A. Such a disposition conflicted with several rules, one of which was a legal contingent remainder rule that prohibited a remainder from cutting short a prior particular estate.142 A disposition in the form of the example could now be effected by placing the dispositions in a trust and creating a future

138 See Zapletal v Wright [1957] Tas SR 211 at 218 per Crisp J quoting from Preston on Estates (Vol 1), p 49. 139 See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 48. 140 Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 618. 141 See [2.50] and [2.275]. 142 See generally, Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 620 and Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 223–​227. 72 [2.230]

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equitable interest in B. Future equitable interests are not bound by the stringent common law rules which governed the creation of legal future interests: see [2.310] and [10.75]. An estate granted subject to a condition subsequent must be distinguished from an interest which is granted subject to a condition precedent. The condition precedent relates to a condition which marks the time for the beginning of an estate; for example, a grant “to A and his heirs when A reaches 21 years” contains a condition precedent to the estate coming into being. This type of interest is covered at [2.270]–​[2.275] and [10.30]. Void conditions [2.235]  Several types of conditions subsequent are void when attached to the grant of an interest.

If the condition is held to be void, the condition is severed and the grant becomes absolute. Conditions which are contrary to public policy, conditions which are uncertain and conditions which are repugnant to the interest granted are void.143 By contrast, if the void limitation appears in a determinable limitation, the whole grant fails and there is a reversion to the grantor. This is because the determinable limitation sets the bounds of the estate and to sever such a limitation would be to treat the grant as absolute and would change the nature of the estate granted. Very different results ensue then depending upon whether the limitation is considered to be conditional or determinable. In some instances limitations which are void when appearing as a conditional limitation are valid when used in a determinable limitation.144 For example, determinable limitations providing that a gift is to last “until marriage”, “until the bankruptcy of the grantee” or “until the grantee purports to alienate” will be valid as the limitations set the absolute bounds of the estate. Nevertheless, even a determinable limitation which is to operate on the occurrence of a stated event, and which is against public policy, would fail.

Conditions contrary to public policy [2.240]  Any condition which is illegal, immoral or otherwise conflicts with the interest of the

community is contrary to public policy and is, therefore, void. Examples of such conditions are many and varied. Conditions in restraint of marriage145 are often encountered and, with respect to realty,146 it seems that a condition in partial restraint of marriage is good.147 For example, a condition prohibiting marriage with a Scotsman or a Papist is valid.148 However, a total prohibition on marriage is void unless the object of the condition is to provide for the grantee while unmarried rather than simply to restrain marriage.149 Further, such a condition is good if the condition is to prevent a second or subsequent marriage.150

143 Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp  620–​629. 144 For example, restraints on alienation: see [2.245]. 145 Section 5 of the Marriage Act 1961 (Cth) was amended by the Marriage Amendment (Definition and Religious Freedoms) Act 2017 (Cth) to allow the marriage of “2 people”, rather than “a man and a woman” only. 146 See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 624 for the stricter law pertaining to conditions in restraint of marriage where the property involved is personalty. 147 In England partial restraints on marriage may no longer be valid in view of “the right to marry” in the European Convention on Human Rights: see Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 229. 148 Perrin v Lyon (1808) 9 East 170; 103 ER 538; Duggan v Kelly (1848) 10 Ir Eq Rep 295. 149 Jones v Jones (1876) 1 QBD 279; Morley v Rennoldson (1843) 2 Hare 570; 67 ER 235. 150 Newton v Marsden (1862) 2 J & H 356; 70 ER 1094; Allan v Jackson (1875) 1 Ch D 399. Note also that there can be no general restraint on a tenant in tail as such a restraint would be repugnant to the interest. [2.240]  73

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In England a condition construed as encouraging the separation or divorce of a married couple has been held to be void as being contrary to public policy.151 By contrast, in Australia it has been held that a bequest conditional upon the beneficiary divorcing his or her spouse is valid, on the basis that, generally, the influence of such a bequest would not itself be sufficient to motivate the beneficiary to seek a divorce.152 It has also been held that a condition which encourages extra-​marital cohabitation is void.153 The classes of acts which are said to be against the policy of the law are capable of change in the light of changing social conditions and it is arguable that a condition encouraging extra-​marital cohabitation would no longer be considered a void one.154 A condition which is designed to separate a parent from his or her child is void.155 A condition forbidding a change of religion, at least in an adult grantee, is valid.156

Conditions repugnant to the interest granted [2.245]  A condition in a grant which purports to place a substantial restraint on alienation

by the grantee is void as “the power of alienation is necessarily and inseparably incidental to ownership”.157 Thus, conditions prohibiting alienation during a person’s life158 or alienation by mortgage159 or will160 are void. Further illustrations of void conditions are conditions prohibiting the alienation of the property for a certain period or to anyone other than a named person.161 Nevertheless, some conditions in partial or limited restraint of alienation have been held to be valid. Two cases which are commonly contrasted are Re Macleay (1875) LR 20 Eq 186 and Re Rosher (1884) 26 Ch D 801. In Re Macleay a devise to X “on condition that he never sells it outside the family” was held to be valid as being only a limited restraint on alienation. In Re Rosher there was a devise to the testator’s son in fee simple, with a proviso that if the son, his heirs or devisees wished to sell the property in the lifetime of the testator’s wife, she should have the option to purchase the property for £3,000 (which was

151 152

153 154

155 156 157 158 159 160 161

Re Moore (1888) 39 Ch D 116; Re Johnson’s Will Trusts [1967] Ch 387. Compare Re Lovell [1920] 1 Ch 122, where the parties are already separated. Ramsey v Trustees Executors and Agency Co Ltd (1948) 77 CLR 321; Ellaway v Lawson [2006] QSC 170. But contrast Church Property Trustees, Diocese of Newcastle v Ebbeck (1960) 104 CLR 394, where the High Court struck down a conditional bequest that required the beneficiaries and their wives to profess the Protestant faith. A majority of the Court found the condition to be invalid because it might ferment discord between the beneficiaries (who were Protestants), and their wives, who were Roman Catholics. Zapletal v Wright [1957] Tas SR 211. See Andrews v Parker [1973] Qd R 93; Seidler v Schallhofer [1982] 2 NSWLR 80. See also the legislation governing property disputes following the breakdown of de facto relationships. Currently, this legislation comprises ss 4AA, 90SL and 90SM of the Family Law Act 1975 (Cth) and ss 205ZA and 205ZB of the Family Court Act 1997 (WA). In addition to the Australian Capital Territory and the Northern Territory, the Commonwealth Act applies to all States, other than Western Australia, pursuant to a referral of power by the respective State Parliaments to the Commonwealth Parliament. By virtue of s 4AA(5) of the Family Law Act 1975 (Cth) and s 13A(3) of the Interpretation Act 1984 (WA) the legislative regimes apply to both of different sex and same sex de facto relationships. See [8.370]–​[8.380]. Re Sandbrook [1912] 2 Ch 471; Re Piper [1946] 2 All ER 503. Blathwayt v Lord Cawley [1976] AC 397. Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 621. Re Rosher; Corbett v Corbett (1888) 14 PD 7; Elton v Cavill (No 2) (1994) 34 NSWLR 289. Ware v Cann (1830) 10 B & C 433; 109 ER 511. Re Dunstan [1918] 2 Ch 304. Attwater v Attwater (1853) 18 Beav 330; 52 ER 131; Re Cockerill [1929] 2 Ch 131. See further illustrations in Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 50.

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considerably less than its value).162 Pearson J held that this restraint on alienation was void even though it was only partial in its scope and limited in time. As these older cases illustrate, no firm principle emerged which could be applied to determine with certainty whether a particular partial restraint on alienation was valid or void. Where the restraint on alienation does not form a condition of a grant of a determinable or a conditional estate, but arises out of a contract entered into by the owner of property, different considerations may arise. This is discussed below.163 [2.250]  In the same way as conditions restraining alienation are void as being repugnant to

the concept of ownership, so too have conditions attempting to exclude the bankruptcy laws been held to be void.164 The operation of the bankruptcy laws may be seen as an alienation of ownership, albeit an involuntary one. It is important to note, however, that in the case of life interests, subject to a limitation that the grantee must not alienate or may only hold the interest until he or she becomes bankrupt, the limitation is more likely to be considered valid. The courts treat the limitation as a determinable one rather than a conditional one if at all possible. This makes an important difference as the courts interpret conditions subsequent more strictly than determinable limitations and are more likely to hold them to be void. A condition subsequent gives rise to a right of forfeiture and the courts insist upon the circumstances in which forfeiture will occur being clear and precise. More specifically, in the context of limitations regarding alienation and bankruptcy, a determinable limitation is not repugnant to the interest granted in the same way as is a condition subsequent. For example, a grant “to A for life until he becomes bankrupt” (a determinable life estate) sets the bounds of the estate granted: the estate is only intended to last until A’s bankruptcy and the occurrence of the determining event does not cut short a larger interest or take away any incidents of the estate granted. Such a grant is valid. In contrast, a grant “to A for life on condition that on his bankruptcy he forfeits the interest” purports to grant A an absolute life estate and then to take away one of its incidents, liability for debts. The condition is void and is severed from the grant.165

Contractual restraints on alienation [2.255]  We have seen that a restraint on an owner’s right to alienate can arise by way of a

determining condition or a condition subsequent in the grant of the land to that owner. As an alternative, such a restraint may be created by way of a contract or covenant entered into by the owner in favour of another party, such as the owner’s predecessor in title. Whereas a breach of a valid determining condition or condition subsequent in a grant will lead to the loss of the grantee’s estate, the breach of a contractual provision restricting the owner’s right to transfer the land will give rise only to a liability to pay damages, unless equity would prevent the threatened alienation in breach of contract by way of injunction.166 Because of

162 163 164 165 166

Also see Moraitis Fresh Packaging (NSW) Pty Ltd v Fresh Express (Aust) Pty Ltd (2008) 14 BPR 26,339 at 26,355 per Giles JA, at 26,365 per Hodgson JA. See [2.255]. Re Machu (1882) 21 Ch D 838; Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd [2012] 1 AC 383. See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 622–​623. Caldy Manor Estate Ltd v Farrell [1974] 1 WLR 1303 at 1307. Also see Hall v Busst (1960) 104 CLR 206 at 217 per Dixon CJ. [2.255]  75

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the difficulty in registering conditional estates under the Torrens system, contractual restraints are more often used in regard to land, and most of the more recent cases concern restraints imposed by contract. In Nullagine Investments v Western Australian Club Inc (1999) 177 CLR 635, Brennan J emphasised the distinction in the conceptual bases upon which restraints on alienation imposed as a condition in the grant of an estate and restraints in covenants or agreements might be held invalid. Brennan J stated. “[i]‌n the former case, as Dixon CJ said in Hall v Busst (1960) 104 CLR 206 at 217, ‘[t]he invalidity may be put on the ground of repugnancy to the grant or upon public policy or for that matter it may conceivably be attributed to an indirect effect of Quia Emptores’. In the latter case, the only basis for holding the covenant or agreement invalid is public policy”.167 That public policy in the free alienability of land, rather than the notion of repugnancy, is the basis on which the validity of contractual restraints on alienation are to be assessed has been recently affirmed by the New South Wales Court of Appeal.168 The issue of the validity of contractual clauses imposing restraints on alienation has caused uncertainty in various contexts. Generally if the restraint on alienation is limited in duration, or serves a valid collateral purpose such as protecting the legitimate interests of the relevant party, it is considered reasonable and valid.169 In Vercorp Pty Ltd v Lin [2007] 2 Qd R 180, Douglas J considered provisions in the contract for sale of a parcel of land in a development that allowed the developer, under certain conditions, to buy back the land at the lesser of the sale price or its then current value. The developer had the right to repurchase if the purchaser had not within two years commenced construction of a house designed by an architect approved by the developer, or if the purchaser desired to sell the land within the same two-​ year period. His Honour held that the provisions did not constitute an invalid restraint on alienation because they: (a) operated for a limited time only; and (b) served the valid collateral purpose of facilitating the building of high quality homes, to the benefit of the developer and all other purchasers of the relevant lots.170 By contrast, in Elton v Cavill (No 2) (1994) 34 NSWLR 289, Young J held that a clause in an agreement made among co-​owners providing that no co-​owner could sell his or her interest without the consent of the other co-​owners was invalid as a restraint on alienation. Such a clause was an impermissible restraint on alienation because it went beyond what was reasonably necessary for the protection of the legitimate interest of a co-​owner in maintaining quality of life in regard to his or her occupation of the premises. Young J expressed the view that if the restriction had been more limited, for example if the co-​owners had been given a power to vet incoming co-​owners and object on reasonable grounds only, it may have been upheld because it effected a proper collateral purpose only.171

167 168 169

170 171

Nullagine Investments v Western Australian Club Inc (1999) 177 CLR 635 at 649. Also seeMoraitis Fresh Packaging (NSW) Pty Ltd v Fresh Express (Aust) Pty Ltd (2008) 14 BPR 26,339 at 26,354 per Giles JA. Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 at 669 [2]‌–​[3] per Giles JA, at 717–​718 [233]–​[234], 741 [339]–​[340] per Campbell JA (Whealy JA agreeing). Reuthlinger v MacDonald [1976] 1 NSWLR 88 at 101 (a case involving shares). As has been stated, the modern judicial view “indicates a distinct unwillingness to apply any sweeping view that all contractual restraints on alienation are necessarily void”: see Mackie, “Contractual Restraints on Alienation” (1998) 12 Journal of Contract Law 255 at 267. Vercorp Pty Ltd v Lin [2007] 2 Qd R 180 at 192. Also see Southlink Holdings Pty Ltd v Morerand Pty Ltd [2010] VSC 214 at [46], [55]. Elton v Cavill (No 2) (1994) 34 NSWLR 289 at 301. See Note, “Restraints on Alienation: Tenants in Common” (1995) 69 ALJ 683; Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 954. Contrast this

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A detailed examination of the law of contractual restraints on alienation was conducted in Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665.172 The owners of a unit in a retirement village, on purchasing the unit, entered into agreements with the service company for the village. By these contracts the purchasers, on behalf of themselves and their respective estates, granted to the company rights to purchase the unit if they ever ceased to occupy it, wished to sell it, or on the death of the survivor of them. The price for which the company could acquire the unit was the same price at which the unit was sold to the purchasers, less deductions for legal and refurbishment costs. The purchasers and their estates were also entitled to have the company purchase the unit for that same amount. This arrangement meant that the purchasers were guaranteed a buyer for their unit, but that they were denied the benefit of any capital gain that accrued in respect of the unit over their years of ownership. At the death of the survivor of the purchasers the unit would have been worth $450,000 without the company’s right of purchase, but the company would have been entitled to purchase it for the original sale price of $107,000.173 The company failed to properly exercise its right of purchase under the contracts following the death of the surviving purchaser, but the question arose as to whether the company could enforce its rights to repurchase the unit for $107,000 if the survivor’s executrices wished to sell the unit. This meant that the court had to consider whether the agreements entitling the company to purchase the unit at an amount well under current market value, if the owner intended to sell, constituted an invalid restraint on alienation. In Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 the New South Wales Court of Appeal held that the restraints were valid. Unlike other cases where restraints that were limited in nature were upheld,174 these restraints were very substantial indeed. However, the Court found that in the circumstances they were not contrary to public policy. Indeed, the restraints advanced the public policy objective of facilitating the provision of accommodation for the aged. Because of the existence of the contractual restraints, the purchasers were able to acquire the unit for an amount less than would have been the case had there been no restraint at all.175 Accordingly, the restraint was upheld as serving a valid collateral interest.176

Uncertain conditions [2.260]  In view of the fact that a condition subsequent gives rise to a right of forfeiture and

possible defeat of an absolute and vested estate, the courts have insisted upon the condition

172 173 174 175

176

view with that expressed in Western Metal Resources Ltd v Murrin Murrin East Pty Ltd [1999] WASC 257, to the effect even where the restraint exceeds the protection of the legitimate interests of the relevant party, and also protects some illegitimate interest, the restraint is reasonable. Also see Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 at 726–​727 [269]–​[270] (Campbell JA). For a discussion of this case, see Grattan, “Revisiting Restraints on Alienation: Public and Private Dimensions” (2015) 41 Mon LR 67. Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 at 735 [316]. Reuthlinger v MacDonald [1976] 1 NSWLR 88; Vercorp Pty Ltd v Lin [2007] 2 Qd R 180; Southlink Holdings Pty Ltd v Morerand Pty Ltd [2010] VSC 214. Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 at 669–​670 [4]‌–​[5] per Giles JA, 740–​742 [333]–​[342] per Campbell JA (Whealy JA agreeing). Undisputed valuation evidence should that without the restraint being in place, the market value of the unit at the time of the purchasers’ acquisition would have been $145,000, rather than $107,000: at 735 [316]. Bondi Beach Astra Retirement Village Pty Ltd v Gora (2011) 82 NSWLR 665 at 738–​742 [327]–​[328] per Campbell JA (Whealy JA agreeing). Also see at 669 [5]‌per Giles JA. [2.260]  77

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being clear and precise in wording and in operation. If it is uncertain, the condition will be declared void and severed from the main grant. For example, conditions requiring the grantee “to be a member” of the Church of England,177 restraining marriage with a person “not of Jewish parentage and of the Jewish faith”178 and requiring the grantee “to reside in Canada”179 have been declared void as being insufficiently certain.180 The test for establishing whether a condition is or is not sufficiently certain is whether or not the court can, at the time of the grant, see “precisely and distinctly” what event will led to the termination of the interest.181

Remainders and reversions [2.265] The doctrine of estates recognised and endorsed the concept of the creation of

successive interests in land and thereby recognised the fact that future interests in land could exist: see Chapter 10 for a detailed discussion of future interests. At first, the common law recognised two types of future interests: the estate in remainder and the estate in reversion. Whereas an estate in possession gives a present right to possession of the land, a future interest, whether it be a remainder or a reversion, is one which gives a right to possession of the land in the future. The reversion comprises the residue of the grantor’s estate when he or she has granted a lesser portion of the interest to another person. For example, if X, the fee simple owner, grants a life estate to Y, X has a reversion, a present right to future enjoyment and possession of the property upon Y’s death. During her life, Y has an estate in possession, a life estate. A remainder is the grant of a future interest to a person who was not previously entitled to the land. For example, if X grants his fee simple estate to Y for life and then to Z and her heirs, Y has a life estate in possession and Z has a fee simple in remainder. Z, or her estate if she is dead, will be entitled to possession of the property upon Y’s death. As in the example given with respect to the reversion, Z’s interest is a present right to future enjoyment. Her interest is a future one only in the sense that the right to possession of the property will arise in the future: her right is vested in interest immediately and exists as an estate during Y’s life. Z has an interest in the land which she can alienate inter vivos or dispose of by will.182 [2.270] Future interests may be vested or contingent. Vested interests may be “vested in

interest” or “vested in possession”. If an interest is “vested in possession”, as are the life estates of Y in the examples above, the interest is clearly not a future one; a present right to possession of the land is given. If the interest is one which is “vested in interest”, but not in possession, as are the reversion of X and the remainder of Z in the examples above, the interest

177 178 179

Re Tegg [1936] 2 All ER 878. Clayton v Ramsden [1943] AC 320; Re Krawitz Will Trusts [1959] 1 WLR 1192. Sifton v Sifton [1938] AC 656; [1938] 3 All ER 425. But a grant of a life estate in a house, terminating if the grantee fails to occupy it permanently within eight months of the grant, has been held to be valid: Hadfield v Hadfield [2010] NSWSC 561 at [18]. 180 For further examples, see Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 626–​628. 81 Claverling v Ellison (1859) 7 HL Cas 707 at 725. Also see Perpetual Trustees Executors & Agency Company of 1 Tasmania Ltd v Walker (1953) 90 CLR 270 at 278 per Dixon CJ and Fermora Pty Ltd v Kelvedon Pty Ltd [2011] WASC 281 at [58]–​[64]. 182 The Victorian Law Reform Commission has proposed that the ability to create successive legal interests in land (ie, the grant of a life estate followed by a fee simple in reversion or in remainder) be abolished, and that successive interests only be created in equity, as beneficial interests under a trust. See Victorian Law Reform Commission, Review of the Property Law Act 1958, Final Report (2010), pp 66–​70, 73. 78 [2.265]

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is termed a future one as the right to possession will arise in the future.183 Nevertheless, as explained above, the interest is a currently existing one in the property even though the right to possession is postponed. The contingent interest is quite different and in theory, is not an estate in land at all. It gives no right at all to the recipient until the occurrence of some particular future event. Thus if, X grants land to Y for life, remainder to Z in fee simple if Z has attained the age of 21 years at Y’s death, Z has a contingent remainder. Z has only the possibility of an estate. The right is neither vested in possession nor in interest and Z (or her estate) would not gain any estate if, at Y’s death, Z was not 21 years or more. Effectively, there is a condition precedent to Z’s right becoming a vested interest. (In these circumstances, the estate reverts to the grantor, X, or his estate.) At common law, Z the holder of a contingent remainder had no right to assign the expectancy. Statute has now made assignment possible.184 If Z attained the age of 21 years before A’s death, B’s contingent remainder is converted into a vested remainder. A future interest is said to be vested, rather than contingent, if two criteria are met. First, the identity of the person who is to take must be clear. Secondly, there must not be any condition precedent to the interest taking effect in possession other than the regular and natural termination of the prior particular estate, such as the death of the life tenant. Usually it is a simple task to determine if a remainder is vested or contingent. Sometimes, however, the wording in the grant is unclear. In these circumstances, the courts lean in favour of holding the remainder to be vested.185 [2.275]  The common law evolved very strict rules for the creation of future interests. Most

of these rules concerned contingent remainders. These rules are discussed in [10.50]. Because of these rules, contingent remainders were very precarious interests. Although techniques evolved to prevent their destruction and statutory intervention rendered them less precarious, they remained uncertain in various ways:  see [10.120]–​[10.130]. In the meantime, a vital development in English land law had taken place: the fragmentation of estates between legal and beneficial ownership. Inter alia, this development made the creation and durability of future interests simpler and more certain. It has led to a situation where legal contingent remainders, with all their uncertainties, are rarely used today. For the most part, future interests are now created in equity, rather than at law.

THE DEVELOPMENT OF THE USE AND THE TRUST: FRAGMENTATION BETWEEN LEGAL AND BENEFICIAL OWNERSHIP Introduction [2.280]  From as early as the Middle Ages, it was becoming clear that the doctrine of tenure

and the doctrine of estates alone could not forever provide the sole basis of land law in England.

183 184

185

Re Estate of Chow Cho-​Poon (2013) 10 ASTLR 251; [2013] NSWSC 844 at [53]. Deed:  Conveyancing Act 1919 (NSW), s 50(1); Property Law Act 1958 (Vic), s 19(1)(a); Property Law Act 1974 (Qld), s 31(1)(a); Law of Property Act 1936 (SA), s 10(a) (wills too); Conveyancing and Law of Property Act 1884 (Tas), s 80(1); Civil Law (Property) Act 2006 (ACT), s 225(b); Law of Property Act 2000 (NT), s 31(1)(a). Query the position in Western Australia. Wills: Succession Act 2006 (NSW), s 4; Wills Act 1997 (Vic), s 4(2) (a); Succession Act 1981 (Qld), s 8(1); Wills Act 1936 (SA), s 4(2)(b); Wills Act 1970 (WA), ss 4, 6; Wills Act 2008 (Tas), ss 4, 6; Wills Act 1968 (ACT), s 7(2)(c); Wills Act 2000 (NT), ss 3, 6. Also seeFairbairn v Varvaressos (2010) 78 NSWLR 577 and Butt, “When is an Interest Vested?” (2013) 87 ALJ 162. See [10.40]. [2.280]  79

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The social and economic conditions were changing and the many fetters on the enjoyment of a freehold estate at common law gradually became less appropriate to prevailing conditions and were a source of resentment to freeholders. In order to understand the development of the modern-​day trust, it is necessary to consider some of the stringent conditions placed on the freeholder which led the freeholder to consider alternative ways of dealing with his or her interest.

Disadvantages of the common law Rules relating to conveyancing [2.285] To ensure that there was no doubt as to who held the freehold estate in land, the

common law insisted that every conveyance of a freehold estate be public and formal. The effective enforcement of feudal dues depended upon the lord who had the right to collect the dues knowing exactly who was seised of the land. Thus, every conveyance of a freehold estate had to be “effected by an open and public delivery of seisin, either upon or within view of the land conveyed”.186 Those residing within the area could then provide evidence of the identity of the current freeholder. This method of conveyance was called feoffment by livery of seisin (the important part was the delivery). This strict rule had the consequence that a freeholder, who for valid reasons wished to transact a conveyance that was not public to the world at large, was unable to do so. Inability to dispose of estate by will [2.290]  As stated at [2.100], the common law did not permit a freeholder to dispose of an

estate by will. The estate automatically passed to the heir (eldest son or other heir) and any purported disposition by will to another person had no effect. Although the freeholder could alienate the interest during his or her lifetime, this method did not aid the freeholder who wished to retain the estate up until death. Further, if the fee simple holder died without an heir, the land automatically escheated to the overlord. Feudal burdens [2.295] The freeholder was subjected to many, heavy feudal dues. The most burdensome

feudal dues were payable upon the death of the freeholder. For example, feudal dues named “relief” were payable to the overlord by the heir before the heir could succeed to the land. Further, in order to prevent the loss of feudal dues which resulted if land were conveyed to a body which never died, for example, a religious body, any lands conveyed to such a body were forfeited to the overlord.187 The fetters referred to above stimulated interest in finding other ways of dealing with land and it was outside the traditional bounds of the common law that the answer was found.

Origin and development of the use [2.300] From its inception, the Chancery was involved in administering the rules of the

common law. The Chancery issued writs enabling actions to be commenced at common law. 186 Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp  62–​63. 187 Statutes of Mortmain 1279 and 1290 (Eng). 80 [2.285]

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From the beginning of the 14th century, the forms of writs which could be issued were clearly defined and set. More and more frequently, a person with a legitimate complaint could not find a writ which fitted the cause of action and, therefore, could not obtain a remedy in the common law courts. Such a person could, however, petition the king directly in an attempt to obtain a remedy. Despite the creation of the common law courts in the 11th and 12th centuries, the king had retained a residual judicial power and it was to this power that a person turned when there was no remedy available at common law. Originally, the king’s council, of which the chancellor was a member, heard those special petitions, but by the end of the 14th century the king and his council had delegated the task to the chancellor. The Chancery Council (the Court of Chancery later) with the chancellor presiding, heard the petitions. The judicial power of the Chancery was clearly recognised by the end of the 15th century and the rules administered by it became known as the rules of equity. In fact, the “rules” varied markedly at first and were apt to change from chancellor to chancellor. Gradually, the Chancery began using the common law system of binding precedent and, by the end of the 17th century, a set of rules in the true sense had developed. Thus, a system evolved whereby two sets of rules, the rules of common law and the rules of equity, existed side by side and were enforced in two different courts. The chancellor did not have, or seek to have, jurisdiction over all inequities existing in the legal system. Rather, the chancellor’s jurisdiction was confined to situations where the common law could not act because, for example, there was no recognised writ the plaintiff could use for the type of damage he or she had suffered. Equity did not attempt to destroy the rules of common law, only to affect the way in which they operated. [2.305]  In the area of land law, the chancellor played a vital role. It was his enforcement of

the “use” which gave rise to the distinction between legal and equitable interests in land. In order to avoid the fetters created by the common law, the freeholder began to employ the use.188 It operated in the following way. The freeholder conveyed the land to a trusted person with the proviso that that person held the land, not for his or her own use and benefit, but for the use and enjoyment of the grantor. The person taking the legal estate pursuant to the conveyance was called the “feoffee to uses” (in modern terms the trustee) and the person entitled to the use of the land was called the cestui que use (in modern terms, the beneficiary). Thus, for example, if B, the holder of a fee simple estate, conveyed his interest “to A and his heirs to the use of B and his heirs”, A was the feoffee to uses and B was the cestui que use. [2.310] The common law courts recognised A  alone as having an interest in the land. At

common law, A was seised of the land and if A refused to honour the agreement and permit B the use of the land, B had no remedy at common law. If the device proceeded as planned and the feoffee to uses permitted the cestui que use to use and enjoy the land, the advantages for the cestui que use, the former freeholder, were many. First, the freeholder effectively gained the power to dispose of the estate by will. During his lifetime, the freeholder, A, conveyed the land to B to the use of himself, A, for life and the remainder to such uses as set out in his will. Secondly, the conveyance of land to uses provided a means of evading heavy feudal burdens payable on the death of the freeholder. By conveying the land to two or more feoffees to joint uses, and preventing the number of feoffees from falling below two, these dues were avoided.

188 See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 65–​67; Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), pp 185–​187. [2.310]  81

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Upon the death of one of the joint holders of an estate, the land vested in the surviving holder(s) by survivorship, not by inheritance, and therefore feudal dues payable on death were inapplicable. The former freeholder, the cestui que use after the conveyance, possessed the land, but no dues were payable on his death as he was not seised of the land. Thirdly, the conveyance to uses permitted a form of land transfer not bound by the strict common law rules of conveyancing. Finally, it became possible to create future interests which were not bound by the strict legal remainder rules: see [10.70]–​[10.75]. [2.315]  The obvious disadvantage for the cestui que use was the inability to enforce the use

against the feoffee in the common law courts. From the beginning of the 15th century the Court of Chancery began to protect the cestui que use and enforce the use against the feoffee. The Chancery insisted that the feoffees exercise their legal rights in accordance with the use. Equity acted in personam specifically against feoffees who refused to hold the land on behalf of their cestuis que use.189 The use was enforced against the heirs or devisees of the feoffee as the Chancery took the view that the conscience of such persons was affected in the same way as the original feoffee. Eventually, a purchaser of the legal estate from the feoffee, who took with notice of the use, was also required by the Chancery to hold the land for the benefit of the cestui que use.190 A situation was reached whereby the equitable rights of the cestui que use were enforceable against persons generally, except a purchaser of the legal estate for value without notice of the use. Thus, equitable rights, originally enforceable in personam against the feoffee, arguably became, or became akin to, rights in rem, that is, rights normally enforceable against third parties generally.191 These equitable rights became a new type of proprietary interest, commonly called the equitable interest. The chancellor, by his enforcement of the use in the manner described, effectively created a new form of interest in land, the equitable estate. As it was his own creation, he could have permitted the creation of different types of equitable interests or estates unknown to the common law. For the most part, however, the chancellor chose to accept and follow the common law as to the types of interests and estates which could be created. Thus, equity adopted the doctrine of estates so that it was possible, for example, to have an equitable fee simple, an equitable fee tail, an equitable life interest and an equitable leasehold interest.192 Although equity adopted much of the common law without modification, there were a number of clear examples where equity modified the common law. For instance, in the area of future interests, the legal remainder rules were not in general adopted and thus equitable remainders were not as liable to destruction. Further, there was the capacity for equity to permit the creation of interests unattainable at common law and equity did, and continues to, use this capacity from time to time. The creation of remainders, reversions and life interests in

189

See generally, Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 81–​82. 190 See [2.490]–​[2.550] for a discussion of the doctrine of notice. 91 There is still dispute as to whether equitable rights are properly termed rights in rem or rights in personam. 1 See Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectifications, and Equitable Damages (9th ed, Thomson Reuters, 2014), pp 27–​37; Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), pp 97–​100; Jackson, Principles of Property Law (Law Book Co, 1967), pp 83–​85; Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 84. 192 A further example is that equity used the common law rules of descent: Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (17th ed, OUP, Oxford, 2006), p 72. 82 [2.315]

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leasehold estates, the estate contract and the mortgagor’s equity of redemption are examples of equity acting in this manner.193 A more recent example is that of the restrictive covenant, an interest in land which can exist in equity alone.194 [2.320]  Effectively a grant “to A and his heirs to the use of B and his heirs” gave A the legal

estate and B the equitable estate. A’s holding of the legal estate gave A no rights to the use and enjoyment of the land. It is often said that A had the bare legal estate. It was B, the beneficial owner, who was entitled to the use and enjoyment of the land and any profits arising from it.

The Statute of Uses195 Overview [2.325]  The king, being at the top of the feudal pyramid, was the person who was bound to

lose more than any other person from the reduction in the payment of feudal dues brought about by the introduction and enforcement of the use. At Henry VIII’s instigation, the Statute of Uses was passed in 1535 to vest the legal estate and seisin in the cestui que use. Upon the death of the cestui que use, feudal burdens would again be payable. Thus, in a conveyance “to A and his heirs to the use of B and his heirs”, B took the legal fee simple and A obtained nothing at all. Effectively, the statute executed the use. Before the Statute of Uses, such a grant resulted in A obtaining the legal fee simple and B, the equitable fee simple. The aim of the statute was to abolish uses. This aim was not fully realised as not all uses were executed by the statute and there were some instances where the feoffee was required by the chancellor to perform the obligations set out in the grant. It was one of these instances which led to the general re-​emergence of the equitable interest and the development of the modern-​day trust of land. The uses not executed by the statute included leaseholds (see [2.330]), active uses (see [2.335]), where a person was seised to his own use (see [2.340]) and use upon a use (see [2.345]). Leaseholds [2.330]  The statute applied to execute a use only where one person was seised to the use

of another person. If the grant were “to A for 20 years to the use of B for 10 years”, the chancellor enforced the use in favour of B. A held a legal leasehold estate for 20 years and B held an equitable leasehold estate for 10 years. The grantor, the landlord, remained seised of the land throughout the term, A being entitled to possession only. That is, A was not seised of the land to the use of B and, therefore, the grant did not fall within the purview of the statute. Active uses [2.335]  The statute did not execute the use where the feoffee had active duties to perform.

For example, if the feoffee were seised to collect rents and profits and hold and pay them to the use of the cestui que use, the chancellor continued to enforce the use. The feoffee held the legal interest and the cestui que use held the equitable interest.

93 See Chapters 7 and 8 for a detailed discussion of these interests. 1 194 Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143; see Chapter 18. 195 See also [10.80]–​[10.85]. [2.335]  83

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Seised to own use [2.340]  Where a person was seised to his or her own use, the statute did not execute the use.

The feoffee held the legal fee simple pursuant to the common law. Use upon a use [2.345]  Before the Statute of Uses, it had been held that it was not possible to have a use

upon a use. In a grant “to A and heirs to the use of B and heirs to the use of C and his heirs”, A took the legal fee simple, B took the equitable fee simple and C took nothing. The use in favour of C was void as it was repugnant to the use in favour of B. Soon after the enactment of the Statute of Uses, it was held in Tyrrel’s Case (1557) 2 Dyer 155a; 73 ER 336 that the statute did not execute the second use. Thus, in this example, B took the legal fee simple and C took nothing. As there was no valid use in favour of C before 1535, there was nothing the statute could execute.

Re-​emergence of equitable interest [2.350]  The reason for the Statute of Uses had been to control the loss of revenue by the king. By 1660 feudal dues had become of little relevance (see generally [2.15]–​[2.20])196 and the reason for the desire to destroy the equitable interest had disappeared. At about this time, the chancellor began to recognise again the equitable interest and he did so by enforcing the use upon a use as an equitable interest. In a grant, “to A and his heirs, to the use of B and his heirs to the use of C and his heirs”, B took the legal fee simple (the Statute of Uses having executed the use) and C was viewed as holding the equitable interest. C’s equitable interest was equivalent to the equitable interest created by one single use before the Statute of Uses. The distinction between the legal interest and the equitable interest had thus re-​emerged. In order to avoid confusion, the terminology used to describe the second use was changed and a grant in which B was intended to take the legal fee simple and C the equitable fee simple was worded “to A and his heirs to the use of B and his heirs on trust for C and his heirs”. Eventually, A’s name was removed altogether and the words in a grant “unto and to the use of B and his heirs on trust for C and his heirs” were effective to give B the legal fee simple and C the equitable fee simple.197 B, the feoffee to uses, became known as the trustee and C, the cestui que use, became known as the cestui que trust or the beneficiary.

Statute of Wills 1540 [2.355]  One of the effects of the Statute of Uses was that feudal dues were again payable on the death of the cestui que use who after the statute held the legal estate. It was also thought that the statute resulted in the cestui que use, as the holder of a legal estate and subject to the common law rules, being unable to devise the interest. This part of the Statute of Uses was so vehemently criticised that in 1540 the Statute of Wills restored the power of the cestui que use to devise land. Tenants of land under socage tenure were able to devise the whole of their lands. No feudal incidents of value were payable on this type of tenure. Tenants who held land by knight service could devise two-​thirds of their land. Feudal dues were payable by the devisee if the devisee

96 Military tenures had been abolished: Tenures Abolition Act 1660 (Eng). 1 197 See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 73–​78 for a detailed analysis of how this was achieved. 84 [2.340]

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were also the heir. The Tenures Abolition Act 1660 (Eng) effectively changed all freehold tenure into socage tenure and it was from this time that absolute power to dispose of land by will was obtained.198

Repeal of the Statute of Uses [2.360]  In New South Wales,199 Victoria,200 Queensland201 and the Northern Territory202 the

Statute of Uses has been repealed. Effectively, the position in these States has returned to the pre-​1535 period in England. Accordingly, to create a trust of land and ensure that A (the trustee) takes the legal fee simple and B (the beneficiary) takes the equitable fee simple, the disposition is worded simply “to A in fee simple on trust for B in fee simple”.203 In South Australia, Western Australia and Tasmania a grant whereby one person is to take the legal fee simple and hold it for the use and enjoyment of another who is to take the equitable fee simple (a trust of land) is still effected by the old terminology “unto and to the use of B on trust for C”. Finally, statutory provisions in all jurisdictions provide that in a will the whole of the legal estate of the testator vests in his or her executor upon the testator’s death.204 The devisee obtains the beneficial interest and can only acquire the legal estate when the executor conveys the land to him or her. After payment of all debts, the executor is under a duty to carry out the instructions of the testator, but it is not until the legal estate is formally conveyed to the devisee that he or she so obtains it.205

Judicature Acts [2.365]  Before the Judicature Act 1873 (UK), separate courts administered the rules of law

and equity. The courts of common law –​the Queen’s Bench, Exchequer and Common Pleas –​ heard actions based on common law claims and granted legal remedies. The Court of Chancery granted equitable relief. The disadvantages of such a system were all too obvious. For instance, a plaintiff seeking damages at law and an injunction was forced to commence proceedings in two separate courts. There were numerous examples of duplication of proceedings concerning the same dispute. Although it was clear that the Court of Chancery would ensure that equitable

198 199 200 201 202 203

204

205

See Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 112. Imperial Acts Application Act 1969 (NSW), s 8. Imperial Acts Application Act 1980 (Vic), s 5. Property Law Act 1974 (Qld), ss 3(1), 7, Sch 6 (prior to the enactment of ss 4 and 5 of the Property Law Amendment Act 1999 (Qld)). Law of Property Act 2000 (NT), s 6. In the pre-​1535 terminology the wording would have been “to A and his heirs, to the use of B and his heirs”. See also Property Law Act 1958 (Vic), s 19A, discussed at [10.145]; Conveyancing Act 1919 (NSW), s 44(2); Property Law Act 1969 (WA), s 39; Civil Law (Property) Act 2006 (ACT), s 223; providing that limitations may be made by direct conveyance without uses. The import of these provisions is discussed at [10.135]. Probate and Administration Act 1898 (NSW), s 44; Administration and Probate Act 1958 (Vic), s 13; Succession Act 1981 (Qld), s 45; Administration and Probate Act 1919 (SA), ss 45, 46; Administration and Probate Act 1935 (Tas), s 4; Administration Act 1969 (NT), s 52. After the grant of probate, the executor proceeds to distribute the estate. Re Beavis; Beavis v Beavis (1906) 7 SR (NSW) 66; In the Will of Malin [1912] VLR 259; Barrett v Barrett (1918) 18 SR (NSW) 637. See generally, Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), pp 190–​191; Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 131. [2.365]  85

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rules prevailed over the rules of common law if there was a conflict, it was obvious that the legal system would be streamlined considerably by the introduction of a scheme whereby one court had jurisdiction with respect to both law and equity. The Judicature Act 1873 (UK) abolished the separate courts and established one Supreme Court, comprising the High Court of Justice, the jurisdiction of first instance, and the Court of Appeal. The Supreme Court was invested with both legal and equitable jurisdiction. The High Court of Justice was divided into a number of divisions. Although as a matter of administrative convenience each division dealt with certain distinct matters, they all had the same jurisdiction.206 Thus, there was one court invested with legal and equitable jurisdiction which could grant both legal and equitable remedies. The already-​established principle that the rules of equity should prevail if there was a dispute between the rules of law and equity was statutorily enacted.207 The Judicature Act 1873 did not destroy the distinction between the rules of law and equity; rather, it simplified the procedure for enforcing these rules by providing that the one court had both legal and equitable jurisdiction.208 All Australian States now have legislation similar to the Judicature Act 1873 (UK). The rules of law and of equity were both part of the law of the colony of New South Wales taken from England.209 Although they were administered by one court, the Supreme Court, two separate divisions of the Supreme Court administered the rules of law and equity. The procedures and proceedings of these divisions were quite different and separate. Matters which concerned legal or equitable rules could only be heard in the appropriate division. Thus, although there was theoretically only one court, effectively the system in New South Wales was the same as that which existed in England before the Judicature Act 1873. Although some ad hoc changes were made to alleviate the situation,210 it was not until 1972 in New South Wales that legislation similar to the English Judicature Act 1873 came into operation. Section 57 of the Supreme Court Act 1970 (NSW) provides that the court must administer concurrently the rules of law and equity. Under s 5 of the Law Reform (Law and Equity) Act 1972 (NSW), it is provided that where there is a conflict between the rules of law and equity, the rules of equity prevail. In the other jurisdictions, the changes were made at much earlier dates.211

The trust today [2.370]  For a long period of time, the subject matter of a trust was invariably land. The concept

of tying up the land for future generations was strongly advocated and adapted by the landed classes. For many years this was achieved by a type of trust called the strict settlement: see

206

Bridge, Cook and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 77. 207 Judicature Act 1873 (UK), s 25. 208 Compare however the views in Joseph v Lyons (1884) 15 QBD 280 and United Scientific Holdings Ltd v Burnley BC [1978] AC 904 at 924–​925 per Lord Diplock. 209 See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 4, 141–​143. 210 See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 142. 211 A full account of these changes is to be found in Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), pp 12–​23.

86 [2.370]

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[13.20]–​[13.40]. In recent times the trust has been used in many more diversified ways to achieve a range of varied objects. The subject matter of the modern trust is more likely to comprise shares in companies than it is to comprise land. Some examples of the situations in which the trust is used are given here.212 First, the trust is still used where there is a desire to provide for successive interests in property. This may be done by will or inter vivos. If there is a desire to keep the contents of such a trust private, the trust would be set up during the settlor’s lifetime because a will becomes a document freely available to the public once probate has been granted. Secondly, trusts, and in particular discretionary trusts, have been used for the purpose of minimising income taxation. Although there are many ways in which such trusts can be used, typically the idea is to distribute the income of trust property among the objects of the trust in such a manner so as to reduce income-​ taxation burdens. Changes to taxation laws in the past decade have resulted in this form of taxation avoidance being less useful in achieving its purpose. Thirdly, the trust has been used to enable unincorporated associations to hold property in a viable manner. Unincorporated associations are not separate legal entities and would have faced virtually insurmountable difficulties in holding property. The vehicle of the trust has been used to enable trustees to hold property on behalf of unincorporated associations. Fourthly, in many cases pension and superannuation schemes operate under a trust. The funds of the scheme, whether the scheme is contributory or non-​contributory, are held by trustees. In such cases, the employee is thereby assured that his or her employer cannot dispose of the funds. Fifthly, the trust is used to enable investment through unit trusts.213 Under these schemes, the trustees purchase shares in a large number of companies and then individual persons acquire “units” or shares in the overall trust fund. The trustees are often full-​time professional managers of the trust. They receive the income and then pay the administrative costs, distribute wholly or partially to the unit holders and reinvest the remainder. From the point of view of the unit holder, the unit trust offers an opportunity to invest in many companies and thereby offset the risks. Other uses of the trust include the protective trust, the charitable trust and trusts under which debenture stock is issued by a company.214 Apart from the use of the express trust in these varied ways, trusts may arise by operation of law. The resulting and constructive trusts are examples of this form of trust. They are discussed in detail in Chapters 8 and 9. Trusts also arise in a variety of situations where persons have failed to follow the proper formalities for the creation or passing of a legal estate. These trusts are discussed in several places: see [2.315] and [8.150]ff and [14.105]–​[14.115].

12 See generally, Ford and Lee, The Law of Trusts (Thomson Reuters, subscription service, Sydney) at [1.020]. 2 213 In Costa & Duppe Properties Pty Ltd v Duppe [1986] VR 90 it was held that the holder of a unit “in a unit trust” has “a proprietary interest in each of the assets which compromise the entirety of the trust fund”; approved in Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343. However, the High Court in CPT Custodian Pty Ltd v Commissioner of State Revenue; Commissioner of State Revenue v Karingal 2 Holdings Pty Ltd (2005) 224 CLR 98 made it clear that care must be taken if the issue of “ownership” in relation to a unit trust is raised in the context of specific statutory provisions (at 109–​110): “The term ‘unit trust’ is the subject of much exegesis by commentators. However, ‘unit trust’, like ‘discretionary trust’, in the absence of an applicable statutory definition, does not have a constant, fixed normative meaning which can dictate the application to particular facts”. 214 Ford and Lee, The Law of Trusts (Thomson Reuters, subscription service, Sydney) at [1.020].

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GENERAL LAW PRIORITIES Introduction [2.375] In general terms, a priorities dispute arises where two or more persons have

inconsistent proprietary interests in the one piece of land. For example, if A, the owner of land, enters into an equitable mortgage in favour of B and subsequently contracts to sell the property to C, both B and C have valid equitable interests in the property. The internal validity of each of these transactions is without defect: the inconsistency between the two interests arises as a result of A, the grantor, purporting to create a second interest which may be wholly or partially inconsistent with the first interest. As Sykes states: “Any invalidity attributable to one of the dispositions exists … by inconsistency with the other disposition or the result sought to be obtained by that other disposition”.215 It does not exist by reason of the internal invalidity of either of the dispositions. [2.380] Disputes concerning rights to the one piece of land may arise in a different way.

If A purports to convey to B and it is subsequently revealed that there was some defect or invalidity in the transaction by which A  claims to have originally acquired title from X, a dispute may arise between B and X. If the document under which A claims an interest is void because it involved, for example, a forgery or an agent acting beyond authority, A acquires no interest at all and the maxim nemo dat quod non habet216 provides the answer to the dispute between B and X. A had no title and B, who can have no better title than A had, loses in a dispute with X. In the strict sense, the type of dispute described above is not a priorities dispute, for B really has no interest with which to compete with X.217 Sometimes a party in B’s position may succeed in gaining “priority” over a party in X’s position. If X has been fraudulent or negligent in some manner, she may be estopped from denying that B acquired an interest from A.218 In a sense, B’s title arises independently of the defect in A’s title. Although this sort of dispute is not a priorities dispute in the narrow sense, it will be considered here. [2.385]  A further important aspect affecting both types of disputes described above concerns

the statutory concept of indefeasibility of title. In the area of real property, this concept is applicable to all land falling under the Torrens system of land registration. In outline, it results in the person who is registered as the holder of an estate taking an interest which is unaffected by any prior claims. Although the paramountcy concept is hedged by many and varied exceptions, the resolution of priorities problems in a system adopting the concept of indefeasibility is different, where at least the later interest is registered, from the resolution of such disputes in a system free of the concept of indefeasibility. Indefeasibility and its relevance to, and impact on, priority disputes is examined in Chapter 4. With respect to some types of priority disputes, the basic principles governing their resolution are the same whether the land is general law land or Torrens land. Thus, for example, the same principles are used to resolve a dispute between equitable interest holders, a dispute between

15 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 29. 2 216 No one gives who possesses not. 217 See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 31, where the distinction is drawn between “independent” and “dependent” title, that is, the situations described above, and the contention that there is no distinction between the two is rejected. 218 See [2.410]–​[2.445], particularly the discussion at [2.425] of the decision in Walker v Linom [1907] 2 Ch 104. 88 [2.375]

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the holders of an equity and a full equitable interest and, arguably, a dispute between the holders of a prior legal interest and a subsequent equitable interest. Differences in the operation of the two systems means that different factors may influence the operation of the principle. This is particularly evident where the competition is between the holders of equitable interests. As most land now falls under the Torrens system of land registration, the more detailed discussion of this type of dispute is undertaken in Chapter 5. The dispute between the holder of a prior legal interest and a subsequent equitable interest is discussed in this chapter and the dispute between the holders of an equity and a subsequent equitable interest is covered in Chapter 5. [2.390] The resolution of a priority dispute in favour of one party does not automatically

result in the absolute loss of the interest of the other party. The interest of the losing party may operate subject only to the interest of the other party. Of course, if the interests are wholly inconsistent, between the holders of two absolute interests, for example, the interest of the losing party is eliminated. Further, if the dispute is between the holder of an absolute interest and the holder of an interest which is not absolute, and the former wins the dispute, the interest of the latter in the land is lost. For example, the resolution of a dispute between the holders of a prior equitable mortgage and a subsequent legal fee simple in favour of the holder of the legal fee simple results in the loss of the mortgagee’s security interest in the property.219 In contrast, a decision in the above example in favour of the holder of the equitable mortgage would result in the holder of the legal fee simple retaining the fee simple, but subject to the mortgage. [2.395] The solution to a priorities dispute is governed by the rules of common law and

equity. The solution arrived at pursuant to these rules may, however, be affected by the system of registration of deeds contained in the general property law statutes220 and by the legislative provisions concerning frauds on purchasers.221 In this section, the intent is to analyse the legal and equitable principles pertaining to priority disputes and the effect on priorities of the deeds registration system. In general terms (excluding the application of the deeds registration system), the dispute is resolved by reference to the time of creation of the competing interests. The intervention of equity, however, has resulted in modifications to this general principle. Equity was far less rigid than the common law and was prepared to override the rule of priority in time in situations where a fairer result could be achieved by doing so. In fact, many of the principles governing priority disputes were formulated by the Court of Chancery. Very little general law land (non-​Torrens land) remains in Australian jurisdictions and so the way

19 Note that the contract between the mortgagor and the mortgagee remains good. 2 220 See [2.600]ff; see also Conveyancing Act 1919 (NSW), ss 184A–​184J; Property Law Act 1958 (Vic), Pt 1 (note that no further registrations can occur in Victoria: the Transfer of Land (Single Register) Act 1998 prevents the registration of any further deeds or instruments under Pt 1); Property Law Act 1974 (Qld), ss 241–​249; Registration of Deeds Act 1935 (SA); Registration of Deeds Ordinance 1856 (WA) now Registration of Deeds Act 1856; Registration of Deeds Act 1935 (Tas). Note that there is no general law land in the Northern Territory or the Australian Capital Territory: see [2.600]. Although the provisions remain in Queensland, there is also no general law land in Queensland. 221 Conveyancing Act 1919 (NSW), ss 37A, 37B; Property Law Act 1958 (Vic), ss 172–​174; Property Law Act 1974 (Qld), ss 228, 229; Law of Property Act 1936 (SA), ss 86, 87; Property Law Act 1969 (WA), ss 89–​91; Conveyancing and Law of Property Act 1884 (Tas), ss 40, 41; Civil Law (Property) Act 2006 (ACT), ss 239–​240; Law of Property Act 2000 (NT), ss 208, 209. These provisions are infrequently used now. They are discussed briefly in Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 416–​417. [2.395]  89

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in which these principles can be overridden by the systems of registration of deeds relating to general law land are considered only briefly.

Legal estate and legal estate [2.400]  A dispute between the holders of two legal estates is resolved by determining when

the interests were created (which is generally the date of execution of the document pursuant to which the interest was created) and according priority to the interest which was created first in time. Thus, where A, the holder of a fee simple, grants a legal lease to B and subsequently conveys the legal fee simple to C, B’s prior legal interest takes priority over the legal fee simple of C. In such a case of partial inconsistency, C takes the legal fee simple subject to the legal lease in B.  If A  had conveyed the legal fee simple to B and subsequently had purported to convey the legal fee simple to C, B’s interest, being first in time, would prevail. The dispositions are totally inconsistent and the one in favour of C is a nullity. It may be argued that this example is simply an application of the maxim nemo dat quod non habet, and that it is not a case of conflicting interests. While it is difficult to separate precisely the principle of nemo dat and a true priorities dispute,222 the preliminary analysis above supports the view that this type of conflict is a priorities dispute. Each of the documents purporting to convey the fee simple to B and to C was an internally valid document and the decision to be made concerns priority between the two. Nevertheless, the answer to the dilemma is unclear. The distinction matters little for it is clear that the first in time prevails pursuant to either view. The principles discussed at [2.410] ff pursuant to which a prior legal interest may lose priority to a subsequent equitable interest might also operate to overturn the natural priority in time enjoyed by the holder of the first legal interest as against a later legal interest.223

Legal estate and subsequent equitable estate [2.410]  If this type of dispute is uncomplicated by any factor of fraud or negligence on the

part of the legal interest holder, the prior legal estate prevails against the subsequent equitable estate. However, in some circumstances, the holder of the legal interest has been postponed because of blameworthy conduct or because of some estoppel. Often the circumstances do not give rise to a priorities dispute in the strict sense. The dispute covers circumstances of the type described at [2.380]. Thus where the grantor, A, is a person with no valid title, a dispute may arise between X, the true holder of the legal fee simple and C, the purported grantee from A. Disputes of this nature will be discussed in this section. [2.415]  In the case of Northern Counties Fire Insurance Co v Whipp (1884) 26 Ch D 482

the English Court of Appeal considered the circumstances in which postponement of the legal estate may occur. Crabtree, the owner of several properties, legally mortgaged them to his employer, the plaintiff company, as security for loans made to him by the plaintiff company.

222

Discussed in Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), p 386. 223 See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 1124, fn 16 and accompanying text.

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The title deeds to the properties were placed in the company safe. Crabtree was the manager of the company and had one of the two keys to the safe. Subsequently, Crabtree, who was in financial difficulty, took the title deeds to two of the properties from the safe. He removed the deeds creating mortgages in favour of the plaintiff company from the chain of title. Crabtree then used the deeds to secure a further loan from Mrs Whipp, the defendant.224 The liquidator for the plaintiff company sought to foreclose the mortgages. Foreclosure results in the extinguishment of the mortgagor’s equity of redemption and confers upon the mortgagee an unencumbered legal fee simple in the land:  see [7.335]–​[7.350]. Whipp, the equitable mortgagee, defended the action and counter-​claimed, seeking a declaration that the plaintiff company’s mortgage was fraudulent and void against her and that its mortgage should be postponed to her later equitable mortgage. Although on the facts of the instant case the Court of Appeal refused to accord priority to the subsequent equitable interest holder, it set out two instances where the holder of the prior legal estate may be postponed to the holder of the later equitable interest. First, where the holder of the legal estate has been a party to a fraud and the fraud has led to the creation of the equitable interest, the legal interest holder will lose priority. The following situation provides an example. A, the holder of the legal fee simple, enters into a legal mortgage in favour of B and subsequently B and A collude to induce C to lend A money on the security of the property, inducing C to believe that there is no other outstanding mortgage over the property. B and A could achieve this result by B handing the title deeds (minus the mortgage) back to A and by A then using the title deeds as security for the loan from C. On the facts of Whipp’s case, the plaintiff company had not been a party to a scheme to defraud the defendant. The plaintiff company’s extreme carelessness in its handling of the security documents did not amount to fraud: the plaintiff company had not combined with Crabtree to induce the defendant to lend her money. The second basis for postponement of a prior legal interest to a later equitable one given by the Court of Appeal in Whipp’s case is where the grantee of the prior interest makes the grantor his or her agent for the raising of money. Before turning to that basis (at [2.435]), however, we will consider a possible ground for postponement related to the first basis given in Whipp: carelessness of the holder of the prior legal interest in acquiring or in retaining the title deeds. [2.420]  Although the Court of Appeal held in Northern Counties Fire Insurance Co v Whipp

(1884) 26 Ch D 482 that negligence in the custody of the title deeds was insufficient to postpone the interest of the holder of a prior legal interest,225 it seems that a negligent failure to get in the title deeds may suffice to postpone the holder of a prior legal interest.226 Further, in order to lead to postponement, it seems that the negligent failure to get in the title deeds must constitute “gross” negligence. Although the term “gross negligence” does not lend itself

224 After the transaction between Crabtree and the plaintiff company, Crabtree retained an equitable interest in the land, the equity of redemption and, thus, there was no question of the nemo dat maxim applying. 225 Compare Brocklesby v Temperance Permanent Building Society [1895] AC 173; see also Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 716, where it has been argued that gross negligence in retention and custody of the title deeds may be sufficient to lead to postponement of the earlier legal interest. 226 See, for example,Clarke v Palmer (1882) 21 Ch D 124; Walker v Linom [1907] 2 Ch 104; see also Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 398.

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to simple definition,227 it connotes more than mere carelessness.228 “[S]‌ome special degree of want of prudence” must be demonstrated.229 [2.425] In Walker v Linom [1907] 2 Ch 104 that “special degree of want of prudence” was

found and the legal interest holder was postponed. Walker was the holder of the legal fee simple. He conveyed the legal fee simple to trustees to be held on certain trusts. The relevant trusts were to Walker for life or until he attempted to alienate, then to his wife for life and thereafter upon other stated trusts. The solicitors who acted for both Walker and the trustees took possession of the title deeds but, unbeknown to them or to the trustees, Walker retained the deed in the chain by which the land had originally been conveyed to him. At a later date, Walker, by using the deed, held himself out to be the legal owner of the property and procured a loan from X on the security of the deed. He also purported to execute a formal legal mortgage in favour of X. Subsequently, X sold to Linom. The dispute that came before the court was between the trustees, who held the legal estate, and Linom. Unlike the situation in Northern Counties Fire Insurance Co v Whipp (1884) 26 Ch D 482, it seemed apparent that Linom had no subsisting legal or equitable interest in the land at all. Walker had no legal estate to give X and thus X could have no legal estate to give to Linom. Neither did Walker have any equitable estate out of which could be carved an interest in favour of X and Linom; his equitable life estate under the trust determined upon alienation. Nevertheless, the court treated the dispute as one between a prior legal interest and a subsequent equitable interest. Although it is not explicitly expressed, it appears that the court is suggesting that in such circumstances, the legal interest holder is estopped by his or her conduct from denying the existence of an equitable estate in the other claimant party.230 It was held that the legal estate of the trustees must be postponed to the equitable estate in Linom. The trustees had been guilty of gross negligence in failing to get in all the title deeds in the chain of title.231 Despite the decision in Walker v Linom, it appears that a failure to get in the title deeds will not always lead to postponement of the legal interest holder.232 The criterion for postponement is gross negligence and, in the unlikely event that a legal mortgagee, for example, can demonstrate that there was a good reason for the failure to get in the title deeds and thereby prove that he or she was not grossly negligent, postponement may not result. Sometimes the holder of the legal interest may get in the title deeds, but later permit them to leave his or her possession. If the title deeds are then used fraudulently to induce a third party to lend money, the legal mortgagee may lose priority to the third party. Unless there is some very good and

27 See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 398. 2 228 Hudston v Viney [1921] 1 Ch 98 (gross negligence is something more than mere carelessness); Armitage v Nurse [1998] Ch 241 at 254 (the difference between the two concepts is a question of degree); see also CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd (2008) 65 ACSR 650 at [28], a case involving shares, rather than land. 229 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 398. 230 See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 401–​402. 231 No attention appears to have been given to the fact that, in turn, Linom must have relied upon one single document as evidence of title in Walker v Linom [1907] 2 Ch 104. 232 See Hudston v Viney [1921] 1 Ch 98 (note, however, that this case concerned a competition between a prior equitable interest and a subsequent legal interest); Hewitt v Loosemore (1851) 9 Hare 449; 68 ER 586 at 458 (Hare), 590 (ER). 92 [2.425]

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plausible reason for parting with the title deeds, the conduct of the legal mortgagee in so parting with the deeds will be considered to be grossly negligent.233 [2.430]  Gross negligence which does not take the form of either a failure to get in the title

deeds or a negligent parting with them will probably not lead to the postponement of the legal interest.234 The cases do not support a general proposition that gross negligence per se by the holder of the legal interest will lead to postponement of the legal interest.235 [2.435] The Court of Appeal in Northern Counties Fire Insurance Co v Whipp (1884) 26

Ch D 482 envisaged a second way in which the holder of the legal estate could be postponed to the holder of a later equitable interest. The court expressed the rule in the following way (at 494): “where the owner of the legal estate has constituted the mortgagor his agent with authority to raise money, and the estate thus created has by the fraud or misconduct of the agent been represented as being the first estate”. The rule is a poorly expressed one and arguably covers a wider variety of circumstances than a strict reading of it would suggest. For example, if the holder of the legal estate hands the indicia of title to an agent with authority to raise a limited amount of money using the title deeds as security for that amount, and the agent borrows a larger sum than the authority permitted, the legal owner would be bound by the security so created. Similarly, a legal mortgagee is bound by a subsequent mortgage if he or she permits the mortgagor to use the title deeds to raise a limited amount on the security of the property (the security created to take precedence over the first mortgage) and the mortgagor exceeds the authority and borrows a larger amount. The legal interest holder here is not postponed on the basis of any fraud, but rather on an estoppel basis. By entrusting the agent/​ mortgagor with the indicia of title, the mortgagee has held out to the world at large that the mortgagor has an unlimited authority to raise money on the security of the property.236 The legal interest holder is bound by his or her implied representation.237 On the facts in Whipp’s case, the court had to decide if the plaintiff company had constituted Crabtree as its agent to raise money by permitting Crabtree to have possession of a key to the safe where the title documents were kept. The court was not prepared to conclude that Crabtree’s possession of the key amounted to an implied authority to deal with the plaintiff company’s security. However, in the case of Perry-​Herrick v Attwood (1857) 2 De G & J 21; 44 ER 895, this second instance envisaged in Whipp’s case did lead to the postponement of the holder of the prior legal interest. In this case the legal mortgagees, two sisters, permitted the mortgagor

233

Compare Saltoon v Lake [1978] 1 NSWLR 52; see also Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), pp 350–​351. This conduct may often be subsumed under the second category discussed at [2.435]. If the legal mortgagee holds on trust for beneficiaries, the beneficiaries may rely on their equitable title to defeat any subsequent interest holder: Shropshire Union Rlys & Canal Co v The Queen (1875) LR 7 HL 496. Compare the situation where the legal interest holder/​trustee fails to get in the title deeds. In this situation, the equitable interest of the beneficiary falls with the trustee’s title: see Walker v Linom [1907] 2 Ch 104. 234 See Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), p 350; cf Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 398. 35 See, for example, Northern Counties Fire Insurance Co v Whipp (1884) 26 Ch D 482. 2 36 Dixon v Muckleston (1872) 8 Ch App 155 at 160; Rimmer v Webster [1902] 2 Ch 163. 2 237 Compare Mason and Deane JJ in Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 340, where their Honours argue that the finding of a “representation” in these circumstances is artificial. [2.435]  93

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to retain the title deeds so that he could give a first mortgage to another party, X, to secure a particular limited sum owed by the mortgagor to X.  The deeds were deposited with X. At a later date the mortgagor regained possession of the title deeds from X, without X’s concurrence, and mortgaged the estate to the plaintiffs in return for a loan of a much larger amount. The plaintiffs had no knowledge of the mortgage in favour of the sisters. The legal interest of the sisters was postponed to the equitable mortgage of the plaintiffs. The court held that the conduct of the sisters, in handing over the title deeds to the mortgagor and permitting the mortgagor to raise a specific sum of money and create a security which was to take priority over their own security, had placed the mortgagor in a position to represent himself as an unencumbered owner of a legal fee simple estate. As against the plaintiffs who had advanced money on the faith of the mortgagor’s possession of the deeds, the legal mortgagees could not complain that the mortgagor had raised a larger sum than had been agreed upon. The principle also appeared to lead to the postponement of the holder of the legal interest in the case of Brocklesby v Temperance Permanent Building Society [1895] AC 173. The father, who was the holder of a legal fee simple estate, gave his son an authority to collect the title deeds to the property to raise a loan of £2,250 on the security of the deeds. The authority contained no reference to any limitation. The son procured a loan of £3,500 on the security of the property and the equitable mortgage thereby created in the lender was held to be enforceable against the legal interest of the father. [2.440] Apart from the instances mentioned in Northern Counties Fire Insurance Co v

Whipp (1884) 26 Ch D 482 and Walker v Linom [1907] 2 Ch 104, a legal owner may also be postponed to the holder of a subsequent equitable interest in circumstances where, pursuant to some document other than the title deeds, he or she effectively permits another party to hold out that the legal estate will vest in that other party. For example, a legal mortgagee may place in the hands of the mortgagor a document which implies that the mortgage has been paid off.238 In Barry v Heider (1914) 19 CLR 197, a Torrens title case, Barry, the registered proprietor was held to be subject to the interest of a subsequent equitable mortgagee, an interest which he had not created himself. Barry executed a transfer of his land in favour of Schmidt. As the land transferred to Schmidt did not contain the whole of the land Barry owned, the Titles Office had to issue a new certificate of title. At the time the transfer from Barry to Schmidt was executed, the new title had not issued and therefore the transfer could not be registered immediately. Schmidt then obtained a loan from Heider on the basis that the land contained in the transfer from Barry to Schmidt would provide security for the loan. He got Barry to sign an authority, addressed to the Registrar-​General, requesting that the new certificate of title be delivered to Heider. The loan from Heider was obtained on the security of the transfer and the authority. Subsequently, Barry alleged that he had a right to have the transfer to Schmidt set aside because of fraud. He claimed that he had offered to sell the land for £4,000, that his signature for £1,200 had been obtained by fraud and that, in any event, he had not been paid any part of the purchase money. He sought an injunction restraining registration of the transfer to Schmidt. Further, Barry claimed that his registered title should not be subject to the mortgage

238 See, for example, Dixon v Muckleston (1872) 8 Ch App 155.

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to Heider.239 The High Court upheld Barry’s claim that the transfer to Schmidt had been obtained by the fraud of Schmidt, and cancelled it. However, the High Court held further that Barry’s interest was subject to the equitable interest of Heider. The transfer and authority “operated as … representation(s), addressed to any person into whose hands (they) might lawfully come, that Schmidt has such an assignable interest”, that is, that Schmidt had a full beneficial interest.240 It may be that the priority dispute in Barry v Heider is more correctly characterised as a dispute between two equitable interests –​Barry’s prior unpaid vendor’s lien and the equitable mortgage of Heider. Griffith CJ referred to Barry’s interest as an equitable lien.241 Even if this is the case, the principle posited remains true: in relation to Torrens land the holder of a prior registered interest may lose priority where his or her conduct gives rise to a claim in personam which can be enforced by a subsequent equitable interest holder. [2.445]  All of the situations in which the holder of a legal interest has had his or her interest

postponed to a later equitable interest appear to be based on two principles.242 The first principle is the estoppel theory: a person is estopped from denying certain facts which he or she has represented to exist by words or conduct and which have been relied upon by another. The second principle, named the “innocent person” theory by Isaacs  J (in Barry v Heider (1914) 19 CLR 197 at 218), concentrates upon some default on the part of the legal interest holder. The legal interest holder should lose priority where his or her fraudulent or, in certain instances, negligent acts, have induced an “innocent person” to act to his or her detriment. In fact, it seems that resort must be had to both principles in order to bring in all the instances where a prior legal interest is postponed to a later equitable interest. In some cases, there may have been no direct representation by the legal interest holder and yet the holder may be postponed by fraudulent or negligent conduct. For example, a legal owner who fails to get in the title deeds makes no direct representation to the world as would be required by a strict estoppel theory about title to the property and, yet, the owner’s negligent conduct has permitted another to make a representation. The default is the important component and the legal interest holder is then estopped from denying the truth of the representation.243 The principles upon which this priority rule is based appear also to be the principles upon which the priority rule governing conflicts between the holders of equitable interests is based: see [5.115]. In both instances the court must decide whether sufficient reason exists to displace the natural priority enjoyed by the earlier legal or equitable interest and thereby

239 There was a further mortgage to Gale, but for the purposes of this discussion the relevance and position of the Gale mortgage is not analysed here. 240 Griffith CJ and Barton J appeared to take the view that either the transfer or the authority would have acted as a sufficient representation. Isaacs J was of the opinion that the transfer comprised the representation. He specifically attached no importance to the authority. 241 Barry v Heider (1914) 19 CLR 197 at 209 (Barton J agreed with Griffith CJ).Similarly AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1 Qd R 306 concerned a priority contest over Torrens title land where one of the parties was also the registered proprietor. The court treated the contest as one between two equitable interests: see [5.200]. 242 See Barry v Heider (1914) 19 CLR 197 at 216–​218 per Isaacs J. See also Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 400–​402. 243 See generally, Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 400–​402.

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accord priority to the holder of a later created equitable interest. It is not surprising that similar base principles have been used by the courts for deciding both types of priority dispute.

Equitable estate and subsequent legal estate [2.450]  The development of the equitable interest in land by the Court of Chancery has been

discussed in “The Development of the Use and the Trust: Fragmentation between Legal and Beneficial Ownership” (see [2.280]–​[2.370]). As the common law courts did not recognise these equitable interests, it was the Court of Chancery which developed priority principles where there was a dispute between an equitable interest and a legal interest or between two equitable interests. In general, the Court of Chancery took the view that it would not interfere with a legal interest unless the conscience of the legal interest holder was not clear. Thus, in the early days where there was a conveyance to uses, equity acted in personam against the feoffee to uses (the trustee) who refused to exercise his or her legal rights in accordance with the use. The Court of Chancery insisted that the rights be exercised in accordance with the use and that the trustee hold the land on behalf of the beneficiaries. In time, equity took the view that the conscience of a purchaser of the legal estate was not clear if the purchaser took with notice of a prior equitable interest and the equitable interest was thus enforced against the purchaser too. In so doing, the Court of Chancery developed the rule that has become known as the polar star of equity: a bona fide purchaser of the legal estate for value without notice of prior equitable interests takes free of prior equitable interests.244 Thus, for instance, if A, the holder of the legal fee simple, creates an equitable mortgage in favour of B and then purports to convey the unencumbered legal fee simple to C, C is not bound by the mortgage in favour of B, provided C is a bona fide purchaser for value and has taken without notice of B’s interest. [2.455]  The bona fide purchaser rule is far less directly relevant and important in real property

law than it was in earlier times. In Australia, most land falls under the Torrens system of land registration and, as stated at [2.385], disputes between prior equitable (unregistered) interests and subsequent legal (registered) interests are governed by specific statutory provisions.245 Similarly, English land law has seen the introduction of registration regimes and specific statutory provisions relating to “overreaching” of equitable interests which have substantially reduced the area for the operation of the bona fide purchase rule. Nevertheless, in relation to general law land, the rule remains applicable. Further, and more importantly, although the Torrens statutes appear to eschew the equitable doctrine of notice, it is clear that there is scope for its operation, albeit more indirectly, in relation to Torrens land. In disputes between the holders of equitable interests under the Torrens system, in most circumstances, the holder of the subsequent equitable interest cannot defeat the earlier interest if he or she had notice of the earlier interest.246 This is discussed at [5.105]–​[5.210].

244 Pilcher v Rawlins (1872) LR 7 Ch 259. 245 However, the rule is still relevant in New South Wales in the Torrens title context in those circumstances where a subsequent unregistered interest is, by virtue of s 43A of the Real Property Act 1900 (NSW), deemed to be a (general law) legal one: see [5.220]–​[5.225]. 246 Moffett v Dillon [1999] 2 VR 480; Perpetual Trustee Company Ltd v Smith (2010) 186 FCR 566; [2010] FCAFC 91. See also the rule in Hopkinson v Rolt (1861) 9 HL Cas 514; (1861) 11 ER 829, which provides that a first legal mortgagee whose mortgage covers what is due and also future advances cannot claim the benefit 96 [2.450]

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There is considerable doubt concerning the onus of proof in these disputes.247 Although the preponderance of authority (including recent authority) favours the view that the holder of the legal estate must prove that he or she purchased for value without notice,248 there are decisions which support the view that the holder of the prior equity must prove that the legal interest holder had notice.249 Bona fide purchaser for value [2.460] The principle outlined makes it clear that a person who acquires a legal interest

may only take free of prior equitable interests if that person is a “purchaser” (see [2.465]). A  person who takes the legal interest by way of gift is a volunteer and is thus bound by existing equitable interests. The equitable maxim, equity will not assist a volunteer, gave rise to this part of the principle. A person who has given no value must take the land with all its burdens. A purchaser includes a grantee of any type of legal estate, such as a fee simple, a mortgage or a lease. Further, the principle provides that the purchaser must be a “bona fide purchaser”. That is, the purchaser must act in good faith. According to general principles then, a purchaser guilty of unconscionable conduct may not be able to take advantage of the principle. As Lord Wilberforce stated in Midland Bank Trust Co Ltd v Green [1981] AC 513 at 528, the bona fide requirement is “a separate test which may have to be passed even though absence of notice is proved”.250 In practice, however, the bona fide criterion does not appear to operate separately, but is subsumed under the part of the principle that requires a purchaser to take without notice. [2.465]  The legal interest holder must be a bona fide purchaser for value. The reason for the

inclusion of the words “for value” is because the technical legal meaning of “purchaser” does not necessarily show that value has been given. In discussing estates at [2.180] and [2.190], a distinction was drawn between words of limitation in a grant, which define the nature of the estate granted, and words of purchase, which designate the person who is the grantee. The person named as the grantee by the words of purchase is the “purchaser”. A purchaser in this technical sense is simply a person who takes by way of grant, whether pursuant to a gift or sale. “For value” means consideration in money, money’s worth or marriage. It does not mean full value.251 Money’s worth means services, shares, other land or any form of consideration

of the future advances as against a second mortgagee where it had notice of the second mortgage before it made the new advances. The rule applies equally to Torrens land. The principle of indefeasibility does not exclude the operation of equitable doctrines such as this: see, for example, Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293; Philos Pty Ltd v National Bank of Australasia Ltd (1976) 5 BPR 11,810; Oversea-​ Chinese Banking Corp Ltd (OCBC) v Malaysian Kuwaiti Investment Co (MKIC) [2003] VSC 495. See also Olympic Holdings Pty Ltd v Windslow Corporation Pty Ltd (2005) 35 WAR at [108]–​[115] (per EM Heenan AJA). 247 See generally, Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), pp 360–​361. 248 See, for example, Mills v Renwick (1901) 1 SR (NSW) (Eq) 173; Re Nisbet and Potts’ Contract [1905] 1 Ch 391; Wilkes v Spooner [1911] 2 KB 473; Barclays Bank plc v Boulter [1998] 1 WLR 1 at 8; Russo v Bendigo Bank Ltd [1999] 3 VR 376 at 386 per Ormiston JA; Oversea-​Chinese Banking Corp Ltd (OCBC) v Malaysian Kuwaiti Investment Co (MKIC) [2003] VSC 495 at [96]. 49 Corser v Cartwright (1875) LR 7 HL 731. See generally, Heydon, Leeming and Turner, Meagher, Gummow and 2 Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), p 361. 50 See also Corbett v Halifax Building Society plc [2003] 1 WLR 964 at 979. 2 51 Bassett v Nosworthy (1673) Rep Finch 102; 23 ER 55. 2 [2.465]  97

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in the contractual sense.252 Marriage will only suffice as “value” with respect to a future marriage.253 Consideration stated to be for natural love and affection of a stated person or persons does not constitute “value” for this purpose.254 Taking a legal estate without notice [2.470]  Where a purchaser simultaneously provides the consideration and obtains the legal

estate, and does so without notice of a prior equitable interest, he or she is not bound by that prior interest. The position is more complex where the dates of the payment of consideration and of the taking of the legal estate are not the same. The general rule is that the purchaser must not have notice at the date he or she furnishes the consideration. If a purchaser has no notice at the time of payment of the consideration and this lack of notice continues until the date of the acquisition of the legal estate, the purchaser is clearly not bound by the prior equity.255 The position of a purchaser who pays the purchase moneys, then receives notice of a prior equity and then takes the legal interest, may be different. It seems that a purchaser who pays the purchase moneys without notice of a prior equitable interest and acquires the legal estate at a later time and after acquiring notice, is protected, provided the conveyance of the legal estate is not in breach of trust.256 If the purchaser knows of a breach of trust, acquisition of the legal estate does not protect him or her. Even where the purchaser does not know of the breach of trust, but the grantor has acted in breach of trust, acquisition of the legal estate may not provide protection.257 [2.475]  The situation often arises where a person originally intends to take only an equitable

estate, but subsequently seeks to get in the legal estate upon discovering that a prior equitable estate exists, of which he or she had no notice at the time of taking the later equitable estate. The person gets in the legal estate pursuant to a separate transaction from the one under which he or she acquired the equitable estate. The aim is to acquire a title not subject to the prior equitable interest. This situation involves the doctrine of tabula in naufragio (“the plank in the shipwreck”): see [7.105]–​[7.110]. In a situation such as that described, provided the conveyance of a legal estate does not constitute a breach of trust by the grantor, the person taking the legal estate acquires a title which is not subject to the prior equitable interest.258 Without acquisition of the legal estate, the rule of qui prior est tempore potior est jure259 would usually have resulted in loss of priority to the earlier equitable estate. The difficult question is as to when it will be considered that there has been a breach of trust. In Mumford v Stohwasser (1874) LR 18 Eq 556 a lessee granted an equitable sublease

52 2 253 254 255

For example, satisfaction of an existing debt: Thorndike v Hunt (1859) 3 De G & J 563; 44 ER 1386. Attorney-​General v Jacobs Smith [1895] QB 341. Goodright Humphreys v Moses (1774) 2 Wm Bl 1019; 96 ER 599. See, for example, Pilcher v Rawlins (1872) LR 7 Ch 259. This is so even if the purchaser takes from a trustee selling in breach of trust. 256 Saunders v Dehew (1692) 2 Vern 271; 23 ER 775; Blackwood v London Chartered Bank of Australia (1871) 10 SCR (NSW) Eq 56; (1874) LR 5 PC 92; Mumford v Stohwasser (1874) LR 18 Eq 556; Taylor v Russell [1892] AC 244; Bailey v Barnes [1894] 1 Ch 25; Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSWLR 273 at 282, where Windeyer J stated “it is a means of overcoming lack of priority between two competing entities by grasping the plank in the shipwreck”. Compare Wigg v Wigg (1739) 1 Atk 382; 26 ER 244. 257 See Mumford v Stohwasser (1874) LR 18 Eq 556; Bailey v Barnes [1894] 1 Ch 25. But cf Newcastle City Council v Kern Land Pty Ltd at 282–​83, where Windeyer J expressed the opinion that this view seemed wrong. 258 See, for example, Bailey v Barnes [1894] 1 Ch 25. 59 He who is first in time has the strongest claim in law. 2 98 [2.470]

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and subsequently, as security for a loan of money to him, granted an equitable mortgage by deposit of title deeds to the defendant. At the time of taking his equitable interest, the defendant had no notice of the earlier equitable interest. Upon discovering its existence, the defendant, not wishing to be bound by the earlier interest, procured a legal mortgage in his favour from the lessee. It was held, however, that the defendant could not succeed on the basis of his acquisition of the legal estate; the lessee was said to be a trustee for the equitable sublessee and had acted in breach of trust: see [7.105]. The concept of a trustee is applied in a wide sense and it may be that where a legal interest holder creates an equitable interest, he or she will be considered a trustee for the equitable interest holder while he or she retains the legal interest.260 It appears that the person getting in the legal estate where the conveyance involves a breach of trust by the grantor will be defeated whether or not he or she knew the conveyance was in breach of trust. On the other hand, it seems that the grantor must know the grant was in breach of trust in order for the exception to apply.261 In order for the breach of trust to defeat the plea of the acquisition of the legal estate, the trust must not be in favour of some third party unconnected with the proceedings. It must be in favour of the person against whom the legal estate is set up. In Taylor v Russell [1891] 1 Ch 8 (CA); [1892] AC 244 (HL(E)) Walker, who held the legal estate as trustee for particular beneficiaries, entered into a legal mortgage. Apparently having forgotten about the mortgage, Walker subsequently purported to convey the legal fee simple free of encumbrances to T. T thereby acquired an equitable fee simple. T then created equitable mortgages, first, in favour of the plaintiff and, secondly, in favour of the defendant. Neither the plaintiff nor the defendant had knowledge of the original legal mortgage when taking their interests and the defendant was unaware of the plaintiff’s interest at the time he took his mortgage. Upon discovering the existence of the plaintiff’s interest, the defendant arranged for the legal mortgagees to re-​convey the legal estate to Walker and then procured a conveyance of the legal estate from Walker to himself. The plaintiff’s action to establish the priority of his mortgage over that of the defendant was unsuccessful. The legal estate obtained by the defendant entitled him to priority over the first equitable mortgage. The plaintiff argued that Walker’s actions constituted a breach of trust vis-​à-​vis the beneficiaries under the original trust. While not deciding whether or not such a breach was present, the House of Lords, affirming the decision of the Court of Appeal, took the view that even if such a breach were proved, it was not a breach of trust which would aid the plaintiff’s case. Fry LJ in the Court of Appeal stated (at 28): a plaintiff cannot rely on some breach of trust towards third persons who assert no title to the estate and take no part in the litigation. The plaintiff, to deprive the defendant of the benefit of the legal estate, must rely on an equity of his own, not on that of a stranger. [2.480] Sometimes a person may intend to acquire the legal estate from the beginning as

part of one transaction, but for some reason acquires only an equitable interest at the time of paying the purchase moneys. If the person gains notice of a prior equitable interest after taking an equitable interest, but before acquiring the legal estate, a question arises as to whether the

60 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 392. 2 261 Mumford v Stohwasser (1874) LR 18 Eq 556 at 563 per Jessel MR. See also Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 391–​392. But cf Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSWLR 273. [2.480]  99

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fact that the grantor has acted in breach of a trust in conveying to him or her will destroy the protection afforded by acquisition of the legal estate in the same manner as protection is lost in the true tabula doctrine. Although the authorities do not appear to distinguish between the tabula situation and the continuous transaction, it has been argued that the legal interest holder may retain the protection if he or she did not know of the trust or any possible breach at the time of taking the equitable interest.262 One form of “tacking” in relation to mortgages comes within the tabula in naufragio doctrine.263 [2.485]  In the situations described at [2.450]–​[2.480], a person must take the legal estate

before any protection against prior equitable interests is afforded. In one instance, however, a purchaser without notice may obtain priority over the holder of a prior equitable interest even before acquisition of the legal estate. This is the case where the subsequent purchaser who has taken an equitable interest has a superior right to call for the legal estate. This appears to be a special example or an extension of the tabula principle.264 Such a superior right exists where it can be proved that the legal estate is held upon a trust for the second purchaser.265 For example, if the subsequent purchaser arranges that the conveyance be made to a third party and not himself, on the basis that the third party is to hold on trust for him, and neither the purchaser nor the trustee had notice of a prior equitable interest, the interest of the subsequent purchaser prevails.266 In these circumstances, the subsequent purchaser has a superior right to call for the legal estate. In short, a better right to call for the legal estate is equated with possession of the legal estate. The issue of the exact circumstances required in order for a superior right to call for the legal estate to exist has been discussed in a number of decisions.267 It appears that there must be some positive act by the legal estate holder “operating in favour of the claimant”. An express declaration of trust is a clear example. In a mortgage situation where the mortgagor creates two equitable interests, the holder of the subsequent equitable interest may be able to claim a superior right to the legal estate if, for example, the legal estate holder, the mortgagee, had lodged the title deeds with him or her or had joined in the conveyance of the equitable interest to him or her.268 It has been argued that this principle was only intended to operate where the dispute is between two equitable mortgagees as it is (when confined in this way) an extension of the tabula in naufragio rule.269 The extension to other types of competing equitable claims seems to provide an unnecessary and unacceptable exception to the bona fide purchaser rule.

262

Saunders v Dehew (1692) 2 Vern 271; 23 ER 775; Dodds v Hills (1865) 2 H & M 424; 71 ER 528 –​both discussed in Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 393. 263 Tacking generally is discussed at [7.95]–​[7.115]. 64 See Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2 LexisNexis, Sydney, 2015), p 334; Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 394. 65 Stanhope v Earl Verney (1761) 2 Ed 81; 28 ER 826 at 85 (Ed), 828 (ER) per Lord Henley LC. 2 66 Stanhope v Earl Verney (1761) 2 Ed 81; 28 ER 826 at 85 (Ed), 828 (ER) per Lord Henley LC. 2 67 Wilkes v Bodington (1707) 2 Vern 599; 23 ER 991; Taylor v London & County Banking Co [1901] 2 Ch 231; 2 Assaf v Fuwa [1955] AC 215. 68 Wilkes v Bodington (1707) 2 Vern 599; 23 ER 991; Taylor v London & County Banking Co [1901] 2 Ch 231; 2 Assaf v Fuwa [1955] AC 215. 269 See Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), p 334, where it is argued that even this extension of the tabula in naufragio principle is unacceptable. 100 [2.485]

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Notice [2.490] As set out at [2.450] and [2.470], the holder of a legal estate must take without

notice of the prior equitable interest in order to take priority over it. Notice may be actual, constructive or imputed. These categories of notice were recognised by the common law and are now set out in statutory form in all States except Western Australia.270 The statutory provisions were adopted from the Conveyancing Act 1882 (UK).271 Section 199 of the Property Law Act 1958 (Vic), for example, provides:

(1) A purchaser shall not be prejudicially affected by notice of any instrument, fact or thing unless–​



(a) it is within his own knowledge, or would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him; or



(b) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his legal practitioner or other agent, as such, or would have come to the knowledge of his legal practitioner or other agent, as such, if such inquiries and inspections had been made as ought reasonably to have been made by the legal practitioner or other agent.



(2) This section shall not exempt a purchaser from any liability under, or any obligation to perform or observe, any covenant condition, provision or restriction contained in any instrument under which his title is derived, mediately or immediately; and such liability or obligation may be enforced in the same manner and to the same extent as if this section had not been passed.



(3) A purchaser shall not by reason of anything in this section be affected by notice in any case where he would not have been so affected if this section had not been passed.



(4) This section shall apply to purchases made either before or after the commencement of this Act.

The statutory provisions do not alter the kinds of notice recognised by the common law. The case law on what constitutes each type of notice remains relevant. The statutory provisions simply ensure that no new form of notice can be created except by statute. An issue that has arisen in several cases is that of aggregation of knowledge where, for example, the purchaser is a company and various officers of the company have been involved in the purchase. Similarly, aggregation of knowledge may be relevant where an agent has acted for the purchaser. Generally the courts appear to have accepted that knowledge of a company’s officers and agents can be aggregated for the purpose of determining an overall level of knowledge or notice.272 270

Conveyancing Act 1919 (NSW), s 164; Property Law Act 1958 (Vic), s 199; Property Law Act 1974 (Qld), s 346; Law of Property Act 1936 (SA), s 117; Conveyancing and Law of Property Act 1884 (Tas), s 5. Note that in some jurisdictions a purchaser is not deemed to have notice of matters kept in various registers relating to corporations: see, for example, Conveyancing Act 1919 (NSW), s 164(1A) (registers or lists kept by the Australian Securities and Investments Commission); Conveyancing and Law of Property Act 1884 (Tas), s 5(1A) (register under s 265 of the Corporations Act 2001 (Cth) and instruments or register of charges under s 271 of the Corporations Act 2001). 271 The relevant English provision is now contained in s 199 of the Law of Property Act 1925 (UK), but note the limited effect of this provision in view of wide-​ranging changes to English property law: see Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), pp 192–​195. 72 See, for example, Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; Oversea-​Chinese Banking Corp Ltd 2 (OCBC) v Malaysian Kuwaiti Investment Co (MKIC) [2003] VSC 495; cf Macquarie Bank v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133 at 145 discussed at [4.225], where the Victorian Court of Appeal was not prepared to aggregate the knowledge of a number of persons to create a notional dishonest intention. [2.490]  101

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Actual notice [2.495] Actual notice means actual knowledge of the relevant facts. Although rumours of

a fact do not amount to notice of the fact, clear and relevant information relating to the property –​even if obtained from a third party to the transaction –​cannot be ignored.273 The dividing line between what will and will not constitute notice of a fact may sometimes be difficult to draw accurately. A person is not necessarily deemed to have actual knowledge of facts of which he or she may have become aware in transactions preceding the transaction in question, but have since forgotten.274 Where the purchaser is a trustee who acts for more than one trust, he or she is not affected with notice of facts which were discovered by the trustee while administering another trust.275 Once a person has actual notice of a prior interest, he or she can only take free of the interest if all reasonable care has been taken to independently ascertain that the prior interest has been expunged.276 It is insufficient to rely on the assurance of a vendor or mortgagor who created the earlier interest.277 A  failure to make reasonable inquiries to verify the discharge of earlier equitable interests means the actual knowledge cannot be negated.278

Constructive notice: general [2.500] Constructive notice comprises notice of matters which would have come to the

purchaser’s attention if the purchaser had made all the usual and proper inquiries and inspections. Thus, a purchaser of a legal estate is only able to plead lack of constructive notice if he or she has made all reasonable inquiries and has found nothing to indicate the presence of a prior, existing equitable interest. In general, a purchaser should make such inquiries as a reasonable purchaser would make in like transactions.279 This includes making further inquiries about a particular fact if a reasonable person with due regard to his or her interest would have done so. The deeds registration system sets up a scheme pursuant to which instruments creating or affecting interests in general law land may be registered.280 It is reasonable to expect that a purchaser of an interest in general law land will search the deeds register to determine if there are any subsisting interests in the land of which he or she may otherwise have been unaware.

273 274

Compare Williamson v Bars (1900) 21 NSWLR (Eq) 302 with Lloyd v Banks (1868) 3 Ch App 488. Brennan v Pitt Son and Badgery (1898) 20 NSWLR (Eq) 179. The matter would be given close scrutiny and the “forgetting” would have to be genuine: Re Montagu’s ST [1987] Ch 264 at 284; El Ajou v Dollar Land Holdings Plc [1993] 3 All ER 717 at 743. There is some authority in dicta for the proposition that actual notice of a matter once known, even if allegedly forgotten, remains actual notice of that matter: see, for example, Eagle Trust Plc v SBC Securities Ltd [1993] 1 WLR 484 at 494; AON Pensions Trustee Ltd v MCP Pensions Trustees Ltd [2010] EWCA Civ 377 at [18]. See generally, Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 114. 275 Trustee Act 1925 (NSW), s 62; Trustee Act 1958 (Vic), s 35; Trusts Act 1973 (Qld), s 69; Trustee Act 1936 (SA), s 34A; Trustees Act 1962 (WA), s 68; Trustee Act 1925 (ACT), s 62. There are no similar provisions in Tasmania or the Northern Territory. 276 Jared v Clements [1903] 1 Ch 428; Oversea-​Chinese Banking Corp Ltd (OCBC) v Malaysian Kuwaiti Investment Co (MKIC) [2003] VSC 495. 277 Jared v Clements [1903] 1 Ch 428; Oversea-​Chinese Banking Corp Ltd (OCBC) v Malaysian Kuwaiti Investment Co (MKIC) [2003] VSC 495. Compare IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 at [223]. 278 Oversea-​Chinese Banking Corp Ltd (OCBC) v Malaysian Kuwaiti Investment Co (MKIC) [2003] VSC 495 at [175]. 279 Bailey v Barnes [1894] 1 Ch 25. 280 See generally [2.600]ff.

102 [2.495]

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Thus, it has been held that a purchaser is usually deemed to have constructive notice of any interest, the existence of which could have been discovered by a search of the deeds register.281 In certain instances or transactions, however, a search of the deeds register is not considered necessary. For example, where a trustee conveys to beneficiaries who have become sui juris, such a search is considered unnecessary.282 There are provisions in some States which confine the requirement of the number and the extent of searches to be made. Generally these provisions affect persons who are purchasing from companies, executors or trustees for sale.283 Constructive notice and its parameters have given rise to considerable dispute. Apart from the specific matters mentioned above, what are the usual and proper inquiries that a purchaser should make? Basically, a purchaser’s duties fall into two main areas: first, the purchaser has a duty to inspect the land (see [2.505]) and, secondly, the purchaser has particular duties relating to the title documents: see [2.525].

Constructive notice: duty to inspect the land [2.505] In Barnhart v Greenshields (1853) 9 Moo PC 18; 14 ER 204 it was held that

possession of the land by a person other than the vendor is notice of the interest that the possessor has in the land.284 The following provides an example. A, the legal fee simple holder of Blackacre, enters into an agreement for a lease for four years in favour of B.  B thereby acquires an equitable interest in the land. B enters into possession pursuant to the agreement for lease. Subsequently, A sells the land to C and C becomes the holder of the legal fee simple. Even if C were unaware of the existence of B, C would be bound by B’s prior equitable tenancy. Reasonable inquiries by C would reveal that B was in possession under a tenancy agreement. A purchaser is always said to have constructive notice of the interest of a tenant in possession and, in fact, of the interest of a person in possession who holds possession pursuant to an arrangement other than a tenancy. Thus, if a person holds an equitable interest pursuant to an agreement for a lease or a contract of sale and is in possession of the land,285 any person who subsequently takes a legal interest in the land will be deemed to have notice of the prior equitable interest.286

281 282

Mills v Renwick (1901) 1 SR (NSW) (Eq) 173. See generally, Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), p 356; see also Re Ball (1890) 2 Ir 313; Mills v Renwick (1901) 1 SR (NSW) (Eq) 173. 283 A good summary of these statutory provisions can be found in Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), p 357. 84 See also [5.210]. 2 285 Query the position where a person is in possession of part of the land. In Ferrishurst Ltd v Wallcite Ltd [1999] Ch 355 the English Court of Appeal held that the overriding interest under s 70(1)(g) of the Land Registration Act 1925 of “the rights of a person in ‘actual occupation’, protected all the rights even where the person was only in possession of part of the premises”. The case concerned registered land and the Court of Appeal cautioned against aligning directly statutory “actual occupation” with the doctrine of notice: see [2.515]. The ramifications of the Ferrishurst case are discussed in Hill, “Overriding Interests: Occupation of Part of the Land” (2000) 63 MLR 113. Note that this principle from the Ferrishurst case has effectively been reversed by statute in England: see Sch 3, para 2 of the Land Registration Act 2002 (UK), the interest of an occupier in possession is only protected with respect to “land of which he is in actual occupation”. 86 Marsden v Campbell (1897) 18 LR (NSW) Eq 33; Short v Gill (1892) 13 LR (NSW) Eq 155. See generally, 2 Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), pp 115–​116.

[2.505]  103

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[2.510] Although occupation by a tenant is notice of the tenant’s interest and other rights

associated with the tenancy, it does not constitute notice of rights, such as an equity of rectification, which cannot be gleaned from the lease.287 Neither is a purchaser under a duty to investigate to whom the tenant pays his or her rent. The purchaser who does not make such inquiries is not fixed with constructive notice of any interest of the tenant’s landlord, who may not be the same person as the vendor.288 [2.515]  Generally, possession of the land by a person other than the vendor provides notice

of any equitable interest the possessor holds. The position is less clear where the vendor is in possession of the land but another person or persons are in possession with the vendor. In these circumstances, is the possession of the person without legal title “notice” of any beneficial interest he or she holds? The early view taken in Caunce v Caunce [1969] 1 WLR 286 was that the purchaser was not affected with notice of the interest of such a person unless the possession was clearly inconsistent with the title of the vendor. Thus, in Caunce v Caunce, where the husband and wife lived together on a property to which the husband held sole legal title, possession of the land by the vendor’s wife was not deemed to constitute notice of the equitable interest she held in the property. As Stamp J remarked (at 293): “[neither would the bank have been fixed] … with notice of the equitable interest of any other person who might also be resident on the premises, for example, the vendor’s father, his Uncle Harry or his Aunt Matilda”. However, subsequent English decisions have taken a broader view of constructive notice in these circumstances.289 Two of these cases, Hodgson v Marks [1971] Ch 892 and Williams and Glyn’s Bank Ltd v Boland [1981] AC 487, concerned land falling under the Land Registration Act 1925 (UK) and thus the bona fide purchaser rule and constructive notice per se were inapplicable. Rather, the question to be decided in those cases was whether the persons living with the legal title holder had an “overriding interest” against the purchaser of the legal title. The interest of a person in “actual occupation” was protected as an “overriding interest” under the Land Registration Act 1925 (UK).290 Nevertheless, the decisions have ramifications for the area of constructive notice. Although care must be taken, the type of occupation which gives rise to constructive notice of the rights of the occupier in unregistered land may arguably be similar to the type of occupation considered to be “actual occupation” and an overriding interest in registered land.291

287 288

Smith v Jones [1954] 1 WLR 1089. Compare Downie v Lockwood [1965] VR 257. Hunt v Luck [1902] 1 Ch 428. The “actual occupation” exception under Sch 3, para 2 of the Land Registration Act 2002 (UK) no longer includes the rights of any person in receipt of rents: see Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), p 207. 289 Hodgson v Marks [1971] Ch 892; Williams and Glyn’s Bank Ltd v Boland [1981] AC 487; Kingsnorth Trust Ltd v Tizard [1986] 1 WLR 783; see also Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566 at 587; [2010] FCAFC 91 at [73]. 290 Section 70(1)(g). See now Sch 3, para 2 of the Land Registration Act 2002 (UK). 91 See McNicol, “Constructive Notice of a Spouse in Actual Occupation” (1981) 13 MULR 226. See Ferrishurst 2 Ltd v Wallcite Ltd [1999] Ch 355, where the Court of Appeal made it clear that although the purpose of both doctrines was to protect the interest of the occupier, the method used to provide such protection in each case was different and care should be taken not to draw direct analogies: per Robert Walker LJ at 372. Compare the earlier view of Russell LJ in Hodgson v Marks [1971] Ch 892 at 931, where his Honour was “prepared to assume … that s 70(1)(g) of the Land Registration Act 1925 is designed only to apply to a case in which the occupation is such, in point of fact, as would in the case of unregistered land affect a purchaser with constructive notice of the rights of the occupier”. 104 [2.510]

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In both of these cases, the co-​occupation of the person with an equitable title (a lodger and a wife, respectively) with the legal title holder was held to be “actual occupation” by the co-​owner and thus an overriding interest enforceable against the subsequent holder of the legal title. In both decisions, disapproval with the statements of Stamp J in Caunce v Caunce was expressed.292 Lord  Wilberforce in the Williams and Glyn’s Bank Ltd case rejected the notion that a wife’s occupation was simply a “shadow” of her husband’s occupation and, more specifically, rejected the dichotomy drawn between “consistent” and “inconsistent” occupation in the Caunce decision. As his Honour asked rhetorically:293 How can it be said that the presence of a wife in the house, as occupier, is consistent or inconsistent with the husband’s rights until one knows what rights she has? … The only solution … is to read the paragraph for what it says. Occupation, existing as a fact, may protect rights if the person in occupation has rights.

Even when the spouse is absent from the property on a regular basis, constructive notice of his or her interest may still be attributed to a purchaser. In Kingsnorth Trust Ltd v Tizard [1986] 2 All ER 54 the land was unregistered and the issue of constructive notice was raised directly. The wife was separated from the husband, but returned to the matrimonial home on most days to care for the children. In these circumstances, the mortgagee was held to have constructive notice of her interest. The agent of the mortgagee had not inquired or inspected with sufficient diligence: first, the occupation of the children should have alerted the mortgagee to the possibility of a spouse; secondly, the husband had originally described himself as spouse and admitted to being married but separated; and thirdly, the time of inspection was set up by the husband.294 In an Australian case, Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266, where the land to which the husband held legal title was in the occupation of a builder constructing a house on the land, it was held that such occupation together with some other factors was sufficient to provide notice of the wife’s equitable interest held under a resulting trust. All these decisions suggest that purchasers (including mortgagees) of a legal title will have to take quite stringent precautions in order to avoid being subject to the rights of even intermittent occupiers who have prior equitable interests.295 Even in a case such as Kingsnorth Trust Ltd v Tizard [1986] 2 All ER 54, where the legal title holder deliberately tries to conceal the occupation of a person with an equitable interest and is successful in doing so, a purchaser may be held to have constructive notice of the interest of the occupier if the particular circumstances suggest that the purchaser should have made further inquiries. [2.520]  The post-​Caunce v Caunce [1969] 1 WLR 286 decisions demonstrate an awareness

of and a willingness to change what had amounted to an indirect gender bias of the law in favour of males. In the greater proportion of cases where a man and a woman are living together in a property where the legal title is held by only one of them, the man will be the

292

Hodgson v Marks [1971] Ch 892; [1980] 2 All ER 408 at 934–​935 (Ch) per Russell LJ, at 505 (All ER) per Lord Wilberforce 2. 293 Williams and Glyn’s Bank Ltd v Boland [1981] AC 487 at 506. Emphasis added. 294 See also Lloyds Bank Plc v Rosset [1989] Ch 350 (the wife who visited the premises each day while the premises were being renovated was held to be in “actual occupation” (reversed on another ground by the House of Lords [1991] 1 AC 107)); Abbey National Building Society v Cann [1991] 1 AC 56 (personal presence not required for “actual occupation” –​resident caretaker may be sufficient). 295 See Luxton, “Clandestine Co-​owners: An Occupational Hazard for Mortgagees? (1986) NLJ 771. [2.520]  105

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party holding the legal title. The person relying upon an equitable interest in the land and possession as a means of protecting that interest will be the woman. The woman’s claim to an equitable estate may be based on such matters as direct and indirect contributions to the purchase price and may in some instances be difficult to prove: see [9.55]–​[9.95] and [9.100]–​ [9.130]. The protection given to the holder of an equitable estate, even where the holder is in possession with the holder of the legal title, ensures that there is some means of retention of the interest against a bona fide purchaser even where the legal title holder purports to deal with the property as the owner of an unencumbered property.296 The holder of the equitable interest cannot, however, deliberately remain silent as to his or her rights when the property is sold or mortgaged and later attempt to claim an interest in the property under this rule against the purchaser or mortgagee.297

Constructive notice: duty to inspect the title documents [2.525]  The other main duty that a purchaser must attend to is an investigation of the title

documents. Where the law requires that the vendor produce a good chain of title to the land, a reasonable purchaser would search the documents in the chain. Thus a purchaser is said to have constructive notice of all the equitable interests which he or she would have discovered had a search been made of the vendor’s chain of title. In the absence of statutory provisions restricting necessary searches, a prudent purchaser would need to search all documents in the vendor’s chain of title going back to the original Crown grant. [2.530]  In all States except South Australia there are statutory provisions which attempt to

limit the searches required of a purchaser.298 In Victoria, for example, s 44(1) of the Property Law Act 1958 (Vic) provides that the vendor is only obliged to produce documents proving title for 30 years preceding the date of contract, providing the documents go back to a “good root of title”. A good root of title has been described as “an instrument of disposition dealing with or proving on the face of it … the ownership of the whole legal or equitable estate in the property sold, containing a description by which the land can be identified”.299 The most obvious example of a document showing a good root of title is a conveyance of the legal fee simple. Thus a purchaser only has a legal right to require production of documents in the chain going back 30 years providing the documents go back to a good root of title. A conveyance of the legal fee simple 28 years before the date of contract would not be considered to constitute compliance with s 44(1): the vendor is required to produce a document showing a good root

296 See McNicol, “Constructive Notice of a Spouse in Actual Occupation” (1981) 13 MULR 226 and cf the possibly weaker position of the holder of such an equitable estate under the Torrens system: see [4.95]. See also the protections a wife may receive under principles enunciated in cases such as Yerkey v Jones (1939) 63 CLR 649, Garcia v National Australia Bank Ltd (1998) 194 CLR 395 and Barnes v Addy (1874) 9 Ch App 244, discussed at [4.370]–​[4.375] and [7.160]–​[7.175]. 297 Bristol and West Building Society v Henning [1985] 1 WLR 778 at 781G–​782G; Equity and Law Home Loans v Prestidge [1992] 1 WLR 137 at 144H–​145B. 298 Conveyancing Act 1919 (NSW), s 53(1) (30 years); Property Law Act 1958 (Vic), s 44(1); Property Law Act 1974 (Qld), s 237(1) (30 years); Conveyancing and Law of Property Act 1884 (Tas), s 35(1) (20 years); Sale of Land Act 1970 (WA), s 22 (30 years). Presumably the 60-​year period insisted upon at common law in England is the relevant period for South Australia. Compare the position in England now: Law of Property Act 1969 (UK), s 23 (15 years). 299 Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [10.080], quoting from Re Lemon & Davies’ Contract [1919] VLR 481. 106 [2.525]

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of title which was made at least 30 years before the contract. The vendor must also, of course, produce any other documents in the chain of title from that date. In four States there are provisions such as s  44(6) of the Property Law Act 1958 (Vic) which reinforce the purchaser’s position by providing that a purchaser is not deemed to have notice of any matter which, if he or she had investigated title prior to the statutory period set out in s 44(1), he or she might have had notice (unless the purchaser had actual notice).300 It has been suggested that the same result may ensue in South Australia as a result of the general notice section.301 [2.535] The following example demonstrates the way in which these statutory provisions

operate to reduce the searches required of a purchaser and to limit the interests of which a purchaser is deemed to have constructive notice. Assume that there are six documents in the chain of title to Blackacre: document 1 is the Crown grant to X in 1860, document 2 is a conveyance of the legal fee simple from X to Y in 1920, document 3 evidences the creation of a restrictive covenant in favour of Z over Blackacre in 1922, document 4 is a conveyance of the legal fee simple interest from Y to P in 1940 and document 5 is a further conveyance of the legal fee simple from P to Q in 1950. In 2010, Q contracts to sell to R. Pursuant to s 44(1), Q produces as evidence of title the 1950 conveyance from P to himself. When the transaction is completed and R becomes the legal fee simple holder, pursuant to s 44(6), R would not be deemed to have constructive notice of the equitable interest, the restrictive covenant, in Z. In the absence of statutory provisions such as those discussed above, R would have been held to have constructive notice of Z’s interest. [2.540]  If a purchaser has actual or constructive notice of a particular document, he or she

will only be held to have constructive notice of the contents of the document if the document is one which necessarily affects title.302 It has been held that a purchaser has constructive notice of the contents of all the documents comprising the chain of title.303 (In the case where it has been statutorily provided that the vendor only has to produce documents going back for a particular time, the chain of title would for those purposes necessarily only include the documents within that time.) Where a vendor deliberately removes deeds from a chain of title, but prima facie the chain seems complete and satisfactory, thus giving the purchaser no reason to suspect their existence and no means of discovering their existence, this would appear to be unduly harsh for the purchaser. In Pilcher v Rawlins (1872) 7 Ch A 259 it was held that constructive notice should not be extended so far and that, in these circumstances, a purchaser is not deemed to have constructive notice of interests created by such deeds. [2.545]  If the purchaser fails to investigate the title at all or investigates the title for a shorter

period than the law requires, he or she has constructive notice of any interest which would

300

Conveyancing Act 1919 (NSW), s 53(3); Property Law Act 1958 (Vic), s 44(6); Property Law Act 1974 (Qld), s 237(6); Conveyancing and Law of Property Act 1884 (Tas), s 35(5). 301 See Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Australian Property Law (9th ed, LexisNexis, Sydney, 2013), p 419; Law of Property Act 1936 (SA), s 117. Query the Western Australian position. 02 Reeve v Berridge (1888) 20 QBD 523. See generally, Sykes and Walker, The Law of Securities (5th ed, Law 3 Book Co, Sydney, 1993), p 388. 03 Carter v Carter (1857) 3 K & J 617; 69 ER 1256. 3 [2.545]  107

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have been discovered had the search been properly undertaken.304 Thus, for example, if the purchaser discovers that the vendor does not have possession of all or some of the title deeds and does not inquire as to who holds them and in what capacity, the purchaser has constructive notice of the interest of any person who is holding the title deeds.305 However, if the purchaser inquires as to the whereabouts of the title deeds and receives a reasonable explanation, he or she will not be deemed to have constructive notice of the equitable interest of a person holding the deeds.306 A vendor who claimed he was too busy at the time of the transaction but would produce the deeds later was said to have provided a “reasonable” explanation for non-​production of the deeds.307 It has been argued that this is an exceptional rule which derogates from the usual principle of notice requiring the purchaser to make all usual and proper inquiries.308

Imputed notice [2.550] Imputed notice is notice acquired or deemed to be acquired by an agent of the

purchaser of the legal estate. If a purchaser employs an agent, such as a solicitor, any actual or constructive notice the agent receives is imputed to the purchaser.309 In order for notice to be imputed to the purchaser, knowledge of the fact must be brought to the agent’s attention in the course of the agency, and not while the agent is pursuing his or her own independent activities.310 The knowledge of an agent is not imputed to the purchaser if the thing of which the agent had notice comes from the agent’s own fraud.311 The common law position is that in order for the notice to be imputed to the purchaser, the knowledge need not have been acquired by the agent in the course of the particular transaction provided the knowledge is in the mind of the agent while he or she is engaged in the transaction in question.312 In New South Wales, Victoria, Queensland, South Australia and Tasmania this principle has been overturned by specific statutory provisions. For example, s 199(1)(b) of the Property Law Act 1958 (Vic) provides that a purchaser is only affected with notice if the knowledge or deemed knowledge is obtained by the agent in the course of the same transaction with respect to which a question of notice arises.313

304 305 306 307 308

309

310 311 312 313

Worthington v Morgan (1849) 16 Sim 547; 60 ER 987; Re Nisbet and Potts’ Contract [1905] 1 Ch 391. Worthington v Morgan (1849) 16 Sim 547; 60 ER 987. Hewitt v Loosemore (1851) 9 Hare 449; 68 ER 586. Hewitt v Loosemore (1851) 9 Hare 449; 68 ER 586. See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2018), pp 117, 1126–​1127. The reason for this rule may lie in the principle discussed in Oliver v Hinton [1899] 2 Ch 264 and Hudston v Viney [1921] 1 Ch 98: see [2.560]. Wyllie v Pollen (1863) 3 De GJ & S 596; 46 ER 767. See IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440, where it was unclear whether an agency existed between a solicitor and one of the parties to the action. It was held the fact that a solicitor is not paid (no retainer) for the work does not mean that the solicitor is not acting for the party within the meaning of s 199 of Property Law Act 1958 (Vic). R v Biggan; Ex parte Fry [1955] VLR 36. Schultz v Corwill Properties Pty Ltd (1969) 90 WN (Pt 1) (NSW) 529 discussed at [4.240]–​[4.245]. Compare Boursot v Savage (1866) LR 2 Eq 134. Brotherton v Hatt (1706) 2 Vern 574; 23 ER 973; Hargreaves v Rothwell (1836) 1 Keen 154; 47 ER 21. See Conveyancing Act 1919 (NSW), s 164(1)(b); Property Law Act 1974 (Qld), s 346(1)(b); Law of Property Act 1936 (SA), s 117(1)(b); Conveyancing and Law of Property Act 1884, s 5(1)(b). Compare the position in Western Australia, where there is no statutory provision to this effect. Imputed notice may not be as narrowly defined. See Brotherton v Hatt; Gerrard v O’Reilly (1823) 3 Dr & War 414; 61 ER 97 at 431 (Dr &

108 [2.550]

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Other principles [2.555] The discussion at [2.450]–​[2.550] demonstrates that, in a competition between a

prior equitable interest and a subsequent legal interest, the holder of the legal interest has priority over the holder of the equitable interest if he or she is a bona fide purchaser of the legal estate for value without notice of the equitable interest. There is, however, one instance where the purchaser of a legal estate who has notice of a prior equitable interest can take priority over the equitable interest.314 A purchaser of the legal estate for value without notice of prior equitable interests can give a good clear title to a purchaser of the legal title from him or her even though the latter has notice of the equitable interest. The rationale for such a rule appears to have been to ensure that the first purchaser can sell the land. There are exceptions to the principle set out in Wilkes v Spooner [1911] 2 KB 473:  first, a trustee who sells in breach of trust to a purchaser without notice, and then re-​acquires the legal title, holds the property on the trust again; and, secondly, a person who acquires a property by actual fraud cannot defeat the interest of the prior equitable interest holder by purchasing from a bona fide purchaser of the legal title without notice. [2.560]  It has been suggested that there is another priority rule affecting a conflict between a

prior equitable interest and a subsequent legal interest. In Oliver v Hinton (1899) 2 Ch 264315 the court took the view that the holder of a subsequent legal interest would lose priority to the holder of a prior equitable interest if the former were guilty of any fraud or gross negligence. It is suggested that in cases where fraud or gross negligence exists, the person holding the legal title would fail to gain priority anyway on the basis of the bona fide purchaser rule described above. For example, gross negligence in getting in and searching the title deeds would constitute constructive notice of any prior equitable interests. Although there appears little, if any, scope for this separate priority rule, the case of Oliver v Hinton sets it out clearly as an alternative. Where joint tenants take a legal estate and one joint tenant has notice of a prior equitable interest but the other joint tenant does not have such notice, it seems that both joint tenants are subject to the prior equitable interest.316

314 315 316

War), 104 (ER); Hargreaves v Rothwell (1836) 1 Keen 154; 47 ER 21; Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 389. As to the position of a company’s “notice” or “knowledge” where a director of a company acquires notice or knowledge, see David Payne & Co Ltd Re; Young v David Payne & Co Ltd [1904] 2 Ch 608; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; Macquarie Bank Ltd v Sixty-​Fourth Throne Ltd [1998] 3 VR 133. See generally, Dodds-​Streeton, Mind/​Knowledge of Company and What Outsiders Are Entitled to Assume (Paper delivered to Leo Cussen Institute, May 1996). See Kettlewell v Watson (1882) 21 Ch D 685 at 707; Wilkes v Spooner [1911] 2 KB 473. The case and its ramifications are discussed in Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 396–​397. Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 at 580; cf Myers v Smith (1992) 5 BPR 11,494. (This principle does not affect the rights of the joint tenants inter se, nor does it apply to co-​owners who are tenants in common as, in such a case, the interests are clearly separate.) Note that in Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 425 the High Court was faced with a different question, namely whether in the case of registered joint tenants of Torrens title land the fraud of one joint tenant rendered defeasible the title of the innocent other. In answering the question in the negative, the majority (French CJ, Hayne, Bell and Gageler JJ), said (at 442 [50]) “no analogy can usefully be drawn between the issue that must be decided in this case and any issue that can arise in the general law of real property”. See XXX (Chapter 4).

[2.560]  109

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Equitable estate and equitable estate [2.565]  As is the case in relation to legal interests, equitable interests take effect according

to their dates of creation. However, equity has taken a broader view than the law when determining the nature and extent of priority conflicts. Where, for example, A enters into a contract to sell property to B and subsequently contracts to sell to C, equity does not apply strictly the maxim nemo dat quod non habet and hold that C has no equitable interest. Equity has been prepared to view both B and C as having equitable interests in the land arising from their respective contracts of sale and to decide which party has the better interest.317 The application of the doctrine of conversion and the resulting imposition of a trust on the vendor is dependent on the contract being specifically enforceable.318 A purchaser under a contract which is not specifically enforceable may, nevertheless, still hold an equitable lien and thus have an equitable interest with which to enter a priority dispute.319 It has sometimes been stated that the use of the maxim qui prior est tempore potior est jure320 provides the answer to a dispute between the holders of equitable interests. This, however, is only partly true. Equity prefers to search for the “better equity” and to use priority of time to decide the issue only if the interests are equal. In Rice v Rice (1853) 2 Drew 73; 61 ER 646 Kindersley V-​C stated the rule in the following terms (at 78; 648): “As between persons having only equitable interests, if their equities are in all other respects equal, priority of time gives the better equity; or, qui prior est tempore potior est jure”. [2.570]  Kindersley V-​C in Rice v Rice (1853) 2 Drew 73; 61 ER 646 treated priority of time

as the decisive factor only if the equities were equal. This approach has been followed in some decisions,321 but in other judgments the order of the relevant matters for consideration appears to have been reversed.322 For example, in Heid v Reliance Finance Corporation Pty 317

Compare Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315, where the High Court has suggested, despite the long-​established principle emanating from Lysaght v Edwards (1876) 2 Ch D 499, that wholly or partly executory contracts for sale may not give rise to an equitable interest in the purchaser. See also Legione v Hateley (1983) 152 CLR 406 at 446 per Mason and Deane JJ; Kern Corp Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 at 192; Stern v McArthur (1988) 165 CLR 489 at 537 per Gaudron J, at 522 per Deane and Dawson JJ. 318 See Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; Chang v Registrar of Titles (1976) 137 CLR 177 at 189–​190; Aussie Invest Corp Pty Ltd v Pulcesia Pty Ltd (2005) 13 VR 168; Westpac Banking Corporation v Ollis [2008] NSWSC 824 at [17]–​[21]; Circuit Finance Australia Ltd v Panella 16 BPR 30,347 at 30,351–​30,352 [21]–​[22]; Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 at [78]. 319 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 332; Westpac Banking Corporation v Ollis [2008] NSWSC 824 at [23]; Slan v Edgerly (2008) 14 BPR 26,369 at 26,371–​26,373. See Harpum, “Relief Against Forfeiture and the Purchaser of the Land” (1984) Cambridge Law Journal 134 at 136–​138. 320 He who is first in time has the strongest claim in law. 21 See, for example, the judgment of Mason and Deane JJ in Heid v Reliance Finance Corporation Pty Ltd (1983) 3 154 CLR 326 at 339. See also Performance Capital Mortgage Pty Ltd v Motive Finance Leasing Pty Ltd (2010) 15 BPR 29,267 at 29,271; Mentech Resources Pty Ltd v MCG Resources Pty Ltd (2012) 188 LGERA140 at 153 [40]; Barlin v Westpac Banking Corporation (2012) 16 BPR 30,671 at 30,679 [31]; Champion Homes Sales Pty Ltd v JKAM Investments Pty Ltd [2014] NSWSC 952 at [87]. 22 Abigail v Lapin [1934] AC 491; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 3 546; Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 333 per Gibbs CJ; Person-​To-​Person Financial Services Pty Ltd v Sharari [1984] 1 NSWLR 475 at 746–​747; CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd (2008) 65 ACSR 650 at [33]; Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174 at 190 [91]–​[93] per Gleeson JA (Meagher and Leeming JJA agreeing). See also Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489 at 499 [32], where Bryson AJ said that in regard to the enquiry as to the better equity, “priority in time is usually by far the most important circumstance and governs the question unless displaced”. 110 [2.565]

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Ltd (1983) 154 CLR 326323 Gibbs CJ, in the course of deciding a dispute between equitable interest holders, although quoting with approval the formulation of Kindersley V-​C in Rice v Rice, remarked:324 In the present case, the interest of the appellant was first in time. The question therefore is whether his conduct … has the consequence that [the holder of the second equitable interest] has the better equity, and that the appellant’s interest should be postponed.

It is doubted whether the order of consideration of these relevant matters is of practical importance in the resolution of individual cases. The important issue is to determine the means by which the courts have decided if “the equities are equal”. [2.575] In Rice v Rice (1853) 2 Drew 73; 61 ER 646 Kindersley V-​C took the view that,

in looking at the relative merits of the parties, the court must direct its inquiries to three matters:  first, the nature and condition of the respective equitable interests; secondly, the circumstances and manner of acquisition; and, thirdly, the whole conduct of the parties. The plaintiff conveyed the legal estate to X. He gave the title deeds to X and a receipt stating that he had received the purchase price. In fact, the purchase price had not been paid and thus the plaintiff had an equitable vendor’s lien over the land. Subsequently, X created an equitable mortgage in the defendant by way of deposit of title deeds. The court found nothing in the differing nature of the interests to distinguish them. In considering the conduct of the parties, however, the court took the view that the plaintiff’s conduct in handing the title deeds to X and in signing the receipt which stated that all purchase moneys had been paid, had armed the purchaser X with the power to deal with the estate as an absolute legal and equitable owner. The equitable mortgagee was blameless and entitled to assume in the circumstances that X was the unencumbered owner of the property. The fact that the defendant had possession of the title deeds was considered a factor in his favour but the court was careful to make it clear that the possession of title deeds does not in every case confer priority. A party may be in possession of the title deeds under such circumstances that no advantage is conferred.325 In subsequent decisions, the emphasis has been placed on the third criterion set out by Kindersley V-​C; that is, the conduct of the parties. It appears that distinctions between different types of equitable interests (eg, an equitable fee simple and an equitable mortgage) are unlikely alone to provide a solution in any dispute and that the criterion concerning circumstances and manner of acquisition, while important, is usually dealt with under the more general criterion of “conduct of the parties”.326 Although theoretically the conduct of both parties is relevant, in a practical sense concentration upon the conduct of the holder of the first equitable interest holder is inevitable. In the absence of any act or omission by the first equitable interest holder, he or she will win the dispute on the basis of priority of time. The conduct of the holder of the second equitable interest may be directly relevant if an act or omission on the part of the first holder is demonstrated. It may act as a counterbalance in “weighing” the relative merits of the equities when the court is required to answer the question as to whether there is any factor making it inequitable for the first equitable interest holder to rely on priority of time. Also, the conduct

23 3 324 325 326

Note that this case concerned Torrens land. Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 333. Rice v Rice (1853) 2 Drew 73; 61 ER 646 at 82 (Drew), 649 (ER). But see [2.580]ff. [2.575]  111

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of the holder of the later equitable interest might be relevant to the process of weighing the competing merits where the holder of the earlier equitable interest has actually paid or performed the promised consideration, but the holder of the later interest has taken that interest under an executory contract and has therefore not yet parted with the price.327 Despite the emphasis on the conduct of the holder of the first equity, Mason and Deane JJ in the High Court decision of Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 reiterated the basic Rice v Rice test and the need to determine if the “equities are equal” by comparing fully the interests of each party. In AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1Qd R 306 the Queensland Court of Appeal also emphasised the need to examine the conduct of both parties. However, their Honours went on to say (at 323 [36]) that in the search for the better equity it is “legitimate to determine the worse of the equities in order to establish the better”. This requires the identification of both meritorious and unmeritorious conduct. In this way the court, like Mason and Deane JJ in Heid, was able to give predominant significance to the disentitling conduct of the holder of the prior equitable interest, while remaining faithful to the Rice v Rice formulation of the priority rule.328 [2.580]  What conduct is considered “displacing” or “postponing” conduct? What is an act

or omission which will lead to the holder of the first equitable interest being postponed to the holder of a subsequent equitable interest? In Circuit Finance Australia Ltd v Panella (2011) 16 BPR 30,347 at 30,349–​30,350 [13], Pembroke J emphasised that: Mere unfairness in outcome is irrelevant unless there is also some tangible conduct by the holder of the first interest which caused the holder of the later interest to act on a false premise. This is why, in such a case, the conduct of the holder of the first interest is often described as “postponing” or “disentitling” conduct. It is not sufficient to point to the eventual outcome and contend that it is unfair. It might well be so by some moral standard. But unfairness of the outcome is not a reason for departing from well-​established legal principle. The only relevant question is whether the supposedly unfair result is the consequence of some causative act, neglect or default by the [holder of the first interest].

The facts of Rice v Rice (1853) 2 Drew 73; 61 ER 646 provide an example of where the holder of the first equitable interest was found to have committed postponing conduct by arming a third party “to go into the world under false colours”. The acts of the holder of the first equitable interest enabled a third party to present himself to the holder of the later equitable interest as the unencumbered owner of the fee simple. A similar “arming” process may be said to arise where the conflict is between two equitable mortgagees and the first mortgagee is entitled under the agreement to get in the title deeds from the mortgagor but has failed to do so. By leaving the title deeds with the mortgagor, the first mortgagee has

327

328

See Woolworths Ltd v About Life Pty Ltd (2017) 18 BPR 36,983 at 37,023 [190], where Emmett AJA appeared to take this factor in account despite stating that the equities were equal in the sense that neither party had acted unconscionably or inequitably and neither has been guilty of fraud, unfairness, negligence or wrongful creation of assumptions. AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1 Qd R 306 is discussed in [5.200]. Note that the court did have regard to the conduct of the holder of the subsequent equitable interest. However, because of the unusual facts of the case, the acts and omissions of the holder of the subsequent equitable interest that were the subject of the court’s scrutiny related to the period before (and not after) the holder of the prior equitable interest took its interest: see at 626–​324 [38]–​[40]. This is because the holder of the subsequent equitable interest also held a legal interest that pre-​existed the creation of the first equitable interest. In this way the case conforms to the theme of awarding priority to the earlier interest except where the holder of that interest has been guilty of postponing conduct.

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enabled the mortgagor to hold himself or herself out to the second mortgagee as the holder of an unencumbered fee simple.329 Similarly, a first equitable mortgagee who takes possession of the title deeds but returns them to the mortgagor and fails to press for their return may be postponed to a second equitable mortgagee who has taken all the reasonable precautions.330 Fraud or gross negligence of types other than those described above on the part of a first equitable interest holder may lead to the postponement of the earlier interest in favour of the later one.331 The cases in which postponing conduct has been held to have occurred have routinely involved conduct by the holder of the earlier equitable interest that led the holder of the later equitable interest to take its interest in the mistaken belief that the earlier interest did not exist. However, it appears that postponing conduct can extend beyond conduct that leads to the creation of the later interest. In Australian Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd (2017) 18 BPR 36,683 the New South Wales Court of Appeal said:332 Whichever of the rationales be accepted as the basis for the principles as to the resolution of priority disputes between competing equitable interests, those principles seem to me better served (and certainly not undermined) by the recognition that disentitling conduct includes conduct leading to a failure by a subsequent interest-​holder to protect its pre-​existing rights, and is not limited to situations in which an act or omission of the earlier interest-​holder contributes to an assumption leading to the creation or acquisition of the later equitable interest.

The facts of this case were unusual and involved the competing interests of the grantee of a call option (L)  and those of an equitable mortgagee (A). The call option was granted to L (a developer) by S, the purchaser under an uncompleted contract for the sale of the land, in relation to a development agreement between S and L. The development agreement was entered into with L some months before S entered into a loan agreement with A to provide funds that would allow S to complete its purchase. That loan agreement provided for the grant of a mortgage by S to A over the relevant land to secure that advance and other borrowings unconnected with the land over which L had development rights. Although the development agreement was entered into before well before completion of S’s purchase, the call option only gave rise to an equitable interest in L at some point following completion of the sale to S. By contrast, A’s mortgage gave A an equitable interest at the time of completion of S’s purchase.333

329 See, for example, Farrand v Yorkshire Banking Co (1888) 40 Ch D 182. Attention must be paid to common conveyancing practice here. A mortgagee who takes a first mortgage (albeit equitable) should take possession of the title deeds to protect his or her security. However, where a legal mortgage is already in existence, the holder of a first equitable mortgage has no right to possession of the title deeds and thus a failure to obtain them is not postponing conduct. Similarly, a purchaser under a contract of sale does not have a right to possession of the title deeds between contract and settlement dates. 330 Waldron v Sloper (1852) 1 Drew 193; 61 ER 425. A recent “arming” case that did not involve possession of the title deeds (or, as it related to Torrens title land, the certificate of title) is Dia v Liu [2018] VSC 189. The purchaser recorded in an uncompleted contract sale was “[L]‌or nominee”. D had provided a one-​third share of the deposit and was seeking the enforce her earlier equitable purchaser’s lien against the later equitable interest of R, L’s nominee as purchaser. The Court found that: “Although [D] did not arm [L] with the power to deal with the land as owner by, for example, arming him with the title deeds, she did arm him with the ability to deal with the land as purchaser by nominating a person to whom the land was to be transferred. Because [D] had permitted [L] or a nominee to be named as purchaser, it was reasonably foreseeable that he would create a later equitable interest in [the land]”: at [117]. R’s later equitable interest thus had priority over D’s earlier equitable interest. 331 Taylor v Russell [1892] AC 244. 332 (2017) 18 BPR 36,683 at 36,729 [256] (emphasis in original). 333 See the “one transaction” principle in notes 337–​339 and accompanying text. [2.580]  113

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Accordingly, A’s equitable mortgage was the earlier in time than L’s equitable interest under the call option despite the order in which the respective agreements were negotiated and entered into. However, A was held to have been guilty of postponing conduct as against L in the period after L entered into the development agreement and before L’s equitable interest actually arose. A had created in the mind of L the impression that a new development agreement would be negotiated with L before completion of S’s purchase that would leave L no worse off than if A’s mortgage were not granted. The false premise on which L operated meant that it did not act to protect its interest under the development agreement while there was time to do so, for example by exercising its contractual rights under the option to substitute itself as purchaser of the land instead of S and to seek its own finance rather than the unfavourable finance (from L’s perspective) provided by A to S.334 Although L was not misled into acquiring its interest by A’s conduct –​because the call option was granted before A appeared on the scene –​A’s conduct induced L not to protect its later interest as against A’s earlier one when L might have done so. However, as stated previously, the facts of Australian Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd were usual. No doubt the majority of postponing conduct cases will continue to involve acts and omissions relating to the acquisition of the later interest. [2.585] Attention to usual conveyancing practices may be relevant to the issue of what is

and what is not “displacing” conduct. For example, the handing over of title deeds and a signed conveyance acknowledging payment to his independent solicitor by a vendor for the purpose of allowing the solicitor to complete the transaction and take the money from the purchaser on his behalf is a common conveyancing practice. If the solicitor acted fraudulently and the consequence was a dispute between the vendor’s equitable lien and a subsequent equitable interest, the vendor’s conduct would not necessarily be considered “displacing”, that is, conduct pursuant to which it was reasonably foreseeable that a second equity could be created.335 [2.590]  Despite any postponing or displacing conduct of the first equitable interest holder,

a subsequent equitable interest holder who knew of the earlier interest could not have been “misled” by the conduct and could not, therefore, gain priority over the earlier interest.336 Further, as Professor Butt stated, “[i]‌n determining priority equity looks to commercial realities”337 and in some cases this may result in what appears at first sight to be the earlier interest losing priority despite a lack of displacing conduct. For example, a person borrows money and grants an equitable mortgage to the lender, X, over particular property he owns and over property to be acquired by him in the future. If the borrower subsequently purchases property with loan moneys provided by another lender, Y, and grants an equitable mortgage to Y, the courts have taken the view that Y’s interest prevails over that of X.338 The reasoning is that the borrower’s purchase of the land and Y’s mortgage over it are in reality one

34 (2017) 18 BPR 36,683 at 36,729–​36,730 [258]–​[260]. 3 335 Compare the facts of Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326. See generally [5.170]. 336 IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550; Moffett v Dillon [1999] 2 VR 480; Perpetual Trustee Company Ltd v Smith (2010) 186 FCR 566; [2010] FCAFC 91. See [5.105]–​[5.120] and [5.205]. 337 Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 712. 338 Abbey National Building Society v Cann [1991] 1 AC 56; Composite Buyers Ltd v State Bank of New South Wales (1991) 3 ACSR 196; Sogelease Australia Ltd v Boston Australia Ltd (1991) 26 NSWLR 1. See Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 712. 114 [2.585]

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transaction: the borrower, therefore, only ever acquires the equity of redemption and thus X’s mortgage can only be over that interest.339 [2.595] Where the holder of the first equitable interest is a beneficiary under a trust, the

priority rules may vary. Where the trustee deals with the title deeds in a fraudulent or negligent manner and another equitable interest is created, the beneficiary does not lose priority because of the conduct of the trustee.340 That is, the beneficiary’s equitable interest is not tainted with the reprehensible conduct of the trustee. The underlying reason for this principle is that a beneficiary, unless entitled to call for the legal estate, is not entitled to possession of the title deeds. It would be unfair, therefore, to penalise a beneficiary not entitled to possession of the title deeds for misuse of the deeds by the trustee. Where the reprehensible conduct of the trustee concerns a failure to get in the title deeds, the position is different. The beneficiary’s interest falls in with that of the trustee and the beneficiary is in no better position than that of his or her trustee.341

Registration of deeds system: effect on priorities Background [2.600] The system of private conveyancing, unaffected by statutory modifications, failed

to provide a simple, certain and secure method for the transfer of interests in land.342 The purchaser’s inability to discover and verify, in a simple and inexpensive manner, the preceding dealings relating to the land, created the main problem. It was thought that a central, complete and publicly available register containing abstracts or memorials of all dealings relating to the land would simplify the searching procedure. The first legislative attempts towards alleviating the problem in the Australian jurisdictions involved the creation of a facility for the registration of deeds and other documents concerning dealings with interests in land. In New South Wales, the Registration of Deeds Act 1825 (NSW) was passed and registration of deeds legislation was passed in all other States.343 The

339

Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 712. See, however, Ng, “Built on Quicksand: The Purchase Money Security under the General Law” (2006) 80 ALJ 53, where it is argued that the broad principle accepted in Sogelease Australia Ltd v Boston Australia Ltd (1991) 26 NSWLR 1 is not supported by authority. 340 Shropshire Union Rlys & Canal Co v The Queen (1875) LR 7 HL 496. See Anderson, “Old Meets New: The Rule in Shropshire’s Case and the Torrens System” (2014) 4 Property Law Review 95 at 99–​102. 341 See Walker v Linom [1907] 2 Ch 104, discussed at [2.425]. This distinction has been criticised (see Coleman v London County & Westminster Bank Ltd [1916] 2 Ch 353 at 360–​361 and Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 406–​407), but it appears to represent the correct legal position. See Lloyd’s Bank v Bullock [1896] 2 Ch 192 for an example of a situation where the beneficiary may be postponed to a later equitable interest holder despite the basic rule in Shropshire Union Rlys & Canal Co v The Queen (1875) LR 7 HL 496. Compare Lloyd’s Bank v Bullock [1896] 2 Ch 192 with Capell v Winter [1907] 2 Ch 376. See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 406–​407. Further, where a trustee exercises an express power of sale, the beneficiary may not be protected against the purchaser who holds an equitable interest under the contract of sale if legislation confers express protection on the purchaser. (See, eg, Conveyancing Act 1919 (NSW), s 40; Trustee Act 1925 (NSW), s 48.) 342 See [4.05]–​[4.10] for a review of the difficulties which beset participants in the private conveyancing system. 343 The current legislation is contained in the following Acts: Conveyancing Act 1919 (NSW), ss 184A–​184J; Property Law Act 1958 (Vic), Pt I (the Transfer of Land (Single Register) Act 1998 (Vic) prevents the registration of any further deeds or instruments under Pt 1 of the Property Law Act 1958 (Vic)); Property Law Act 1974 (Qld), ss 241–​249; Registration of Deeds Act 1935 (SA); Registration of Deeds Act 1856 (WA); Registration of Deeds Act 1935 (Tas). [2.600]  115

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legislation in Victoria, Queensland and Tasmania was similar in form. The South Australian and Western Australian provisions differed from each other and both sets of provisions were substantially different from the relevant provisions in the eastern States.344 There is no general law land in either the Northern Territory or the Australian Capital Territory.345 [2.605]  With some specific exceptions, registration does not affect the validity of documents

purporting to convey or deal with interests in land in any of the States.346 For example, if A’s solicitor forges A’s name to a conveyance of the fee simple of A’s land in favour of B, no interest passes to B because the deed is void as a result of the forgery. The fact that B registers the deed does not enhance B’s position.347 Unlike the Torrens system of land registration, discussed in Chapter 4, registration does not confer title. Therefore, it was necessary to find a means of encouraging registration in order to ensure as complete a register as possible. In most States the means adopted was to confer priority on registered over unregistered and subsequently registered instruments.348 As will be explained at [4.05]–​[4.10], the deeds registration system failed to provide an adequate solution to the problems which beset private conveyancing and the Torrens system of land registration was introduced into all States by 1875. In every State all land alienated from the Crown after the introduction of the Torrens system falls under the operation of that system. Therefore, only land which was alienated by the Crown before the introduction of the Torrens system (and which has not been subsequently converted to Torrens system land) is general law land. With some exceptions,349 it is only instruments affecting general law land which fall within the ambit of the deeds registration system. In Victoria, it is no longer possible to register instruments under the Property Law Act 1958 (Vic). The Transfer of Land (Single Register) Act 1998 (Vic), inserting s  6(2) of the

344 See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 408–​409 for a discussion of the possible historical bases for the differing legislative provisions. 345 All land in the Australian Capital Territory is now leasehold land and Torrens title. See generally, [6.15]–​ [6.135] and [6.140]–​[6.180]. Information provided by A Taylor, Acting Registrar, Land Titles Office, ACT (26/​9/​96). The Registration of Deeds Act 1957 (ACT) providing for registration of deeds still exists, but in view of the non-​existence of general law land, it is not relevant to this discussion. (The legislation is used for registration of instruments such as powers of attorney and deed polls.) 346 Some specific legislative provisions require registration for validity. For example, see s 52 of the Powers of Attorney Act 2003 (NSW), which requires that, when used for execution of a deed, a power of attorney must be registered. See generally, See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 812. 347 See, for example, Re Cooper (1881) 20 Ch D 611. 348 Compare the position in South Australia and Western Australia. See [2.630] and Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 413–​415; see also O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis NZ, Wellington, 2003), pp 249–​275 at 254–​256, where the author discusses the inadequacies of the deeds registration systems. 349 Any document affecting Torrens land cannot be registered under the deeds registration system in South Australia (Registration of Deeds Act 1935 (SA), s 9), Tasmania (Registration of Deeds Act 1935 (Tas), s 3) or Western Australia (Registration of Deeds Act 1856 (WA), s 1). In New South Wales, only those instruments which are registered under the Real Property Act 1900 (NSW) are excluded from registration under the deeds registration system: see [2.620]. It has been argued that this is the case in Queensland too: see Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 410. Sykes argues that, in addition to unregistrable instruments (such as contracts of sale of Torrens land) being registrable under the deeds registration system, so too might instruments in registrable form, prior to registration under the Torrens system, be capable of registration under the deeds registration system. If this were the case, priority disputes between holders of equitable interests might be affected. Compare, however, Saunder v Twigg (1887) 13 VLR 765 at 783–​784. 116 [2.605]

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Property Law Act 1958, provides that no further deeds, conveyances or other instruments can be registered under s 6(1). The aim of the closure of the register is to provide an impetus for the conversion of remaining general law land to Torrens land: see [4.510]. [2.610] The pool of general law land has lessened considerably over the years, more in

some States than in others.350 In New South Wales, Victoria and Tasmania areas of land remain under the general law land system. In South Australia general law land has virtually disappeared and in Western Australia only small pockets of general law land remain. In Queensland there is now no general law land. In view of the virtual elimination of general law land in South Australia, the following analysis is limited to a discussion of the operation of the deeds registration system in New South Wales, Victoria, Tasmania and Western Australia. In Victoria, the discussion remains relevant for disputes arising in relation to instruments registered before the commencement of the Transfer of Land (Single Register) Act 1998 (Vic). Operation of the deeds registration system [2.615] Although the priority principles described at [2.375]–​[2.595] continue to operate,

the deeds registration system may have the effect of altering the order of priority of interests which would otherwise have existed in its absence. It is necessary then to consider the types of interests which may be registered and the effect of registration: see [2.620]–​[2.655].

Registrable instruments [2.620]  In general, any instrument which affects an interest in land is capable of registration.351

In New South Wales the provision is not even limited to instruments affecting land. Section 184D of the Conveyancing Act 1919 (NSW) provides that the Registrar-​General may register “any instrument whatever, whether affecting or relating to land or not”. The priority principle discussed at [2.625], however, only affects instruments relating to interests in land. Wills affecting real estate may be registered, but, in New South Wales and Tasmania, the priority provisions are inapplicable to wills.352 Instruments such as a contract for the sale of land, an equitable mortgage in writing and an agreement to grant an easement are registrable instruments. In Western Australia and Tasmania there are specific provisions relating to leases. In Tasmania bona fide leases at a rack rent for less than 14 years cannot be registered353 and in Western Australia bona fide leases at a rack rent for a term exceeding 14 years cannot be registered.354 In Tasmania documents affecting Torrens land cannot be registered at all.355 In New South Wales the exclusion is less widely based:  only instruments which are registrable under the Torrens system and relate only to Torrens title land are excluded from registration under the deeds registration system. Thus, theoretically, a contract of sale giving rise to an equitable

50 See [4.490]–​[4.540] for a discussion of the conversion schemes. 3 351 Conveyancing Act 1919 (NSW), s 184D; Registration of Deeds Act 1856 (WA), s 2; Registration of Deeds Act 1935 (Tas), ss 9–​12. 352 In Tasmania, “instrument” is defined to exclude wills (Registration of Deeds Act 1935 (Tas), s 5) and the priority provisions apply only to instruments. In New South Wales, wills are expressly excluded from the operation of the priority principle (Conveyancing Act 1919 (NSW), s 184G). 353 Registration of Deeds Act 1935 (Tas), s 3(b). 354 Registration of Deeds Act 1856 (WA), s 3. 355 Registration of Deeds Act 1935 (Tas), s 3(a). [2.620]  117

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interest may be capable of registration and thus capable of affecting a priority dispute.356 The position in New South Wales may also exist in Western Australia.357 In Western Australia and Tasmania it is specifically provided that judgments are registrable instruments358 and in New South Wales and Tasmania instruments affecting Crown lands appear to be registrable:359 see generally Chapter 6.

Effect of registration on priority [2.625]  In New South Wales, Victoria and Tasmania a registered instrument prevails over an

unregistered or subsequently registered instrument, provided the former instrument is made and executed bona fide and for valuable consideration and registered in conformity with the relevant provisions of the Act.360 The principle affects the priority principles described at [2.375]–​[2.595], Therefore, for example, the holder of an equitable interest under a registered agreement for a lease would take priority over the holder of a subsequent unregistered, or later registered, conveyance of a legal fee simple. The prior registration of the agreement for the lease ensures priority for the equitable lessee. Under the general law, the result of such a priority dispute depends upon whether the holder of the subsequent legal interest is a bona fide purchaser of the legal estate for value without notice.361 Indirectly, the priority rule affects the application of the principle of nemo dat quod non habet. For example, if A, the owner of Blackacre, conveys the legal fee simple to B and subsequently purports to convey the same estate to C, and C registers a memorial of her conveyance first, C gains priority over B because of the registration. At common law, the interest of B would prevail. At common law, C would be viewed as having no interest at all as A had nothing to give at the time of the conveyance. As Stawell CJ remarked in Andrews v Taylor (1869) 6 WW & A’B (L) 223 (at 224): [T]‌he intention of the “Registration Acts” is to give priority to the registered owner over the unregistered owner; in other words, in the case of two conveyances, either of which would be valid if the other was removed, to give, by virtue of the registration of one of them, priority to it over the unregistered conveyance.

Registration does not, however, cure the defect in an instrument which is inherently invalid. Neither does registration of such a document give priority over an unregistered or subsequently registered but inherently valid instrument. A document which is void because of a forgery, for instance, is of no greater effect because it is registered. [2.630] The Western Australian provisions arguably accord greater importance and effect

to registration or the lack of it than the registration provisions in the eastern States. Priority is decided according to the date of registration and there is no proviso such as exists in the eastern States concerning bona fides or consideration. Under s 3 of the Registration of Deeds

56 3 357 358 359 360 361

Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 409–​410. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 409–​410. Registration of Deeds Act 1856 (WA), s 2; Registration of Deeds Act 1935 (Tas), ss 5, 12. See Blackwood & Ibotson v London Chartered Bank of Australia (1871) 10 SCR (NSW) (Eq) 56; (1874) LR 5 PC 92. Conveyancing Act 1919 (NSW), s 184G(1); Property Law Act 1958 (Vic), s 6(1); Registration of Deeds Act 1935 (Tas), s 9(1). See Pilcher v Rawlins (1872) LR 7 Ch 259.

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Act 1856 (WA), any unregistered instrument is invalid against any subsequent bona fide purchaser for the value of the same land. This appears to be the case whether or not the subsequent purchaser has registered his or her instrument of grant. It had been suggested that the net effect of these provisions is to ensure that registration is vital in the protection of interests in land under the general law.362 First, where there is a dispute between two instruments, one or both of which are registered, the instrument registered or first registered is accorded priority whether or not the person so registering lacked bona fides363 or was a volunteer. Secondly, in a dispute between two unregistered instruments, s 3 appears to provide that the second instrument prevails provided the holder of the interest under the second instrument took bona fide and for value.364 The discussion at [2.635] and [2.655] applies equally to Western Australia. There are limitations to the operation of the priority principle.

Unregistrable transactions [2.635] Certain instruments and transactions affecting land cannot be registered. Further,

there are many instances where interests in land may be created without any writing at all. In such cases, there is no instrument to register. For example, an oral agreement for the grant of an interest in land supported by sufficient acts of part-​performance gives rise to an equitable interest in the grantee. Other examples of the creation of interests in land without writing include an easement by long user (see [17.205]–​[17.230]) and an interest based on adverse possession: see Chapter 3. If an interest is acquired pursuant to an unregistrable instrument or without an instrument at all, it is not defeated by the registration of an inconsistent instrument.365 The priority principle expressed in the provision such as s 184G of the Conveyancing Act 1919 (NSW) has no operation. In such circumstances, the priority principles discussed at [2.375]–​[2.595] are applied to decide the dispute.

Bona fide and for valuable consideration [2.640]  Reference has been made to the fact that, in New South Wales, Victoria and Tasmania,

a registered instrument prevails over an unregistered instrument or a subsequently registered instrument if made and executed bona fide and for valuable consideration. A person who is actually fraudulent in procuring the execution of an instrument under which he or she is the grantee is clearly not “bona fide” and cannot benefit by the registration.366 However, it seems that something less than fraud may also constitute a lack of the requisite bona fides. It is strongly arguable, from the decision in Sydney & Suburban Mutual Permanent Building & Land Investment Assoc v Lyons [1894] AC 260,367 that a person who executes an instrument having actual or constructive notice of prior unregistered interests at the time of taking the interest lacks the requisite bona fides. In this case Lyons purchased eight lots

62 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 414–​415. 3 363 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 415 argues that the omission of the requirement of bona fides in the priority provision must be given full weight in view of the fact that it is used in the avoidance provision. 364 As to the interpretation of bona fide, see [2.640]. 365 See White v Neaylon (1886) 11 AC 171. 366 It is the fraud of the grantee which is the relevant consideration: see Davidson v O’Halloran [1913] VLR 367. 367 See also Scholes v Blunt (1917) 17 SR (NSW) 36. [2.640]  119

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of an estate at an auction. Contracts of sale between Lyons and the vendor were signed. Subsequently, the vendor gave a legal mortgage over the whole estate (including the eight lots) to the Sydney and Suburban Land Association. The Association knew at the time it advanced the mortgage moneys that unspecified parts of the estate had been sold. The Association registered a memorial of the mortgage. In the priority dispute which ensued between Lyons and the Association, the Association relied on the registration of the instrument of mortgage. It was held that, as the Association had notice of Lyons’ equitable interest, it had not satisfied the bona fide criterion. The equitable interests of Lyons arising from the contracts of sale took priority.368 Although the appellant probably had actual notice, the court implied that constructive notice would be sufficient to demonstrate a lack of bona fides in this context.369 [2.645]  The benefits of registration are conferred only upon a person who has given valuable

consideration. Nevertheless, a volunteer should register the instrument pursuant to which he or she claims an interest. This is to ensure that any natural priority over later created and registered interests is not lost. For example, if A acquires a legal interest by way of gift and registers the deed pursuant to which the legal interest passed to her, A’s interest may not be defeated merely by the subsequent acquisition and registration of another legal or equitable interest in the land. Arguably, the registration of A’s interest may constitute notice of A’s interest and thus ensure that any subsequent registration of an instrument cannot be bona fide on the view of bona fide taken in Sydney & Suburban Mutual Permanent Building & Land Investment Assoc v Lyons [1894] AC 260.370 In a priority dispute where neither claimant can rely upon registration of an instrument as being made “bona fide and for valuable consideration”, the normal priority rules would be used to resolve the dispute. If A has a legal interest prior in time, A’s interest will prevail. On the other hand, a failure to register by A may result in the defeat of A’s interest by the holder of a later registered interest. [2.650]  Bona fides must be established at the time the instrument is executed. Thus, any

notice of a prior interest which is obtained between the time of execution of the instrument and the time of its registration does not prevent the grantee from acquiring priority by registration.371 In the case of the sale of land, two instruments (the contract of sale and the conveyance) are (in Victoria were) capable of registration. A purchaser who obtains notice of an earlier, but unregistered, interest after entering the contract, but before execution of the conveyance, may protect his or her priority by registering the contract of sale.372 The purchaser can then complete the sale, and take an unencumbered interest, by paying the balance of the purchase moneys to the vendor.373 In contrast, if the purchaser chooses to complete the purchase without registering the contract and subsequently registers the conveyance in his or her favour, priority

368 The court ordered specific performance of the contracts and ordered that the Association join in the execution of the required conveyances. 369 See also Marsden v Campbell (1897) 18 LR (NSW) Eq 33; cf Agra Bank v Barry (1874) LR 7 HL 135. See Le Neve v Le Neve (1747) Amb 436; 27 ER 291. These decisions are discussed in Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 411. 370 See generally, Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 412–​413. 371 See Blackwood & Ibotson v London Chartered Bank of Australia (1871) 10 SCR (NSW) (Eq) 56; (1874) LR 5 PC 92; Burrows v Crimp (1887) 8 LR (NSW) 198. 372 Moonking Gee v Tahos (1963) 63 SR (NSW) 935. 373 If the vendor has conveyed to the other purchaser, payment may be made to that party: see Moonking Gee v Tahos (1963) 63 SR (NSW) 935. 120 [2.645]

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over the earlier interest would not be obtained–​the conveyance would not have been “made and executed bona fide”. In Western Australia the priority principle does not require that the instrument registered be made and executed bona fide and for valuable consideration: see [2.630].

Inconsistent instruments [2.655]  In some situations difficult questions may arise in determining whether or not there

is an inconsistency between two instruments. It is only where there is such an inconsistency that the priority principle applies. Where the owner of land executes two separate instruments which are inconsistent with each other and one is registered, there is a clear case for the application of the priority principle.374 If, however, the two instruments are executed by different parties (eg, by the holder of the fee simple and a person claiming through the holder of the fee simple, such as a trustee in bankruptcy), an issue arises as to whether there are conflicting instruments. For example, suppose that A, the owner of the land, conveyed her interest to B and subsequently was declared bankrupt. If the trustee in bankruptcy of A’s estate conveyed the same land to X and X registered the conveyance, a question arises as to whether the instruments operating in favour of B and X respectively are “conflicting instruments” so that registration of the conveyance to X gives X’s interest priority. It has been argued that there can be no conflict between the instruments because the second deed would only be purporting to convey any “right, title or interest” remaining in the grantor after the execution of the first conveyance. It has been held, however, that this argument is not well-​founded and that registration does confer the better title in these circumstances.375 As the Chief Justice remarked in Smith v Deane (1889) 10 LR (NSW) (Eq) 207 at 208:376 “The effect of registration is to vest the land again in the conveying party, in such a way as to feed the estate of the party who registers, and to give him priority over any previous unregistered purchaser”. Similarly, the question as to whether there are conflicting instruments so that the statutory provision is brought into play may arise where there is a conveyance of land by a specific description and a subsequent conveyance of land by a general description. If the land generally described in the second conveyance could include the land specifically described in the first conveyance, are the conveyances “conflicting instruments” so that registration of the second conveyance gives priority? Arguably, the instruments may be wholly consistent with each other if there is a simple finding that the land of general description in the second grant includes only land to which the grantor is entitled at the time of the conveyance. Land which is the subject of the first grant would thereby be excluded. In Boyce v Beckman (1890) 11 LR (NSW) (L) 139, however, the court was concerned to give as wide a scope as possible to the registration priority principle. Innes J stated (at 146):

374 Boyce v Beckman (1890) 11 LR (NSW) (L) 139. 375 See, for example, Warburton v Loveland (1832) 2 Dow & Cl 480; 6 ER 806; 6 Bligh NS 1; 5 ER 499; Dorward v Salter (unreported, Full Ct of Sup Ct, Victoria, Argus Newspaper, 8 December 1859) referred to in Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [10.210]; Smith v Deane (1889) 10 LR (NSW) (Eq) 207; cf Andrews v Taylor (1869) 6 WW & A’B (L) 223. 376 Compare the situation where there is a sale by a sheriff. Here the estate of the debtor does not vest in the sheriff, but in the purchaser who takes any “right, title and interest” of the debtor on a sale by the sheriff. In this case registration by the purchaser of a conveyance would not confer priority over the interest of a person taking under a previous conveyance from the debtor –​no conflicting instruments. See generally, Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [10.210]. [2.655]  121

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Such words, then as “lands to which I am entitled”, when used by a vendor, must be held to mean “such lands as I possess and am entitled to, whether included in any previous conveyance by me or not, if that conveyance remains unregistered,” and cannot be held to except lands previously conveyed by him, so long as that conveyance remains unregistered. To hold otherwise would, in our opinion, be to defeat the very object of the Act.

Although it is often stated that registration does not confer title under a deeds registration system, the examples above demonstrate that there are instances where registration has the effect of conferring title. It is important to note, however, that where a document is itself void, registration is ineffective to validate the documents and confer title.

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CHAPTER 3

Adverse Possession [3.05] INTRODUCTION......................................................................................................... 124 [3.40] LENGTH OF LIMITATION PERIOD................................................................................ 130 [3.45] ADVERSE POSSESSION AND THE CROWN................................................................... 131 [3.60] COMMENCEMENT OF THE LIMITATION PERIOD........................................................ 134 [3.60] Present interests........................................................................................... 134 [3.65] In possession and then discontinued or dispossessed................................. 134 [3.170] Entitled to possession but never obtained possession................................. 150 [3.185] Future interests............................................................................................. 151 [3.200] Land held on trust........................................................................................ 152 [3.205] Adverse possession by the trustee......................................................... 153 [3.210] Adverse possession by a stranger.......................................................... 154 [3.215] Adverse possession by a beneficiary...................................................... 154 [3.220] The doctrine of laches........................................................................ 155 [3.230] Limitation and leasehold estates.................................................................... 157 [3.230] Between the landlord and tenant......................................................... 157 [3.255] Between landlord and stranger............................................................ 160 [3.260] Limitation and mortgages............................................................................. 161 [3.260] Right to redeem................................................................................ 161 [3.265] Mortgagee’s rights............................................................................ 162 [3.270] Limitation and co-​ownership......................................................................... 163 [3.275] Limitation and Aboriginal claims.................................................................... 164 [3.280] POSTPONEMENT OF COMMENCEMENT OF LIMITATION PERIOD AND EXTENSION OR SUSPENSION OF IT.................................................................... 165 [3.290] RUNNING OF THE LIMITATION PERIOD...................................................................... 167 [3.295] Alienation by adverse possessor..................................................................... 168 [3.305] Successive adverse possessors........................................................................ 168 [3.310] Abandonment by the adverse possessor......................................................... 169 [3.320] THE EFFECT OF TIME LAPSING.................................................................................... 171 [3.320] Person dispossessed...................................................................................... 171 [3.325] Title of the adverse possessor......................................................................... 172 [3.330] Rights of third parties........................................................................ 172 [3.335] Adverse possession of leased land......................................................... 173 [3.350] Proof of title................................................................................................. 176 [3.355] METHODS BY WHICH TIME IS STOPPED FROM RUNNING.......................................... 176 [3.360] Asserting right.............................................................................................. 176 [3.365] Admission.................................................................................................... 177 [3.365] Acknowledgment and part payment..................................................... 177 [3.370] Persons bound................................................................................. 179 [3.375] Acknowledgment or part payment when time has run............................... 179 [3.380] ADVERSE POSSESSION AND THE TORRENS SYSTEM................................................... 179 [3.380] Background.................................................................................................. 179 [3.385] Current law.................................................................................................. 180 [3.390] Victoria and Western Australia............................................................. 181 [3.395] Tasmania........................................................................................ 182 [3.400] Queensland and South Australia.......................................................... 184 [3.405] New South Wales............................................................................. 185 [3.410] OTHER RELEVANT LEGISLATION.................................................................................. 187 [3.415] MERGER AND EXTINGUISHMENT............................................................................... 187

 

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INTRODUCTION [3.05] A person unlawfully dispossessed of land has a right to bring an action against the

wrongdoer to recover possession of the land.1 The common law regarded this right, and other types of rights of action, as subsisting forever. Most systems of law, however, embrace the principle of “limitation”, the principle of fixing a finite time in which an action may be instituted. Legislation in various forms2 in England has for a long time adopted a limitation principle. The most recent revision and consolidation of the English legislation is contained in the Limitation Act 1980 (UK); its operation in relation to registered land, however, has been curtailed by the introduction of the Land Registration Act 2002 (UK).3 All Australian States have statutes of limitation in various forms.4 The legislation in New South Wales was comprehensively revised and consolidated in 1969 pursuant to the recommendations of the New South Wales Law Reform Commission5 and the legislation in Queensland and Tasmania incorporates some provisions which are similar to the provisions in the New South Wales Act.6 The Victorian Act is based on the 1939 English legislation7 and the South Australian legislation is based on early Imperial statutes. In Western Australia, the limitation legislation has been revised and updated in the Limitation Act 2005 (WA); this Act applies to all causes of action which accrue after the commencement of the Act (16 November 2005).8 In the Northern Territory and the Australian Capital Territory title to land cannot be lost by adverse possession.9 [3.10] A number of reasons of policy have been advanced in favour of the principle of

limitation. Sir Thomas Plumer MR in Marquis Cholmondeley v Lord Clinton (1820) 2 Jac &

1 2 3

4

5 6

7 8 9

For a brief outline of the historical development of this form of action, see [2.50]–​[2.55]. For a brief outline of the English limitation statutes, see Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 265–​266. For a detailed description of the provisions, see Cooke, The New Law of Land Registration (Hart Publishing, Oregon, 2003), Ch 7. See also McCrimmon, “Whose Land Is It Anyway? Adverse Possession and Torrens Title” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 157–​176 and “Editor’s Notebook” [2009] Conv 3 at 169–​176. The new law prevents a person from acquiring title to registered land based purely on adverse possession. Limitation Act 1969 (NSW); Limitation of Actions Act 1958 (Vic); Limitation of Actions Act 1974 (Qld); Limitation of Actions Act 1936 (SA); Limitation Act 2005 (WA) (note the Limitation Act 1935 (WA) applies to causes of action arising before 15 November 2005: references are to the 2005 Act); Limitation Act 1974 (Tas). NSWLRC, Report on the Limitation of Actions, Report No 3 (1967) (LRC 3). See also the revised legislation in Tasmania concerning adverse possession over Torrens land: Land Titles Act 1980 (Tas), ss 138T–​138ZA inserted by Land Titles Amendment (Law Reform) Act 2001 (Tas). See also Queensland Law Reform Commission, Review of Limitation of Actions Act 1974 (Qld), Report No 53 (September 1998), where the Commission reviewed extensively the limitation legislation and made recommendations for change. Limitation Act 1939 (UK). See Law Reform Commission of Western Australia, Report on Limitation and Notice of Actions (Project No 36, Part II, January 1997). See Land Title Act 2000 (NT), s 198; Land Titles Act 1925 (ACT), s 69; Limitation Act 1985 (ACT), s 5(a). Note, however, that the Limitation Act 1985 (ACT) contains provisions relevant to rights of action arising out of mortgages. For example, limitation periods of 12 years for foreclosure and for recovery of possession of mortgaged property are set out. Extinction of title, as opposed to extinction of the cause of action only, does not ensue from the running of the limitation periods in respect of these actions: s 24(1). (Compare s 43, dealing with the extinction of title in relation to a cause of action to recover or obtain goods.) In the Northern Territory query the position relating to limitation and rights arising under mortgages.

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W 1 at 139–​140; 37 ER 527 at 577 took the view that the community at large benefits if the status quo is eventually recognised. His Honour stated: The public have a great interest, in having a known limit fixed by law to litigation, for the quiet of the community, and that there may be a certain fixed period, after which the possessor may know that his title and right cannot be called in question. It is better that the negligent owner who has omitted to assert his right within the prescribed period, should lose his right than that an opening should be given to interminable litigation.

More specifically, it has been suggested that the community as a whole benefits from a limitation principle as the principle encourages the use and development of land and makes more certain the validity of title, thereby encouraging the alienability of land.10 “[I]‌t is in the public interest that a person who has long been in undisputed possession should be able to deal with the land as owner”.11 In a detailed article on limitation, Professor  Jackson advanced three possible reasons for having a scheme of limitation of actions:12 (a) holders of rights should not sleep on their rights; (b) problems of proof become more difficult the longer the period of time between the dispute arising and the action being heard; (c) the status quo should be recognised at some stage, and there should be a certain end to litigation. Jackson concludes that the basic principle behind the idea of limitation of actions is the third-​recognition of the status quo and a certain end to litigation. The rationale accords with that described by Lord Plumer MR. Jackson takes the view that the other two possible reasons for the principle are more relevant in determining the various lengths of limitation periods with respect to different causes of action. [3.15] The “morality”, and consequently the existence, of a limitation principle in relation

to actions for the recovery of land has been questioned. In one sense, the existence of such a principle sanctions the act of the person who has taken possession of another’s land –​it sanctions what some may call “land stealing”13 by providing that the lawful right of another to bring proceedings to eject the “thief” will be lost after a finite period of time. With respect to old system title, at least, the reasons in favour of having a limitation period in relation to actions for the recovery of land outweigh such an argument. Certainty of title, pursued and gained by eventual recognition of the status quo, and the greater emphasis in modern times

10

11 2 1 13

Goodman, “Adverse Possession of Land –​Morality and Motive” (1970) 33 Mod LR 281 at 281–​283; see also Dockray, “Why Do We Need Adverse Possession?” [1985] Conv 272, where he argues that simplification of conveyancing procedures has been, and remains, an important reason for having a limitation principle. Irving has similarly argued that the reduction of “risks associated with conveyancing because defects are cured with time … is the most convincing argument in support of possessory title”: see Irving, “Should the Law Recognise the Acquisition of Title by Adverse Possession” (1994) 2 APLJ 112. See Griggs, “Possessory Titles in a System of Title by Registration” (1999) 21 Adel L Rev 157–​175 and McCrimmon, “Whose Land Is It Anyway? Adverse Possession and Torrens Title” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 157–​176 where the relevance of this principle is discussed in relation to registered land. For a more recent critique of the traditional rationales for the doctrine of adverse possession, see Edgeworth, “Adverse Possession, Prescription and Their Reform in Australian Law” (2007) 15 ALPJ 1 at  11–​17. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 264. Jackson, “The Legal Effects of the Passing of Time” (1970) 7 MULR 407 at 409. Goodman, “Adverse Possession of Land –​Morality and Motive” (1970) 33 Mod LR 281 at 281–​282. See also Ballantine, “Title by Adverse Possession” (1918) 32 Harvard Law Review 135 and the developments in this area in relation to adverse possession and human rights, discussed at [3.25]. [3.15]  125

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on residential security,14 are aided and enhanced by the existence of a principle of limitation of actions. With respect to Torrens system land, however, registration confers title and ownership and the Register is intended to confer “certainty of title”; the concept of acquisition of title by possession appears to controvert a basic aim of the Torrens system. This was recognised by the framers of the Torrens legislation and, in a number of jurisdictions, the concept was limited or excluded in relation to registered land.15 Nevertheless, even under the Torrens system, there can be situations where uncertainty exists. For example, where a registered proprietor has died and no successor has claimed the land, there may, after a number of years, be some uncertainty as to who is entitled to the land.16 Traditionally it was argued that the principle of adverse possession had a legitimate place, even in the Torrens system, in providing certainty of title in such instances. Further, it has been argued strongly in the past that “the theoretical sanctity of the Register is not a practical reality”; many exceptions to indefeasibility of title exist and the policy reasons for a partial or full exception for adverse possession are at least as strong as the arguments in favour of other types of exceptions to indefeasibility of title.17 Increasingly, however, the view is being taken that the right of an adverse possessor to deprive a registered proprietor of his or her title should be removed or lessened.18 The concerted and largely successful procedures to convert speedily all remaining general law land to Torrens title19 and the advent of electronic titles and eventually electronic conveyancing will inevitably ensure that in the future more reliance is placed on documented title than on the fact of possession. As Gray and Gray declaim: registration has now replaced possession as the authentic source of title. The philosophical base of English land law has finally shifted from empirically defined fact to officially defined entitlement, from property as a reflection of social actuality to property as a product of state-​ ordered or political fact.20

14 15 16 17 18

19 20

See Gray and Symes, Real Property and Real People Principles of Land Law (Butterworths, London, 1981), p 94. See [3.380]–​[3.405]. For a more recent example, see Re Johnson [2000] 2 Qd R 502. See Irving, “Should the Law Recognise the Acquisition of Title by Adverse Possession” (1994) 2 APLJ 112. For a discussion of this point, see Griggs, “Possessory Titles in a System of Titles by Registration” (1999) 21 Adel L Rev 157. See Law Reform Commissioner of Tasmania, Report on Adverse Possession and Other Possessory Claims to Title (1995) and see now Land Titles Act 1980 (Tas), ss 138T–​138ZA, inserted by Land Titles Amendment (Law Reform) Act 2001 (Tas), defining and restricting the acquisition of title by adverse possession over Torrens land. See also Law Commission and HM Land Registry, Land Registration for the Twenty-​First Century (UK Law Comm No 254, September 1998) where the Commission recommended changes to the law relating to adverse possession lessening considerably the adverse possessor’s rights to bar the right of the registered owner, discussed in Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), pp 1167, 1170, and in Griggs, “Possessory Titles in a System of Titles by Registration” (1999) 21 Adel L Rev 157 at 165–​167. Some jurisdictions have made the concept of adverse possession wholly inapplicable to Torrens land. In British Columbia, for example, a registered proprietor’s title to Torrens land cannot be defeated by the adverse possession of another where the original dispossession constituted a trespass: s 12 of the Limitation Act RSBC 1979 implementing the recommendation of the Law Reform Commission of British Columbia, Report on Limitations Part II –​General (Project No 6, 1974), p 50. See also JA Pye (Oxford) Ltd v Graham [2000] 3 WLR 242 at 271 per Neuberger J, where the result in the case was described as “draconian to the owner, and a windfall for the squatter” but was, nevertheless, eventually upheld by the House of Lords: JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419. See [4.490]–​[4.540]. Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 182.

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In England, the limitation provisions applied to both registered and unregistered land before 2003. The application of these principles to registered land was found to be unjustifiable and unfair by the Law Commission and the Land Registration Act 2002 (UK) gave effect to the recommendations of the Commission. The circumstances in which a trespasser can be successful in acquiring title through possession are now reduced and circumscribed.21 As predicted by Gray and Gray, the introduction of the Land Registration Act 2002 (UK) in England has instituted a system where title is no longer based on possession, but instead on registration.22 [3.20]  At present the Australian States have dealt with the issue of the interaction of Torrens

statutes and the limitation statutes in varying ways:  see [3.380]–​ [3.405]. The trend in jurisdictions which have recently reviewed laws in this area is to restrict the operation of the adverse possession principles in relation to Torrens land.23 Nevertheless, in contrast to the current position in England, in all jurisdictions except the Australian Capital Territory and the Northern Territory and possibly South Australia, where it seems the adverse possessor cannot get a certificate of title in his or her name if the documentary owner objects, the registered proprietor may lose his or her registered title if another person has taken adverse possession for the statutory period. [3.25] In recent times, the issue of the application of a limitation principle to land, in

particular registered land, has been considered in the context of human rights laws.24 In JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, discussed in detail at [3.85], the limitation legislation then operating in England25 was applied by the House of Lords to deprive the documentary owner of its title. This occurred in circumstances where the adverse possessor was originally a licensee for a term. The proper application of the law meant that the adverse possessor did not have to inform the documentary owner that he was in possession or, when the time came, that he was nearing the expiration of the limitation period. Nor, of course was there any requirement for the adverse possessor to compensate the documentary owner. The defeated documentary owner applied to the European Court of Human Rights asserting that the loss of its title constituted a deprivation of property contrary to Art 1 of the European Convention on Human Rights 1950 Protocol 1 and seeking compensation from the United Kingdom government (the Human Rights Act 1998 (UK) gives direct effect to the Convention). Article 1 provides: Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

21 22 23 24 25

For an outline of these law reform and legislative developments, see Beaulane Properties Ltd v Palmer [2006] Ch 79 at 129–​130. See Chan Tin Shi v Lin Tin Sung [2006] HKCFA 7 per Lord Hoffmann at [37]. See Griggs, “Possessory Titles in a System of Titles by Registration” (1999) 21 Adel L Rev 157 at 173. See generally, Jourdan, Adverse Possession (Butterworths, London, 2003), pp 55–​62; Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 1164–​1166. See Limitation Act 1980 (UK); Land Registration Act 1925 (UK). [3.25]  127

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The relevant Chamber of the European Court of Human Rights, by a majority of four to three, held that on the facts, the operation of the Limitation Act 1980 (UK) and the Land Registration Act 1925 (UK) resulted in a violation of Art 1.26 However, on appeal the Grand Chamber of the European Court of Human Rights, by a majority of 10 to seven, overturned the decision of the lower court. The Grand Chamber held that the English law of adverse possession did not defeat the title of the documentary owner by way of a “deprivation of possessions”, but rather by a “control of use” of property by the State in accordance with the public interest.27 Accordingly, English law was compliant with the Convention.28 Despite a temporary divergence in the domestic English case of Beaulane Properties Ltd v Palmer [2006] Ch 79, which was decided after the decision of the Chamber and before the reversal of that decision by the Grand Chamber, the relevant principles of the English law of adverse possession are as set out in JA Pye (Oxford) Ltd v Graham.29 [3.30]  Australia is not a party to the European Convention on Human Rights.30 However,

the introduction of charters of human rights in the Australian Capital Territory and Victoria,31 the work done towards the potential development of similar charters in other jurisdictions32 and the possibility that categories of rights protected may be expanded in the future to include a broader protection for economic rights mean that there is the potential for analogous compliance issues in Australia in the future.33 While the provisions vary from jurisdiction to 26 27

28 29

30

31 32 33

JA Pye (Oxford) Ltd v United Kingdom [2005] 43 EHRR 3. JA Pye (Oxford) Ltd v United Kingdom [2008] 46 EHRR 45 at [1101]. See Edgeworth, “Adverse Possession and Human Rights: The Last Act in JA Pye (Oxford) v the United Kingdom” (2007) 15 ALPJ 107; Griggs, “Possession, Indefeasibility and Human Rights” (2008) 8 QUTLJJ 286 at 289–​292; Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), pp 1167–​1168. For a brief consideration of the compliance of the Land Registration Act 2002 (UK), see Zarb v Parry [2012] 1 WLR 1240 at 1246 [17]. See Ofulue v Bossert [2009] 1 AC 990 at 1015–​1017. In Beaulane Properties Ltd v Palmer [2006] Ch 79 Nicholas Strauss QC reinterpreted the term “adverse possession” in a manner intended to bring it into line with the Chamber decision. His Honour held that only where the adverse possessor’s use was inconsistent with the use to which the documentary owner intended to put the land would adverse possession exist. This was a return to a test that had been specifically rejected by the House of Lords in JA (Pye) Oxford Ltd v Graham [2003] 1 AC 419. While Australia has ratified the Universal Declaration of Human Rights, which includes Art 17 (1. [e]‌veryone has the right to own property alone as well as in association with others; 2. [n]o-​one shall be arbitrarily deprived of his property), the Declaration does not form part of Australian law: Kioa v West (1985) 159 CLR 550 at 570 per Gibbs CJ. See also Al-​Kateb v Godwin (2004) 219 CLR 562 at 592–​593 per McHugh J; Roach v Electoral Commissioner (2007) 223 CLR 162 at 220–​221 per Hayne J, at 224–​225 per Heydon J. Further, its protection of property (“arbitrary deprivation”) is vague and does not amount to a guarantee of compensation. In some instances Australian judges have referred to human rights instruments to interpret Australian law, but generally international law has provided “minimal and inadequate protection for human rights in Australia” (see Tasmanian Law Reform Institute, A Charter of Rights for Tasmania? (Issues Paper 11, August 2006) at [3.2.4]). Neither does the Australian Constitution guarantee human rights. Although s 51(xxxi) requires that Commonwealth laws provide for acquisition of property by the Commonwealth on just terms, there is no general provision guaranteeing a right to property. See submission to the Human Rights Consultation Committee (Vic) of Professor Simon Evans, Law School, University of Melbourne, 25 August 2005, where the author explored the ambit of the protection of property rights under s 51(xxxi) and concluded that the adoption of similar language for the Victorian Charter would be inadvisable. See Human Rights Act 2004 (ACT); Charter of Human Rights and Responsibilities Act 2006 (Vic). See, for example, Tasmanian Law Reform Institute, A Charter of Rights for Tasmania? (Issues Paper 11, August 2006). It is clear that a charter of human rights need not necessarily protect property rights: see, for example, Human Rights Act 2004 (ACT); Bill of Rights Act 1990 (NZ). In particular, it has been argued that a guarantee

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jurisdiction in relation to the acquisition of adverse possession rights over registered land (see [3.380]–​[3.405]), it seems that, in all States (except possibly South Australia),34 a human rights charter broadly protecting property rights and giving a property rights guarantee would give rise to matters of compatibility such as occurred in JA Pye (Oxford) Ltd v United Kingdom [2008] 46 EHRR 45.35 In the Australian Capital Territory, the Human Rights Act 2004 (ACT) does not currently contain a protection for property rights at all.36 Although s  20 of the Charter of Human Rights and Responsibilities Act 2006 (Vic)37 provides “a person must not be deprived of his or her property other than in accordance with law”, it has been suggested that such wording (“other than in accordance with law”) would preclude any challenge to the adverse possessor by a documentary owner.38 Neither would it give rise to any rights of compensation from the State. The provision was not drafted as a property rights guarantee; the intention was to provide protection ensuring rights to ownership free of discriminatory restrictions and to require the government to act in accordance with the law when limiting property rights.39 Whether or not the current Victorian provision protecting the right to property can be so dismissed remains unclear,40 although the limited judicial consideration the issue has received thus far suggests that the law of adverse possession would not fall foul of the Charter. In Abbatangelo v Whittlesea City Council [2008] V ConvR 54-​750 the documentary owner posited that there was an incongruity between the doctrine of adverse possession and the respect for property rights, as an instance of human rights, afforded by the Charter of Human Rights Act. In response, Pagone  J stated that such a view failed to recognise that adverse possession gives effect to the public interest by protecting longstanding peaceable possession rather than agitating old claims. His Honour also stated that it was not certain that the Charter

34 35 36

37

38 9 3 40

of compensation for expropriation is not a human right under international law (or as a matter of principle) (see n 30) and need not be included: see Evans, “Should Australian Bills of Rights Protect Property Rights?” (2006) 31 Alt LJ 19; see also submission to the Human Rights Consultation Committee (Vic) of Professor Simon Evans, Law School, University of Melbourne, 1 August 2005. The protection of more basic property rights in the general context of protection of social and economic rights (eg, the right to own property, the right to acquire and dispose of property in a non-​discriminatory environment) was advocated. In the Australian Capital Territory and the Northern Territory title to land cannot be lost by adverse possession. See submission of Lynden Griggs on Colin Brown Human Rights Project to Tasmanian Law Reform Institute, 28 November 2006. The first review of the Act did not recommend the inclusion of economic, social and cultural rights: see Department of Justice and Community Safety, Human Rights Act 2004 Twelve-​ Month Review Report (June 2006). Department of Justice and Community Safety, Human Rights Act 2004 Twelve-​Month Review Report (June 2006). The potential for difficulties in this area and possible solutions should be addressed by other bodies considering the introduction of charters to protect human rights, including a right to property. Griggs has suggested various solutions, including the payment of compensation by the adverse possessor to the documentary owner or a system similar to that introduced in the UK: see submission of Lynden Griggs on Colin Brown Human Rights Project to Tasmanian Law Reform Institute, 28 November 2006. Note that, in Victoria, the right to property does not provide a right to compensation: see Explanatory Memorandum to Charter of Human Rights and Responsibilities Act 2006 (Vic). Submission of Lynden Griggs on Colin Brown Human Rights Project to Tasmanian Law Reform Institute, 28 November 2006. Evans, “Should Australian Bills of Rights Protect Property Rights?” (2006) 31 Alt LJ 19 at 24. If the view were taken that “law” in s 20 does not simply comprise positive law, but includes law in line with international law and human rights jurisprudence, it is possible that discretions to take property could be found to be inconsistent with the Charter: Professor Simon Evans, Law School, University of Melbourne. [3.30]  129

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would assert the proprietary rights of the documentary owner over the equally proprietary rights of the adverse possessor.41 The issue of the applicability of the Charter was not raised on appeal.42 It is clear, however, that in the future the interaction of adverse possession laws and possible future human rights laws protecting property has the potential to change radically the way the limitation principle operates in relation to Torrens land.43 [3.35]  The limitation principle enshrined in the English and Australian limitation legislation

operates in a negative way by eliminating the claim of a person with a better title. Thus, although a person who has a right to bring an action to recover land loses that right after a set period of time, the prospective defendant to the action, the possessor of the land, does not acquire thereby the exact interest in the land formerly held by the person with the right of action. Rather, the right to the land is enhanced as a result of the extinguishment of a better right. Each of the limitation statutes in Australia provides that at the expiration of the statutory period, the title of the person dispossessed is extinguished in addition to the cause of action being lost.44 The extinguishment of title is important. Before 1833 in England the statute of limitations did not provide for the loss of title and, therefore, if the titleholder managed to obtain possession again, his or her title would prevail over that of the previous possessor. The principle of limitation is to be contrasted with the concept of prescription. Prescription is a doctrine of the common law, but it has been altered and extended by statute. The idea of prescription is that a right may be acquired through long use; if a person has enjoyed a right over a long period of time, it will be presumed that there was a grant of the right to the user.45 In contrast to the principle of limitation, which operates negatively by extinguishing rights, prescription operates positively by presuming an actual grant of the right. In English law the operation of prescription has been confined to incorporeal hereditaments, in particular easements and profits à prendre.

LENGTH OF LIMITATION PERIOD [3.40]  The Australian limitation statutes divide various types of actions into various categories,

such as actions to recover land, actions founded on tort or contract and actions to recover damages for personal injury. The limitation period with respect to actions to recover land is

41 42 43

44 45

Abbatangelo v Whittlesea City Council [2008] V ConvR 54-​750 at [3]‌. See Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 57, where the grounds for appeal are referred to. As to the way in which rights under Charter of Human Rights and Responsibilities Act 2006 (Vic) can be enforced, see s 39 of that Act. Although there is no independent right to claim damages for a breach, it seems declarations and injunctions in relation to unlawful breaches are available. See Evans, The Victorian Charter of Rights and Responsibilities and the ACT Human Rights Act: Four Key Differences and Their Implications for Victoria (Paper presented at The Australian Bills of Rights: The ACT and Beyond Conference, ANU, 21 June 2006) and, generally, Evans and Evans, Australian Bill of Rights (LexisNexis Butterwoths, Sydney, 2008), Ch 4. Limitation Act 1969 (NSW), s 65; Limitation of Actions Act 1974 (Qld), s 24; Limitation of Actions Act 1936 (SA), s 28; Limitation Act 1974 (Tas), s 21; Limitation of Actions Act 1958 (Vic), s 18; Limitation Act 2005 (WA), s 75. See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 265, 1197–​1203; Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 667. See also [17.205]–​[17.230].

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the longest: in New South Wales, Queensland, Western Australia and Tasmania the period is 12 years46 and in Victoria and South Australia the period is 15 years.47

ADVERSE POSSESSION AND THE CROWN [3.45]  The legislative approach in relation to adverse possession against the Crown48 varies

from State to State.49 In Victoria, Queensland and Western Australia the limitation statutes provide that the right and title of the Crown in any land cannot be affected by the possession of such land adverse to the Crown, whether or not the adverse possession has exceeded 60 years.50 In New South Wales and Tasmania the limitation statutes provide that an action by the Crown with respect to recovery of Crown land is barred after 30 years adverse possession.51 Despite the provision in the limitation statute in New South Wales, s 170 of the Crown Lands Act 1989 (NSW) effectively provided in most situations that title to Crown land may not, on the basis of adverse possession, be asserted or established against the Crown. Various transitional provisions and exceptions were set out. The position has basically been maintained in its successor provision, s 13.1 of the Crown Land Management Act 2016 (NSW).52 Further, in relation to Torrens land, s  45D(3) of the Real Property Act 1900 (NSW) provides that no possession application can be made for land where the registered proprietor is the Crown.53 In South Australia there is no specific statutory provision relating to adverse possession against

46 47 48

49 50

51

52

53

Limitation Act 1969 (NSW), s 27(2); Limitation of Actions Act 1974 (Qld), s 13; Limitation Act 1974 (Tas), s 10(2); Limitation Act 2005 (WA), s 19(1). Limitation of Actions Act 1936 (SA), s 4; Limitation of Actions Act 1958 (Vic), s 8. Whether or not a particular statutory corporation is the “Crown” for this purpose is to be determined by construing the intention of its constituent statute. For a recent example of this enquiry, see Roads Corporation v Pearse [2012] VSC 527. The intersecting areas of possession, native title and the Crown were discussed by Toohey J in Mabo v Queensland (No 2) (1992) 175 CLR 1 at 207–​214. See [3.275]. Limitation of Actions Act 1974 (Qld), s 6(4); Limitation of Actions Act 1958 (Vic), s 7; Limitation Act 2005 (WA), ss 19(2), 76. (See also Limitation of Actions Act 1958 (Vic), ss 7A, 7AB, 7B, which specifically provide that no title by adverse possession can be asserted to land held by Victoria Rail Track (s 7A), water authorities (eg, Melbourne Water Corporation: s 7AB) or local councils (s 7B). Under s 7B(3), “council land” means land of which the council is the registered proprietor under the Transfer of Land Act 1958 (Vic)). The Crown Suits Act 1769 (Imp), more often referred to as the Nullum Tempus Act 1769 (Imp), which provided for the Crown’s right to be barred after 60 years adverse possession, was part of the law (see Delohery v Permanent Trustee Co (NSW) (1904) 1 CLR 283; Attorney-​General (NSW) v Love [1898] AC 679), but is of no effect in Victoria, Queensland and Western Australia in view of the specific provisions mentioned above. Note that the provisions of these limitation statutes generally bind the Crown: Limitation of Actions Act 1958 (Vic), s 32; Limitation of Actions Act 1974 (Qld), s 6; Limitation Act 2005 (WA), s 10. Limitation Act 1969 (NSW), s 27(1); Limitation Act 1974 (Tas), s 10(1). In Tasmania there are particular fact situations where no period of adverse possession, however long, will extinguish the Crown’s title: see Limitation Act 1974 (Tas), s 10(4)–​(6). For example, s 10(4) provides that there can be no adverse possession against the Crown where the Crown land has been reserved as a road under an Act, dedicated for a public purpose or reserved in any Crown grant. See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 1098–​1099. Also see s 45D(3) of the Real Property Act 1900 (NSW) which provides that a possessory application with respect to Torrens land may not be made in relation to an estate in land of which the Crown, Minister of the Crown, a statutory body representing the Crown, particular public corporations or a local council is the registered proprietor. In itself, this provision would not prevent adverse possession of unalienated Crown land; s 13.1 of the Crown Land Management Act 2016 (NSW) does prevent loss of title to Crown land even where unalienated. For these purposes the Crown includes statutory bodies representing the Crown, certain statutory corporations and local councils. [3.45]  131

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the Crown. It appears, therefore, that the Crown Suits Act 1769 (Imp), sometimes referred to as the Nullum Tempus Act, is the applicable law.54 Pursuant to the Nullum Tempus Act the Crown’s right to bring an action is lost after 60 years possession by the adverse possessor or his or her “ancestors or predecessors”. Unlike the general provisions relating to adverse possession, where the right of action and title of the owner are lost if the land has been in continuous adverse possession for the relevant limitation period, a title by adverse possession may only be alleged and gained under the Nullum Tempus Act 1769 if the applicant can prove that he or she has adversely possessed the land for 60 years or that he or she has a good documentary title to the possessory interest.55 Further, it is important to note the interaction of the limitation statutes and the Torrens statutes: see [3.380]–​[3.405]. The justification for giving the Crown a longer limitation period, or for providing that there can be no adverse possession against the Crown at all, appears to be that the Crown cannot be expected to check and monitor all Crown lands for adverse possessors. The justification clearly has validity if the Crown land is land which has never been alienated and which would rarely, if ever, be checked for adverse possessors. The reasoning has less validity where the Crown owns the land through it being vested in, for example, a minister or a government department. In most instances, the land would be used for a particular purpose and it would be unlikely that possession by an adverse possessor would remain unnoticed for a long period.56 Despite this reasoning, the recent trend is to restrict or prohibit adverse possession against the Crown whether the land is unalienated or alienated Crown land.57 [3.50] Problems may arise if a person takes adverse possession of Crown land and,

subsequently, the Crown transfers its interest in the land. In Victoria, where a right of action to recover land first accrues to the Crown and the Crown subsequently conveys the land to another person, the proviso to s 8 of the Limitation of Actions Act 1958 (Vic) ensures that the transferee has 15  years to bring an action to recover the land from the date the land was conveyed to the transferee. The effect of the proviso appears to be that no matter how long someone has been in adverse possession of Crown land, the person to whom the land is conveyed, or any person who claims the land through that person, has 15  years from the date of the conveyance to bring an action to recover the land.58 The

54 55

56

57

58

Attorney-​General (NSW) v Love [1898] AC 679; Delohery v Permanent Trustee Co (NSW) (1904) 1 CLR 283; South Australian Co v Port Adelaide CC [1914] SALR 16. See Simpson v The Council of the North West County District (1978) 4 BPR 9277, discussed in (1980) 54 ALJ 34. It has also been suggested that the issue of a Crown grant during the 60-​year period stops time running: In Re Winter (1893) 14 NSWLR 389, but cf Bree v Scott (1903) 29 VLR 692 and McGellin and Fuchsbichler v Button [1973] WAR 22. In the NSWLRC, Report No 3 the Commissioner recommended that the normal period (ie, 12 years) should apply to land alienated by or to the Crown (eg, Ministers and public corporations). Nevertheless, the Bill drafted by the Commission did not give effect to the recommendation as it was thought that further research should be undertaken before such a change was made. See, for example, Crown Lands Act 1989 (NSW), s 170; Limitation Act 2005 (WA), ss 19(2), 76; Limitation Act 1981 (NT), s 6(4) (discussed in Step v Crown Land Manager of the Department of Lands and Planning of the Northern Territory (2011) 251 FLR 443). Similarly, where there is intervention of Crown documentary ownership during a period of adverse possession, a person taking from the Crown would have 15 years from when the right of action first accrued to him: see Hill v Transport for London [2005] 3 All ER 677, where the words “first accrued” to the Crown were interpreted to mean “earlier” or “previously” rather than “originally”.

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same result is likely in Western Australia, despite the differences in wording in the statutory provisions.59 The Victorian position is to be contrasted with the position in Tasmania, where a 30-​year period bars the Crown. The right of action of a person to whom the Crown land is conveyed is barred at the expiration of 30 years from the date of the original dispossession or 12 years from the conveyance, whichever is the shorter. Thus, in this case the assignee from the Crown is entitled to 12 years from the date of the conveyance, unless at that time there was less than 12 years of the Crown period of 30 years unexpired: in this case, the assignee has the residue of that period.60 Although the limitation statute in Queensland mirrors the Victorian Act in providing that no period of adverse possession can bar the Crown, it does not contain a proviso dealing with the Crown similar to the proviso in s 8 of Limitation of Actions Act 1958 (Vic). Where the Crown land is conveyed and time has commenced to run against the Crown before the conveyance, then the operation of the adverse possession provisions depend on whether the Crown is a “person” to whom the right of action accrues. On balance, it is suggested that the Crown is a person for this purpose.61 If the Crown is a person, the 12-​year period will commence to run against the Crown and continue to run after the conveyance against the assignee from the Crown, notwithstanding that no period of adverse possession could ever bar the Crown. If the Crown is deemed to be a person for the purpose of this provision, the Crown would be in a position to convey land which had been adversely possessed for over 12 years and the assignee would have his or her title extinguished from the date of purchase. [3.55]  In most jurisdictions the relevant legislation expressly provides that the Crown can

take the benefit of the running of the limitation period in respect of an action against it.62 For an example of an English case where the Crown acquired title to land through adverse possession, see Roberts v Swangrove Estates [2008] Ch 439.

59

60 61 62

In Western Australia, s 19(2) of the Limitation Act 2005 (WA) provides that an action may be commenced at any time if it is brought by the Crown or a person claiming through the Crown and on a cause of action which accrues to the Crown. One argument is that a person claiming through the Crown can never lose title by adverse possession if the cause of action originally accrued to the Crown. The better view (although not wholly supported by the wording of the provision) is that a new cause of action accrues to the person claiming through the Crown once the transfer from the Crown is completed and the transferee then has 12 years to commence an action on his or her own cause of action. This view was endorsed by EM Heenan J in Goodwin v Western Australian Sports Centre Trust [2014] WASC 138 at [76]. In that case, however, his Honour was concerned with a different issue, namely whether a person who had been in adverse possession for a period of 12 years while the land was held in private ownership could assert a good title against the Crown, which acquired the paper title after that time. EM Heenan J found at [79] that “a fully accrued … vested possessory estate in land” had been acquired by the person which was enforceable against the Crown. This was so notwithstanding that s 76 of the Limitation Act 2005 (WA) provides that land is taken to have never been affected by possession adverse to the Crown. His Honour did so on the basis that the person’s possession was not adverse to the Crown, but rather adverse to the previous proprietor, and because legislation is presumed not to interfere with vested proprietary rights: at [71], [74]. Limitation Act 1974 (Tas), s 10(1)–​(3). See Hogg, Liability of the Crown in Australia, New Zealand and the United Kingdom (2nd ed, Law Book Co, Sydney, 1989), pp 42–​45 and 215–​216. Limitation Act 1969 (NSW), s 10(1); Limitation of Actions Act 1958 (Vic), s 32; Limitation of Actions Act 1974 (Qld), s 6(1); Limitation Act 1974 (Tas), s 37(1). There is nothing in the South Australia and Western Australia legislation that indicates that the position is different in these jurisdictions. [3.55]  133

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COMMENCEMENT OF THE LIMITATION PERIOD Present interests [3.60]  The limitation period commences from the time the cause of action accrues. In relation

to land, the limitation statutes set out specifically when a person’s right to bring an action to recover land accrues. There are two ways in which a cause of action may accrue to the holder of a present interest. First, such a person may have been in possession and then discontinued possession or been dispossessed (see [3.65]) or, secondly, although entitled to possession under a will or deed for instance, the holder of a present interest may never have obtained possession: see [3.170]. In possession and then discontinued or dispossessed [3.65]  With the exception of the South Australian legislation, the relevant provisions on this

type of case are substantially the same in all jurisdictions. They provide that a person’s right to bring an action to recover land accrues when, first, the person entitled to possession has discontinued possession or has been dispossessed63 and, secondly, adverse possession has been taken by some other person.64 In South Australia the relevant statutory provision states simply that a cause of action accrues when a person entitled to possession has discontinued possession or has been dispossessed. It is clear, however, that despite the lack of a specific statutory provision in South Australia, the cause of action arises only if another person has taken adverse possession of the land.65 The provisions encompassing this principle are poorly drafted and confusing. For example, the two matters referred to above which must exist before a cause of action can be said to arise are contained in quite separate provisions in the limitation statutes. Section 9(1) of the Limitation of Actions Act 1958 (Vic), for instance, provides simply that: Where the person bringing an action to recover land or some person through whom he claims –​

63

64

65

(a) has been in possession thereof; and

Limitation Act 1969 (NSW), s 28; Limitation of Actions Act 1958 (Vic), s 9(1); Limitation of Actions Act 1974 (Qld), s 14(1); Limitation of Actions Act 1936 (SA), s 6; Limitation Act 2005 (WA), ss 3(6), 65(1); Limitation Act 1974 (Tas), s 11(1). Limitation Act 1969 (NSW), s 38(1); Limitation of Actions Act 1958 (Vic), s 14(1); Limitation of Actions Act 1974 (Qld), s 19(1); Limitation Act 2005 (WA), s 65; Limitation Act 1974 (Tas), s 16. But see Bonifacio v NSW Trustee and Guardian (Acting as Executor of the Estate of the Late Adam Frank Woitala) [2015] NSWSC 124 at [53]–​[55], where Darke J was inclined to the view that the limitation period could commence, without the need for someone being in adverse possession, where the date for the accrual of the cause of action is provided for or determined otherwise than by the limitation statute itself. In that case the cause of action arose in favour of the former registered proprietors of land against the current proprietor, who had obtained registration fraudulently but had delayed in going into possession. Without expressing a concluded view, Darke J thought that as the cause of action was permitted by s 118(1)(d) of the Real Property Act 1900 (NSW), the date of accrual was determined outside the Limitation Act 1969 (NSW). On this basis the limitation period would commence on the earlier date on which the former registered proprietors discovered the fraud, rather than the later date on which the fraudulent registered proprietor went into possession. The South Australian legislation is drawn directly from the Real Property Limitation Act 1833 (UK). As in South Australia, this Act stated simply that the cause of action accrued upon dispossession or discontinuance of possession. In Smith v Lloyd (1854) 9 Exch 562; 156 ER 240 the court had to consider this legislation and it was held that the “statute applies not to cases of want of actual possession by the plaintiff, but to cases where he had been out of and another in possession for the prescribed time” (at 572 (Exch); 246 (ER)).

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(b) has while entitled thereto been dispossessed or discontinued his possession –​ the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance.

A reading of such a provision alone suggests that a right of action accrues either on the date of dispossession or discontinuance. It is clear, however, from a thorough perusal of the statute that s 9(1) must be read in conjunction with s 14(1), which provides that no right of action shall be deemed to accrue “unless the land is in the possession of some person in whose favour the limitation period can run (… adverse possession)”. [3.70] In all jurisdictions where a true owner who has been dispossessed or discontinued

possession, subsequently assigns inter vivos or devises the land to another person, the assignee or devisee can be in no better position than the former true owner. Although the principle of nemo dat quod non habet alone might ensure such a result, the general provisions equivalent to s 9(1) of the Limitation of Actions Act 1958 (Vic)66 provide that this is so. The assignee or devisee “claims through” the grantor and the right of action dates from the dispossession or discontinuance of a person through whom the assignee or devisee claims. In Victoria, Queensland and Tasmania there is a further specific provision relating to this situation.67 In these jurisdictions, it is provided that where a cause of action has accrued to a person and that person assures the land to another, the person taking under the assurance may only bring the action during the period which the person by whom the assurance was made could have brought such an action.68 [3.75] Apart from the confusing manner of the presentation of the statutory provisions,

resort must be had to the case law in order to ascertain the legal meaning of the terms used in these provisions. An integration of the relevant statutory provisions suggests that a person’s right to bring an action to recover possession of land may occur in one of two ways.69 First, the cause of action may arise at the date the person entitled to the land is “dispossessed” or ousted from possession by the adverse possessor. Secondly, and perhaps more usually, the cause of action may arise at the date of the taking of adverse possession following an earlier “discontinuance” of possession by the person then entitled to possession. Thus, for example, if A, the owner of land, abandons the land or, in the terminology of the statutes “discontinues possession”, and five years later S enters into adverse possession, A’s right of action does not accrue until S takes possession. How are these terms interpreted by the courts? Although brief descriptions of the terms “discontinuance” and “dispossession” are given, the need to discuss the meaning of each of these terms individually and at length is minimal. The aim of the statutes is that time should start running against the true owner only when another person has taken adverse possession of the land. Whether the taking of adverse possession follows a discontinuance by the true 66

67 68

69

Limitation Act 1969 (NSW), ss 27(2), 11(2)(a); Limitation of Actions Act 1958 (Vic), ss 9(1), 3(4); Limitation of Actions Act 1974 (Qld), ss 14(1), 5(4); Limitation of Actions Act 1936 (SA), ss 6, 3(1); Limitation Act 2005 (WA), s 3(3); Limitation Act 1974 (Tas), ss 11(1), 2(4), (5). Limitation of Actions Act 1958 (Vic), s 10(3); Limitation of Actions Act 1974 (Qld), s 15(3); Limitation Act 1974 (Tas), s 12(5). Section 3(2) and (3) of the Limitation Act 2005 (WA) probably has the same effect. It appears that these provisions were drawn from the Limitation Act 1939 (UK). The mirror provision in the English Act related to future interests created in settlements (post-​1925 future interests are equitable in England). See Treloar v Nute [1976] 1 WLR 1295 at 1300 per Sir John Pennycuick. [3.75]  135

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owner or arises by virtue of a dispossession is not important. Further, what constitutes a discontinuance or a dispossession depends upon the facts of the individual case. Basically, “discontinuance” means that the true owner, or a person with a possessory interest, has abandoned possession. The law assumes that the true owner has possession of his or her land,70 but it is possible for a “discontinuance” to occur.71 “Dispossession” means that the true owner or a person with a possessory interest has been driven out of possession by another.72 [3.80] The term “adverse possession” bore a complex, technical meaning in the early

19th  century and before.73 Under the current Australian legislation, the term “adverse possession” connotes simply actual possession of the land without the licence of the true owner and it is used with this meaning in this chapter.74 The adverse possessor must be able to show that he or she has taken possession and that the true owner no longer enjoys possession. The difficult question is what constitutes “possession” in any given instance. At common law, possession comprises two elements: first, there must be factual possession which demonstrates an appropriate degree of physical control of the land in the circumstances75 and, secondly, the animus possidendi, the intention to possess, must be present.76 It is clear that these factors interact; the acts done must, by their nature, demonstrate the requisite intention and the squatter must have a subjective intention to possess.77 The courts have not formulated specific rules or definitions that can be applied to any given fact situation such that it is possible to say that the presence or absence of particular factors demonstrate the existence or absence of “possession”. “Acts, implying possession in one case, may be wholly inadequate to prove it in another”.78 Although each case must be decided on its own facts, the courts

70 71

72

73

74

75 76

77 78

Powell v McFarlane (1977) 38 P & CR 452 at 470–​472; Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709 at 63,033; see also Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 58. Where the owner can only exercise minimal proprietorial rights because, for example, there is a right of way over the land, “discontinuance” would be very difficult to prove: Traykof v Shanco Holdings Pty Ltd [2001] VSCA 56. The distinction between “discontinuance” and “dispossession” was explained by Fry J in Rains v Buxton (1880) 14 Ch D 537 at 539–​540 and endorsed by the English Court of Appeal in Buckinghamshire County Council v Moran [1990] 1 Ch 623 at 636, 664. All of the terms, “discontinuance”, “dispossession” and “adverse possession” concern the presence or absence of possession in the relevant parties. See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 270 and Staughton v Brown (1875) 1 VLR (L) 150 at 158–​159. A detailed analysis of the historical development of this area of the law is contained in the recent judgment of Strauss QC in Beaulane Properties Ltd v Palmer [2006] Ch 79 at 102–​112. The House of Lords in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 432–​438 per Lord Browne-​Wilkinson considered in detail the meaning of the term “possession” in the context of an adverse possession case. In separate judgments, Lords Bingham of Cornhill, Mackay of Clashfern, Hope of Craighead and Hutton all agreed with the judgment of Lord Browne-​Wilkinson, each adding their own further observations. See also Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60, 61; Cervi v Letcher (2011) 33 VR 320 at 325 [16]. Riley v Penttila [1974] VR 547 at 561. JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 436–​437; Inglewood Investment Co v Baker [2003] 2 P & CR 23. Note that there are some inconsistencies with respect to the actual meaning of the animus possidendi in the context of adverse possession. See [3.115]–​[3.150] and Dockray, “Adverse Possession and Intention –​1” [1982] Conv 256. Prudential Assurance Co Ltd v Waterloo Real Estate Inc [1999] 2 EGLR 85; Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60. Lord Advocate v Lord Lovat (1880) 5 AC 273 at 288; see also Riley v Penttila [1974] VR 547; Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60.

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have laid down guidelines which may be used when the issue arises as to whether adverse possession of particular land has been taken, described at [3.85]–​[3.165].

Factual possession –​nature of the land [3.85]  As Bowen CJ in Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 475 stated,

the possession must be “open, not secret;79 peaceful, not by force; and adverse, not by consent of the true owner”. Open possession means that the user must be unconcealed and “such that it would be noticed by a documentary owner reasonably careful of his or her interests”.80 Thus a squatter who knows the documentary owner was not reasonably careful of his or her interests would know also that little concealment would be needed to hide his or her presence: in the absence of fraudulent concealment81 such a squatter would still be able to maintain an “open” possession.82 Openness may strengthen the claim of adverse possession.83 The requirement of openness does not necessarily prevent adverse possession being taken of an area, such as a cellar.84 It has been held that peaceable possession is synonymous with uninterrupted, exclusive and continuous possession.85 Although unreasonable force should not be used by the squatter,86 the fact that threats may have been used to maintain the possession does not necessarily prevent the possession from being a “peaceable” one.87 A squatter who threatens and warns people (including the documentary owner) off the property with a shotgun may still satisfy the “peaceful without force” test.88 If, however, the documentary owner is frightened to enforce his or her rights in the courts because of the adverse possessor’s conduct, the concept of peaceable possession may not be satisfied.89 But the fact that the act of adverse possession amounts to a criminal act, such as criminal trespass, does not itself prevent the limitation period from running.90

79

80

81 82 83 84 85 86 87 88

89 90

See similarly Monash City Council v Melville (2000) V ConvR 54-​621, where Eames J said the possession must be actual, open, continuous and exclusive and without the licence of the true owner. The fact that a squatter “lies low” does not make the occupation “secret”, provided he or she has not attempted to hide the occupation from the true owner: Purbrick v Hackney London Borough Council [2004] 2 P & CR 553. Re Riley and the Real Property Act (1965) 82 WN (NSW) 373 and 381 per McLelland CJ in Eq. Note that it is openness in relation to the documentary owners, not the authorities. In Cooke v Dunn (1998) 9 BPR 16,489 the fact that the squatter did not list the property as his residential address did not prevent him from being in possession. See [3.285]. See Cooke v Dunn (1998) 9 BPR 16,489 (repair and maintenance work on the land by the squatter should have alerted the documentary owner). See Ellis v Lambeth LBC (2000) 32 HLR 596. Rains v Buxton (1880) 14 Ch D 537. See further [3.100]. Shaw v Garbutt (1996) 7 BPR 14,816 per Young J (NSWSC). Shaw v Garbutt (1996) 7 BPR 14,816 at 14,829–​14,830. Compare Bartlett v Ryan (2000) 10 BPR 18,077. See Harnett v Green (No 2) (1883) 4 LR (NSW) 292 (L); Harris v Wogama Pty Ltd [1969] 1 NSWR 245; Beever v Spaceline Engineering Pty Ltd (1993) 6 BPR 13,270. Compare Eaton v The Swansea Waterworks Co (1851) 17 QB 267. Bartlett v Ryan (2000) 10 BPR 18,077; Hough v Taylor (1927) 29 WALR 97 at 98. R (Best) v Chief Land Registrar [2016] QB 23 (CA). Compare R (Smith) v Land Registry [2009] EWHC 328 (Admin), although that case is better explained by the inability to obtain a title by adverse possession over a public highway, a principle recognised in R v Land Registry [2010] 3 WLR 1223. See Butt, “But No Possessory Title to Road” (2011) 85 ALJ 468; Butt, “Adverse Possession and Criminal Trespass” (2014) 89 ALJ 150. [3.85]  137

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In order for the possession to be adverse, it must be without the consent of the true owner. Possession cannot be “adverse” if the occupier is on the premises under a lawful title (such as a lease) or by the licence of the true owner.91 If a licence has terminated, the formerly consensual possession of the occupier may become adverse possession.92 In the renowned House of Lords decision of JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 Graham initially took possession of valuable grazing land pursuant to a licence which expired in 1983. Negotiations for a new licence took place but no new licence was granted and Graham was asked to vacate. He did not vacate and remained on the land for the statutory period, barring the title of the documentary owner.93 It has also been held that if permission to occupy is given (even if not requested by the occupier) during the running of the limitation period, time stops running.94 There is, however, uncertainty about this proposition,95 especially in view of the otherwise quite stringent principles which apply in determining if time has stopped running.96 The preponderance of authority supports the view that in order to stop time running, there must be a proper acknowledgment of title by the squatter97 and, in this context, that would require a written offer or arrangement by the squatter to take a licence or lease of the land.98 Where the dispute involves family members, the courts are more likely to find that possession executed by one member against another is by licence and is not, therefore, adverse.99 [3.90] Factual possession denotes an appropriate degree of physical control. In order to

determine whether there is a sufficient degree of exclusive control, the particular and peculiar circumstances of the case in hand must be analysed closely. “The character and value of the property, the suitable and natural mode of using it [having regard to all the circumstances], and the course of conduct which a proprietor might be expected reasonably to follow with regard to [her or] his own interests” should all be taken into account in determining whether adverse

91

92 93

94 95 96 97 98 99

Hughes v Griffin [1969] 1 WLR 23; Buckinghamshire County Council v Moran [1990] Ch 623 at 636 per Slade LJ; Cooke v Dunn (1998) 9 BPR 16,489; Ramnarace v Lutchman (Trinidad and Tobago) [2001] 1 WLR 1651 (PC); Executive Seminars Pty Ltd v Peck [2001] WASC 229 (encroachment due to builder’s error and parties made an agreement that encroachment (possession) of squatter could continue whilst the parties attempted to resolve the title problems –​held that this was a form of licence or possession with consent of true owner and time could not run); Sandhu v Farooqui [2004] 1 P & CR 3 (purchaser who takes possession without paying purchase price, but with permission of the vendor, may eventually acquire a possessory title if he or she can show withdrawal of permission by the vendor and communication of that withdrawal to the purchaser); Batsford Estates (1983) Co Ltd v Taylor [2006] 2 P & CR 5 (implied consent may arise where a reasonable person would believe that permission for occupation had been given by the true owner). Public Trustee v Bellotti (1986) 4 BPR 9196 at 9203; JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419; Bridges v Bridges [2010] NSWSC 1287 at [34]. Michael Graham had died and the action was brought by his personal representatives. It was found that, after the expiration of the licence, Graham continued to run cattle and cut hay as he had been permitted to do under the licence. It was also found, however, that he conducted other activities, such as over-​wintering of cattle and yearlings in a shed, which had not been specifically permitted under the licence. BP Properties Ltd v Buckler (1988) 55 P & CR 337; Cooke v Dunn (1998) 9 BPR 16,489. See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 1107; Wallace, “Limitation, Prescription and Unsolicited Permission” [1994] Conv 196. See generally,[3.355]–​[3.375]. See [3.365]. Shaw v Garbutt (1996) 7 BPR 14,816 at 14,826. Radonich v Radonich [1999] WASC 165; Bridges v Bridges [2010] NSWSC 1287 at [16]–​[17].

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possession of the land has been taken.100 As was stated by Slade  J in Powell v McFarlane (1977) 38 P & CR 452 at 471, the issue of possession must be determined having regard to “the nature of the land and the manner in which land of that nature is commonly used or enjoyed”. Effectively (at 471), “the alleged possessor (must have) been dealing with the land in question as an occupying owner might have been expected to deal with it and [show] that no one else has done so”.101 Thus, the occupation of premises evidenced by physical presence by the carrying out of improvements or repairs or by the erection of buildings will constitute strong evidence of possession.102 Nevertheless, the fact that a squatter could have done more than he did on the land is insufficient in itself to defeat a claim for adverse possession.103 The possession of a tenant under a lease from the squatter can constitute possession in the relevant sense; for the purposes of adverse possession, the tenant takes possession on behalf of the landlord/​squatter.104 Many cases emphasise, however, that the type of factual possession which is necessary for a cause of action to accrue must be determined in light of the facts of the particular case. In Red House Farms (Thorndon) Ltd v Catchpole [1977] 244 Estates Gazette 295; 121 Sol J 136 it was held that shooting over marshy land, which was of no use for agriculture, constituted adverse possession.105 In contrast, the tethering of ponies and the playing by children on land were held to be, in the circumstances, too trivial to constitute acts of adverse possession.106 Similarly, camping and fishing on land without evidence that others were prevented from using the land was insufficient to constitute adverse possession.107 In Riley v Penttila [1974] VR 547 the enclosure of land and its use first as a tennis court and then as a garden by a person already holding an easement for recreational and garden purposes over the land in dispute was held not to constitute adverse possession in the circumstances. [3.95]  Where the land comprises a large area, acts of possession performed on one part of the

land may provide evidence of possession of the whole.108 Further, where land is farmed on a

100

Lord Advocate v Lord Lovat (1880) 5 AC 273 at 289. See also Littledale v Liverpool College [1900] 1 Ch 19; Murnane v Findlay [1926] VLR 80; Riley v Penttila [1974] VR 547. All these matters are relevant in considering whether there has been a “discontinuance” or a “dispossession”. 101 Slade J’s statement was approved by the House of Lords in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 433. Note, however, the relevant intention is an intention to possess, not an intention to own: see, for example, Buckinghamshire County Council v Moran [1990] Ch 623 at 643 per Slade LJ; Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60. See [3.145]. 02 See Cooke v Dunn (1998) 9 BPR 16,489; McIntyre v Porter (1983) 2 VR 439; cf Australian Red Cross Society 1 v Malor (1983) V ConvR 54-​109, where the carrying out of certain improvements by the squatter was not enough. 03 Purbrick v Hackney London Borough Council [2004] 2 P & CR 553 (a builder used a dilapidated building to 1 store his tools but, for the first four years of occupation, he undertook no improvements of the building –​ this fact did not prevent the builder from being “in possession” for the purpose of the limitation legislation). 04 Doe d Lewis v Rees (1834) 6 C & D 610; Smirk v Lyndale Developments Ltd [1975] Ch 317; Ian Rumney 1 Office Equipment Pty Ltd v Tasmania [1998] TASSC 6; Kierford Ridge Pty Ltd v Ward [2005] VSC 215. Also see McFarland v Gertos [2018] NSWSC 1629 at [65], [67]. 05 See also Cadija Unmar v S Don Manis Appu [1939] AC 136 (land used only for cutting and selling of grass 1 where the land was swampy and otherwise unsuitable for cultivation –​sufficient evidence of possession). 06 Tecbild Ltd v Chamberlain (1969) 20 P & CR 633. 1 07 Re Johnson [2000] 2 Qd R 502. Later the squatter erected a fence and paid the rates and Wilson J suggested 1 that these further acts coupled with the earlier acts would establish a sufficient degree of physical control. 08 Staughton v Brown (1875) 1 VLR (L) 150 at 163; Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709 1 at 63,033. [3.95]  139

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rotational or peripatetic basis, adverse possession of the whole may be claimed.109 However, possession of land pursuant to the paper title does not amount to adverse possession of the minerals in the land, where the minerals are subject to a separate title and where neither the owner of the land nor the owner of the minerals mined or extracted the minerals or otherwise sought to exercise any entitlement over them.110 [3.100]  In some circumstances adverse possession of part of a piece of land may be taken,

despite the fact that the owner remains in possession of other parts of the land.111 This may occur on a horizontal or vertical basis. In Quach v Marrickville Municipal Council (Nos 1 and 2) (1990) 22 NSWLR 55 the plaintiffs had been in possession of the disputed land, other than an area occupied by a drain pipe, for a time in excess of the limitation period. The New South Wales Supreme Court held that the plaintiffs had barred the right of the owner with respect to all of the land except the area occupied by the drain pipe. It is important to note that an owner and an alleged possessor cannot both be in possession at the same time. Possession is single and exclusive.112 In cases where neither can demonstrate a “single and exclusive possession”, the owner will be held to have possession.113 [3.105]  In a number of older cases it had been held that, in order for time to start running,

the acts of user should be inconsistent with the rights of the true owner and with the use he or she intended to make of the land.114 Whether the acts of user constituted such an inconsistency necessarily varied with each fact situation. Satisfaction of a criterion demanding that the alleged possessor demonstrate use of the land inconsistent with the purpose to which the true owner intends to put the land were to prove difficult where the true owner had no present use but a future intended purpose regarding the land or where the true owner had no particular present or future intended use. Thus, for example, in Leigh v Jack (1879) 5 Ex D 264, where the test was first stated by Bramwell LJ, the alleged possessor failed to prove adverse possession; his act of placing refuse on the owner’s land for the statutory period was not inconsistent with the owner’s intention of dedicating the land in the future to the public as a roadway.115 Similarly, where the owners intended to use their land for development purposes in the future, the cultivation of land, the erection of sheds and lines of bricks and the use of 109 110

Higgs v Nassauvian Ltd [1975] AC 464; cf Ocean Estates Ltd v Pinder [1969] 2 AC 19. Payne v Dwyer [2013] WASC 271 at [65]–​[69]. In this case the owner of the land was also a tenant in common of the separate title comprising the minerals, and the claim was that the half interest of the other tenant in common of the minerals had been extinguished by their adverse possession by the owner of the land. However, because the owner of the land –​even if it were in actual possession of its own half share of the minerals –​was not in adverse possession of its co-​owner’s share there was no extinguishment: at [71]–​ [73]. For the principles dealing with adverse possession between co-​owners, see [3.270]. 111 See, for example, Rains v Buxton (1880) 14 Ch D 537 (a cellar); Marshall v Taylor [1895] 1 Ch 641 (drain pipes); Midland Railway Co v Wright [1901] 1 Ch 738 (a tunnel); Williams v Usherwood (1981) 45 P & CR 235 (overhanging eaves); Quach v Marrickville Municipal Council (Nos 1 and 2) (1990) 22 NSWLR 55 (a drain pipe). 12 Dockray, “Adverse Possession and Intention –​II” [1982] Conv 345 at 346. 1 113 Dockray, “Adverse Possession and Intention –​II” [1982] Conv 345 at 346; see also Cody v Underwood [2003] QSC 345. 14 Leigh v Jack (1879) 5 Ex D 264; Williams Bros Direct Supply Ltd v Raftery [1958] 1 QB 159; Riley v Penttila 1 [1974] VR 547; Wallis’s Cayton Bay Holiday Camp Ltd v Shell-​Mex and BP Ltd [1975] 1 QB 94; Treloar v Nute [1976] 1 WLR 1295. 115 Compare the judgment of Ormrod LJ in Wallis’s Cayton Bay Holiday Camp Ltd v Shell-​Mex and BP Ltd [1975] 1 QB 94 at 117.

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the land for the purpose of rearing greyhounds by another person were insufficient to satisfy the criterion.116 In subsequent decisions, the English Court of Appeal expanded on the formulation and suggested that where the true owner had no particular present purpose but only a future intended use for the land, or even where a true owner had no particular present or future use for the land, a licence from the true owner to the alleged possessor was to be implied.117 Such a licence would preclude completely any suggestion that the alleged possessor was in adverse possession.118 The above interpretation was strongly criticised119 and there is now legislation in England which prevents the implication of a licence in the manner suggested in the Court of Appeal cases.120 Additionally, subsequent cases in England have rejected the position that, even at common law, adverse possession cannot be proved unless the alleged possessor shows acts of user inconsistent with the purpose to which the true owner intends to put the land. In Buckinghamshire County Council v Moran [1990] Ch 623 Slade  LJ reiterated that legal possession comprises the elements of factual possession and the animus possidendi, and that proof of acts of user inconsistent with the purpose to which the true owner intends to put the land is unnecessary.121 In JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 437–​438 the House of Lords also approved this view.122 It has been suggested that the only way in which the intention of the true owner to use the land for a particular purpose at a future date may become relevant is if the alleged possessor knows of such an intention and thus does not, in light of this knowledge, form the requisite intention himself or herself to possess the land and exclude others.123 [3.110]  Although there is no similar provision in any of the Australian limitation statutes, the

implied licence doctrine is unlikely to be applied by Australian courts. In Woodward v Wesley Hazell Pty Ltd (1994) ANZ ConvR 624124 Underwood J, after considering the development and demise of the doctrine in England, stated (at 627) that “[e]‌ven if the Shell-​Mex case and Gray v Wykeham-​Martin were binding upon me, they should no longer be regarded as good

116 117

Williams Bros Direct Supply Ltd v Raftery [1958] 1 QB 159. Wallis’s Cayton Bay Holiday Camp Ltd v Shell-​Mex and BP Ltd [1975] 1 QB 94; Gray v Wykeham-​Martin (unreported, Court of Appeal, 17 January 1977, No 10A). 118 Wallis’s Cayton Bay Holiday Camp Ltd v Shell-​Mex and BP Ltd [1975] 1 QB 94 at 103 per Lord Denning, at 117 per Ormrod LJ. Ormrod LJ held that the plaintiffs had not dispossessed the defendants as the farming activities of the plaintiffs were not inconsistent with the defendants’ future plans for the land. Note, however, that his Honour suggested that had the plaintiffs built chalets or other structures, this may have jeopardised the proposed development for the land and thus constituted adverse possession: [1975] 1 QB 94 at 117. Compare the majority judgments with the dissenting judgment of Stamp LJ, who conceded the greater difficulty in finding adverse possession where the true owner is not using the land for the purpose for which it was acquired, but did not accept the implied licence doctrine. 119 See, for example, Slade J in Powell v McFarlane (1977) 38 P & CR 452 at 473. 20 Limitation Act 1980 (UK), s 15(6), Sch 1, para 8(4). However, the provision still permits a court to infer that 1 a licence exists if “such a finding is justified on the actual facts of the case”. 121 Confirming the views he expressed in Powell v McFarlane (1977) 38 P & CR 452 at 473. See similarly Nourse and Butler-​Sloss LJJ. 22 Compare Beaulane Properties Ltd v Palmer [2006] Ch 79, discussed at [3.25]. 1 123 The House of Lords in the JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 438 took the view that this would be an infrequent finding or inference where the true owner had been excluded. 124 Discussed in Skapinker, “Adverse Possession” [1994] LSJ 32. [3.110]  141

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law”. Recent Australian decisions have accepted the interpretation of the Court of Appeal in Buckinghamshire County Council v Moran [1990] Ch 623.125 In Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 61, 78–​79 the Victorian Court of Appeal endorsed the position in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419. Despite the probable inapplicability of the contrived implied licence doctrine in Australia, it remains the case that permission given by the true owner to the user of the land does prevent the use from constituting adverse possession.126 Such permission may sometimes be implied from the facts of the particular case.127

Animus possidendi [3.115] The second material consideration in determining whether adverse possession

of the land has been taken concerns intention. The person claiming to have taken adverse possession must have the relevant animus possidendi.128 Especially where the acts relied upon as constituting adverse possession are equivocal, the intention with which they are done is important.129 The person claiming to have taken adverse possession must be more than a persistent trespasser; that person must have the intention to use the land as his or her own and to exclude all others, including the true owner so far as is practicable and so far as the law permits (see [3.140]–​[3.145]). [3.120]  The issue of proof of the requisite intention is a vexed and difficult one. It has been

suggested that the enclosure of an area of land is as unequivocal as an act of adverse possession can be and prima facie demonstrates the requisite intention.130 Even where there is enclosure, however, the intention must be considered in light of the facts of the particular case; despite enclosure, the requisite intention may be absent. In Riley v Penttila [1974] VR 547 a plan of subdivision provided for the purchasers of lots adjoining a common reserve to have the right to use and enjoy the reserve for the purposes of recreation or as a garden or a park. The right was held to amount to an easement. A predecessor in title of the defendant erected a fence around a part of the land adjoining his lot for the purpose of enclosing a tennis court he built. The evidence showed that the person who erected the tennis court and the fence around it intended to use the easement he possessed for a specific recreational purpose and that he invited other lot owners, who enjoyed the benefit of the same type of easement, to use the tennis court. Therefore, the evidence did not support the proposition that the defendant’s predecessor intended to take actual possession adverse to the possession of the true owner. Rather, the evidence suggested that he simply wished to gain a special enjoyment from the liberty already granted to him. Reliance on enclosure by an already existing fence as evidencing an intention to possess is insufficient if there are not other acts on the land demonstrating physical control

25 1 126 127 128

129 130

See, for example, Re Johnson [2000] 2 Qd R 502; Monash City Council v Melville (2000) V ConvR 54-​621. See nn 94 and 95. See, for example, Ghilarducci v Ghilarducci [1993] ANZ ConvR 331. Littledale v Liverpool College [1900] 1 Ch 19; Williams Bros Direct Supply Ltd v Raftery [1958] 1 QB 159; George Wimpey & Co Ltd v Sohn [1967] Ch 487; Murnane v Findlay [1926] VLR 80; Riley v Penttila [1974] VR 547; Cervi v Letcher (2011) 33 VR 320 at 336 [59]. See particularly, Riley v Penttila [1974] VR 547; JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 447 per Lord Hutton; Inglewood Investment Co Ltd v Baker [2003] 2 P & CR 23. Seddon v Smith (1877) 36 LT 168 at 169; George Wimpey & Co Ltd v Sohn [1967] Ch 487 at 511; Monash City Council v Melville (2000) V ConvR 54-​621; Guggenheimer v Registrar of Titles (2002) V ConvR 54-​658.

142 [3.115]

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and an intention to possess.131 Similarly, fencing for the purpose of conveniently restricting the movement of livestock, without any intention to exclude others, cannot constitute adverse possession.132 [3.125] In Powell v McFarlane (1977) 38 P & CR 452 Slade J stated that not only must the

intention to possess be present, but also that intention should be made clear to the world.133 As has been stated in another case, the intention should be clear from the acts themselves.134 The statement of Slade J also suggests that certain acts, such as the cultivation of agricultural land, may be so obvious as to satisfy such a test.135 Many acts, however, are more equivocal and it would be difficult to prove that it was “perfectly plain to the world at large [that he] intended to exclude the [world at large]”.136 Recent Australian decisions137 have adopted generally the tests set out by Slade J in Powell’s case and subsequently approved by the House of Lords in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, without elaborating on the issue as to whether the intention must be made clear to the world at large. However, the implication from these cases, and probably also from the earlier case of Clement v Jones (1909) 8 CLR 133, is that the intention should be made clear to the world at large. [3.130]  A question arises as to the relative value of the evidence of the adverse possessor in

determining whether the requisite intention has been proved. Direct evidence from an adverse possessor of a lack of the requisite intention demonstrates that the animus possidendi did not exist and prevents the squatter from being in possession for the purpose of a limitation statute. For example, in Williams Bros Direct Supply Ltd v Raftery [1958] 1 QB 159138 Raftery’s evidence that he was entitled to use the strip of land at the back of his rented premises, that he was “[n]‌ot trying to take over land, not really” and that he had done nothing to keep the true owners off the land, revealed a lack of the relevant intention and was one reason for the Court of Appeal deciding that he had not taken possession. In Lambeth London Borough Council v Blackburn (2001) 82 P & CR 494; [2001] EWCA 912, however, a squatter who gave evidence that he thought his possession was temporary as it was likely he would be evicted by the paper owner was held to have the requisite intention to possess. The English Court of Appeal found that the squatter did not intend to go until he was lawfully evicted and thus he had shown an intention to exclude the whole world including the paper owner, as far as was reasonably practicable. The statements of the adverse possessor must be interpreted carefully and in the context of all the facts of the case. In contrast to the situation where the alleged possessor specifically denies having the requisite intention, as in Raftery’s case, it appears that statements or declarations of intention

131 132 133 134 135 136 137

138

Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709. Inglewood Investment Co Ltd v Baker [2003] 2 P & CR 23. Powell v McFarlane (1977) 38 P & CR 452 at 472. See similarly Cody v Underwood [2003] QSC 345. Tecbild Ltd v Chamberlain (1969) 20 P & CR 633. See Jackson, “The Animus of Squatting” (1980) 96 LQR 333 at 334. Powell v McFarlane (1977) 38 P & CR 452 at 472. Woodward v Wesley Hazell Pty Ltd (1994) ANZ ConvR 624; Ghilarducci v Ghilarducci (1993) ANZ ConvR 331; Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709; Kierford Ridge Pty Ltd v Ward [2005] VSC 215; Abbatangelo v Whittlesea City Council (2008) V ConvR 54-​750 at [5]‌. See similarly JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, where it was clear that Graham would have been prepared to pay for occupation of the disputed land if he had been asked. [3.130]  143

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made by the claimant indicating possession of the requisite intention should usually be accorded little weight in determining whether or not the animus possidendi exists. Such statements are capable of being “merely self-​serving”139 and may be very difficult to refute. This is not only the case where the statement is made at the time of any hearing, but also where the statement relied upon was purportedly made at the time when the squatter took factual possession. A more recent case, however, formally rejects the view that no weight is ever to be given to statements by a putative adverse possessor about his or her intentions regarding the relevant land. In Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60 the Victorian Court of Appeal stated: while a statement by a person that he or she intended to possess land will not be enough in itself to establish such an intention, it may be relevant when taken in combination with other evidence suggesting an intention to possess.

To understand the significance of this statement, it is necessary to put it in context. At trial, Pagone  J, while acknowledging that subjective evidence by a witness must be closely scrutinised as it may be self-​serving,140 accepted the evidence of Mrs Abbatangelo (the putative adverse possessor) that “she came to use the disputed land as if it were part of the integrated whole of the properties for the use, enjoyment and activities of the family there” (at [14]). His Honour stated that it would be curious if a parcel of land that was surrounded on three sides by land owned by the Mrs Abbatangelo and her husband (and on the fourth side by a road), and over which no outsider exercised control for nearly 50 years, were not regarded by the adverse possessor and her family as their backyard.141 On appeal, the Court of Appeal rejected an argument by the documentary owner that the trial judge had erred in accepting Mrs Abbatangelo’s subjective evidence in this regard. Their Honours held that Pagone J was alive to the potentially self-​serving nature of Mrs Abbatalangelo’s explanation of her state of mind and had properly evaluated this statement in the context of all of the evidence in the case. According to their Honours, Pagone J was entitled to accept Mrs Abbatalangelo’s stated intention in the context of the evidence as a whole.142 In the Abbatangelo litigation it was significant, however, that there was ample objective evidence of the “integration” that was the subject of Mrs  Abantangelo’s assertion. Fences were built on the boundary between the disputed land and the “outside world”; trees and vegetation were maintained on, and noxious weeds, pests and fallen timber were removed from, the disputed land; an old bath tub was left there as a water trough for livestock; family members played on the land and swings and a form of cubby house were erected.143 Having regard to the totality of these corroborating facts, accepting Mrs Abbatangelo’s statements as evidence of her intention to possess the land cannot be seen as a significant departure from the position that normally little weight will be given to such assertions.

139 140 141 142 143

Powell v McFarlane (1977) 38 P & CR 452 at 476; Re Johnson [2000] 2 Qd R 502 at 509 per Wilson J; Taylor v Lawrence [2001] EWCA Civ 119. Abbatangelo v Whittlesea City Council (2008) V ConvR 54-​750 at [12]. Abbatangelo v Whittlesea City Council (2008) V ConvR 54-​750 at [14]. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 81–​82. Abbatangelo v Whittlesea City Council (2008) V ConvR 54-​750 at [26]–​[32].

144 [3.130]

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[3.135]  A consideration, not necessarily relevant to every fact situation, has been referred to and used in a number of cases, both Australian and English.144 In Murnane v Findlay [1926] VLR 80 at 88 Cussen J of the Victorian Supreme Court described this consideration as follows: where an act done is given a more limited effect than otherwise might have been the case by reason of the fact that it may be taken in the circumstances not as indicating an intention to exclude the true owner, but as indicating an intention merely to produce a particular special benefit to the person doing it.

For example, a person claiming rights through adverse possession may be held not to have dispossessed the true owner because the claimant was merely doing something in furtherance of rights of enjoyment already conferred on him or her by the true owner. In Riley v Penttila [1974] VR 547 at 564 it was held that the act of erecting a fence and enclosing the disputed area showed an intention to produce a special benefit rather than an intention to exclude everyone including the true owner.145 However, as pointed out by the Victorian Court of Appeal in Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 79–​80, the concepts of “special benefit” and “adverse possession” are not mutually exclusive. For example, a putative adverse possessor who owns land adjacent to the parcel in dispute may be able to put that parcel to a greater variety of uses and derive a greater range of benefits than someone living some distance away. Accordingly, acts undertaken on the disputed land that might otherwise be construed as conferring a mere special benefit –​such as grazing livestock, maintaining trees and vegetation, removing noxious weeds, shooting rabbits, keeping down snakes  –​might be construed as acts of exclusive possession. This is because such an exploitation of the existing physical characteristics of the disputed land complements and enhances the enjoyment of the adjoining owned land. [3.140] Two specific questions arise in a consideration of the exact nature of the requisite

intention. First, the issue as to whether or not it is necessary to have an intention to exclude specifically the true owner must be addressed. The traditional view taken in Littledale v Liverpool College [1900] 1 Ch 19 at 23, and followed in a number of subsequent cases, requires that the person claiming to be in adverse possession must intend, not only to exclude strangers and exercise control over the land, but also to exclude the true owner specifically.146 It has been argued that this seemingly entrenched view of the animus possidendi is not part of the common law’s concept of possession of land.147 The more common meaning ascribed to the term animus possidendi is that it comprises an intention to exercise control and to exclude strangers. The English Court of Appeal in Ocean Estates v Pinder [1969] 2 AC 19 adopted

144

Murnane v Findlay [1926] VLR 80; Riley v Penttila [1974] VR 547; Littledale v Liverpool College [1900] 1 Ch 19; Leigh v Jack (1879) 5 Ex D 264; Philpot v Bath (1904) 20 TLR 589; (1905) 21 TLR 634; George Wimpey & Co Ltd v Sohn [1967] Ch 487. 145 See also Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709; Inglewood Investment Co Ltd v Baker [2003] 2 P & CR 23. 146 See, for example, Clement v Jones (1909) 8 CLR 133; Riley v Penttila [1974] VR 547 at 563; Powell v McFarlane (1977) 38 P & CR 452 at 471–​472; Buckinghamshire County Council v Moran [1990] Ch 623 at 639–​640 per Slade LJ. See also Dockray, “Adverse Possession and Intention –​I” [1982] Conv 256 at 257–​261. 147 Dockray, “Adverse Possession and Intention –​I” [1982] Conv 256 at 258 and the texts he cites supporting his argument: Pollock and Wright, Possession, p 17; Lightwood, Possession, p 23; Holmes, The Common Law, p 220. [3.140]  145

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this meaning.148 There seems to be little merit in the insistence upon an unlimited intention to exclude the true owner specifically: the owner is not placed in any better position149 and the adverse possessor is not required to prove any further or more substantial facts with respect to user than if the usual definition of animus possidendi were adopted. Further, it fails to take account of the situation, which has been accepted as constituting adverse possession, where the adverse possessor uses the land believing himself or herself to be the owner.150 The interpretation of the animus possidendi which requires an intention to exclude the true owner “seems to be an artificial obstacle; it appears to require little more than a private intention to do something which a squatter is not actually required to attempt and which, in most cases, he could not lawfully or practically do”.151 In order to reflect more correctly the definition of “possession”, Slade  J in Powell v McFarlane (1977) 38 P & CR 452 at 471 reformulated the test as requiring “an intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow”. The House of Lords in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 436–​437 approved this definition and it has also been approved in recent Australian decisions.152 Many of the cases in which the purported adverse possessor failed, and in which the court took the view that an intention to exclude the true owner was necessary, could have been resolved against the adverse possessor upon a more liberally based intention test. For example, in Riley v Penttila [1974] VR 547 the adverse possessor had no intention to control the area enclosed and exclude others; rather, he erected the fence as a means of better enjoying the easement already granted. [3.145]  A second issue is whether the adverse possessor needs to demonstrate an intention to

exclude the true owner for all time and in all future circumstances. Several decisions suggest that an intention to own the land must be present and thus indicate that the above intention must be present.153 However, the better view is that the requisite intention is an intention to possess to the exclusion of others rather than an intention to own.154 In Buckinghamshire 148

Also see Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709 at 63,033; Wretham v Ross [2005] EWHC 1259. 149 Such an intention does not give the owner any greater knowledge of the adverse possessor’s possession as it does not require the adverse possessor to “inform” the owner of his or her presence on the land. 50 Bligh v Martin [1968] 1 WLR 804; Malter v Procopets (2000) V ConvR 54-​624 (VSCA); Williams v Usherwood 1 (1981) 45 P & CR 235; Hughes v Cork [1994] EGCS 25; Pulleyn v Hall Aggregates (Thames Valley) Ltd (1992) 65 P & CR 276. Similarly, where the adverse possessor mistakenly thinks he is entitled to possession of the disputed land under a lease, such a mistaken belief does not prevent the requisite intention to possess from existing: Sunny Corporation Pty Ltd v Elkayess Nominees Pty Ltd [2006] VSC 314; Lodge v Wakefield Metropolitan City Council [1995] 2 EGLR 124. Compare Adams v Trustees of Michael Batt Charitable Trust (2001) 82 P & CR 406 (probably incorrectly decided: see Jourdan, Adverse Possession (Butterworths, London, 2003), pp 169–​170). 151 Dockray, “Adverse Possession and Intention –​I” [1982] Conv 256 at 261. 52 Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709; Kierford Ridge Pty Ltd v Ward [2005] VSC 215; 1 Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 60. 53 For example, Littledale v Liverpool College [1900] 1 Ch 19 at 23; George Wimpey & Co Ltd v Sohn [1967] Ch 1 487 at 511 per Russell LJ; Powell v McFarlane (1977) 38 P & CR 452. 54 Buckinghamshire County Council v Moran [1990] Ch 623 at 643 per Slade LJ; Lambeth London Borough Council 1 v Blackburn (2001) 82 P & CR 494; [2001] EWCA 912; JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 436; J Alston & Sons Ltd v BOCM Pauls Ltd [2009] 1 EGLR 93. 146 [3.145]

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County Council v Moran [1990] Ch 623 statements by the adverse possessor that impliedly acknowledged that he would have to leave the land in dispute if the council, the true owner, decided to go ahead with plans to construct a new road showed that he did not have an intention to exclude the true owner in all future circumstances. Nevertheless, the adverse possessor intended to possess the plot to the exclusion of all persons including the council unless and until the road was constructed. On these facts, the Court of Appeal found that the requisite intention was present.155 Similarly evidence that the occupier would have been prepared to pay for occupation of the disputed land if he had been asked by the paper owner does not demonstrate an absence of an intention to possess.156 In Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 81 the Victorian Court of Appeal emphasised that the relevant intention was one to possess, rather than to own. Accordingly, statements by the putative adverse possessor in a planning application that the disputed land was “Not in Title”, and statements to an employee of the Council (the documentary owner) that the land was owned by the Council, did not detract from her intention to possess the land to the exclusion of all others. [3.150]  The requirement that an adverse possessor has a particular intention or motive has

been the subject of some criticism.157 The question has been asked as to whether deliberate “land stealers” should be placed in a better position than those mistakenly using the land believing they have a right to do so. The limitation statutes do not require any particular motive. However, the interpretation of the term “possession” by the courts, particularly in limitation cases, has ensured that the requisite intention is a vital element.158 One commentator, Goodman, suggests that the intention of an adverse possessor should be irrelevant. He argues that there should be a rebuttable presumption that long continued possession is adverse to the true owner. More recently, it has been suggested that:  “[C]‌onsideration should be given to changing the whole basis of acquisition of title by possession and limiting it to cases where possession was acquired in good faith but, for one reason or another, no valid legal title passed” (emphasis added).159 The suggestion of Goodman is based upon the notion that the common law concept of prescription would be a better doctrine with which to deal with this area of law. In contrast to the statutory principle of limitation, prescription presumes a grant after long use and only operates where the possession is taken as of right –​without permission, without stealth and without force. As Nourse LJ remarked in Buckinghamshire County Council v Moran [1990] Ch 623 at 644: “[t]‌hat is the antithesis of what is required for limitation, which perhaps can be described as possession as of wrong”. The intention of the true owner in prescription is very important for no grant may be presumed if the true owner’s intention is shown to be

155

See also Lambeth London Borough Council v Blackburn (2001) 82 P & CR 494; [2001] EWCA 912, discussed at [3.130]. 156 JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at 438. 157 See, for example, Goodman, “Adverse Possession of Land –​Morality and Motive” (1970) 33 Mod LR 281 at 281; Dockray, “Adverse Possession and Intention –​I” [1982] Conv 256 at 263; Jackson, “The Animus of Squatting” (1980) 96 LQR 333 at 336; see also the judgments in Hayward v Chaloner [1968] 1 QB 107. 58 In Tasmania, legislation has been introduced which sets out new rules governing adverse possession of 1 Torrens Land: see Land Titles Act 1980 (Tas), ss 138T–​138Y, discussed at [3.395]. A number of criteria for determining possession are set out, but the intention of the squatter is not one of them. 159 Jackson, “The Animus of Squatting” (1980) 96 LQR 333 at 336. [3.150]  147

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against such a grant. The limitation statutes ensured that prescription did not develop except in the area of incorporeal hereditaments such as easements and profits à prendre.160

Two common acts relied upon as proof [3.155]  The most important point which should emerge from the analysis at [3.85]–​[3.150]

is that the issue of whether or not adverse possession exists depends heavily upon the facts of each case and the nature of the land involved. Because of this, it is perhaps inappropriate to analyse separately two particular acts that are often relied upon to aid in proof in cases concerning adverse possession. Nevertheless, as the acts in question are so often referred to and relied upon, it is intended to consider them briefly: fencing (see [3.160]) and payment of rates: see [3.165].

Fencing [3.160]   The enclosure of an area of land by fencing is clearly a method by which a person

can demonstrate that he or she intends to dispossess and has taken possession of the land. In fact, enclosure has been said to be the strongest possible evidence of adverse possession.161 There have been many cases where the fencing of the disputed area by the squatter has been a most important factor in the determination that adverse possession of the land has been taken.162 Nevertheless, as stated at [3.120], in order to determine if adverse possession has been taken, the erection of a fence must be considered in light of all the circumstances.163 In Clement v Jones (1909) 8 CLR 133 two blocks of land belonging to two different owners were enclosed within the one ring fence erected by the plaintiff. The plaintiff grazed his cattle over both blocks of land and eventually brought an action claiming to have extinguished the defendants’ title. The High Court held in favour of the defendants. Griffith CJ took the view that the running of cattle on the defendants’ land and the erection of the one ring fence around both properties were equivocal acts. Therefore, to determine if there had been dispossession by the plaintiff, the intention of the parties, and in particular the plaintiff, was very important. In view of the fact that the property comprised large areas of grazing land, the acts relied upon by the plaintiff were insufficient to demonstrate that he intended to take exclusive possession and to exclude the defendants.164 The potential role that the erection of fencing can have in adverse possession claims was examined in detail in Whittlesea City Council v Abbatangelo (2009) 259 ALR 56. This case 60 See also the discussion of human rights laws in the context of adverse possession at [3.25]–​[3.30]. 1 161 Seddon v Smith (1877) 36 LT 168 at 169. 162 For more recent examples, see Monash City Council v Melville (2000) V ConvR 54-​621; Malter v Procopets (2000) V ConvR 54-​624 (VSCA); Guggenheimer v Registrar of Titles (2002) V ConvR 54-​658; Bowman v Tremaine [2016] WASC 294. 163 See, in particular, Littledale v Liverpool College [1900] 1 Ch 19; Riley v Penttila [1974] VR 547. Also see Cervi v Letcher (2011) 33 VR 320 at 337–​337 [62]–​[64]. In this case the disputed land was a driveway over which a right of carriageway had been granted to and used by the defendant. The fencing-​in of the driveway to the defendant’s land was found not to establish the necessary animus possidendi because the purpose of doing so was for the better enjoyment of a right of carriageway, rather than to exclude the true owner. 164 Isaacs J approached the problem by holding that the defendants had not discontinued their possession. In view of the type of land, their actions in cutting down timber on the property several times during the relevant period and checking and replacing boundary pegs were evidence of assertion of title and continuing possession. The actions of the plaintiffs were insufficient to demonstrate “dispossession” in these circumstances. See also Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709; Inglewood Investment Co Ltd v Baker [2003] 2 P & CR 23. 148 [3.155]

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involved an adverse possession claim by Mrs Abbatangelo over adjoining rural land owned by the Council. Mrs Abbatangelo’s land surrounded the disputed land on three sides. On the fourth side the disputed land adjoined a public road. For the Victorian Court of Appeal, an extremely important act of adverse possession was the construction (by Mrs Abbatangelo’s former co-​owner, her late husband) of a fence on the boundary between the disputed land and the road, which effectively incorporated the disputed land with Mrs Abbatangelo’s land. The Court concluded that the role of that fence in securing possession of the disputed land was not diminished by the fact that it served to keep grazing animals in, as well as other people out, as fences can serve multiple purposes. Nor did it matter that it was possible for people simply to step through the wires that comprised the fence; the fence was nonetheless a sign to others not to enter the disputed land.165 Additionally, the court noted, without adverse comment, the trial judge’s finding that the incorporation of the disputed land into Mrs Abbatangelo’s land was not negated by the existence of other fences erected on the boundary between the two parcels. These other fences differed in nature and appearance from the fences erected on the boundary between the disputed land and the outside world. These “internal” fences were feature fences serving aesthetic or functional purposes, rather than marking a boundary.166 By way of summary, it can be said that the decision in Whittlesea City Council v Abbatangelo indicates that the “nature and purpose of a fence will be affected by the nature, location and characteristics of the land and the uses to which it is put”.167 An illustration of this can be found in KY Enterprises Pty Ltd v Darby [2013] VSC 484. In this case the disputed land was vacant land owned by the plaintiff and located between the plaintiff’s and the defendant’s neighbouring shop buildings. There was no boundary fence between the parcels and the defendant used the disputed land as a driveway. The defendant erected and kept locked a set of gates that prevented access to the disputed land from the street. Although the rear of the plaintiff’s shop abutted the disputed land, it was not possible to gain access to it from the shop because of the dilapidated condition of the building. In upholding the defendant’s claim for adverse possession of the disputed land, Lansdowne AsJ concluded at [235] that fencing off the disputed land from the street gave the defendant possession of the disputed land, despite the fact that it was in the plaintiff’s power to gain access by repairing his own building.

Payment of rates [3.165]   The payment of rates by a person who is not the true owner, but is in occupation, may be significant in relation to the issue of adverse possession, provided the person knows that he or she is paying rates in respect of the land.168 In Bank of Victoria v Forbes (1877) 13 VLR 760 it was held that such a payment of rates constituted strong evidence to show that the claimant had a deliberate purpose to create a title in himself and intended to do whatever acts might be necessary to effect that purpose.169 If the true owner has acquiesced in the

165 166 167 168

Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 70–​80. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 72. Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 80. In Cervi v Letcher (2011) 33 VLR 320 at 331 [37], the putative adverse possessor was not aware that the disputed land had been included in his rates assessment. Accordingly, the payment of rates in these circumstances was not regarded as evidence of the required animus possidendi. 169 Higinbotham CJ further held that the payment of rates by a person in occupation who is not the true owner is conclusive to show that the true owner is not in possession. See also Bree v Scott (1903) 29 VLR [3.165]   149

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payment of rates by the claimant, there is “very strong evidence of adverse possession by the claimant”.170 Generally, the payment of rates must be reinforced with other acts of possession on the land.171 The fact that a squatter has not paid the rates does not necessarily eliminate his or her claim.172 The payment of rates by a person who is not in occupation, and who is not the true owner, will not constitute adverse possession save in exceptional circumstances.173 In Kirby v Cowderoy [1912] AC 599 the land in dispute comprised wild and unusable bushland. The payment of rates was the only act of possession of which the land was capable and thus, in the circumstances, the payment was considered to constitute an act of adverse possession. The payment of rates by a true owner who is out of possession provides only very slight evidence in his or her favour that the occupier of the land is not holding in adverse possession for himself or herself.174 In Tasmania, however, in relation to adverse possession of Torrens land, the payment of rates by the true owner prevents time from running.175 This is especially so if the land over which adverse possession is claimed is owned by a council and is consequently not rated. The putative adverse possessor cannot be expected to request the council to issue a rates notice is his or her own name.176 Entitled to possession but never obtained possession [3.170]  The second type of case may be divided according to whether the title arose upon

death (see [3.175]) or by an assurance inter vivos: see [3.180].

Deceased person in possession at date of death [3.175]  In order for a cause of action to accrue, there must be a plaintiff who can sue and a

defendant who can be sued. That is, there must be persons who can legally take the position of plaintiff and defendant. When a person entitled to land dies while still in possession, the limitation statutes provide that the cause of action of a person entitled to the land pursuant to a will or an intestacy accrues at the date of death.177 This statutory provision ensures that, on an intestacy, the cause of action can date from death, rather than from the date of the grant of

170 171 172 173 174

175

176 177

692 (strong inference in favour of adverse possession when the person in occupation pays the rates) and Guggenheimer v Registrar of Titles (2002) V ConvR 54-​658 (payment of rates together with enclosure but minimal use in the first years –​adverse possession). Quach v Marrickville Municipal Council (1990) 22 NSWLR 55. O’Neil v Hart [1905] VLR 107; McFarland v Gertos [2018] NSWSC 1629 at [68]. Shaw v Garbutt (1996) 7 BPR 14,816 at 14,833; Cooke v Dunn (1998) 9 BPR 16,489 at 16,505. Kirby v Cowderoy [1912] AC 599; Ferguson v Registrar of Titles [1919] VLR 509. Bree v Scott (1903) 29 VLR 692; Shaw v Garbutt (1996) 7 BPR 14,816. As Madden CJ commented in O’Neil v Hart [1905] VLR 107 at 120, “the payment of rates by the person in adverse possession affords a very much stronger influence in his favour than the payment by a true owner does in his”. Land Titles Act 1980 (Tas), s 138U(1), (2). See Natural Forests Pty Ltd v Turner (2004) 13 Tas R 44, where it was held that s 138U has retrospective operation. Additionally, in Quarmby v Keating [2008] TASSC 71 at [61]–​[64], the Full Court of the Supreme Court of Tasmania stated that this provision also extends to non-​ Torrens land. (See also Land Titles Act 1980 (Tas), s 183H.) Whittlesea City Council v Abbatangelo (2009) 259 ALR 56 at 82. Limitation Act 1969 (NSW), s 29; Limitation of Actions Act 1958 (Vic), s 9(2); Limitation of Actions Act 1974 (Qld), s 14(2); Limitation of Actions Act 1936 (SA), s 7; Limitation Act 2005 (WA), s 67; Limitation Act 1974 (Tas), s 11(2). The same rule applies to a rentcharge created by will or taking effect on death. The position is different where a tenant of the deceased owner, rather than the deceased owner, was in possession at the time of the owner’s death: McFarland v Gertos [2018] NSWSC 1629 at [75]–​[83].

150 [3.170]

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letters of administration. Without such a provision, no cause of action could accrue until the date of the grant of letters of administration, for it is only such a grant that confers title on the administrators. The status of the administrator does not automatically date back to the date of death.178 An executor derives title from the will and thus, at the date of death, the executor would be competent as a plaintiff or defendant. The grant of probate is simply an affirmation of this. Although perhaps unnecessary, the statutory provision ensures that there can be no argument at all that the right of action does not accrue until the grant of probate. The rule is subject to the overriding proviso that a right of action will only accrue if there is some other person in whose favour time can run; that is, there is some other person who is in adverse possession of the land.179

Grant of present interest [3.180]  Where land is assured (other than by will) by a person who was in possession at the

time of the assurance and the person to whom the land is assured does not take possession, his or her right to bring an action to gain possession accrues on the date the assurance took effect.180 Again, the overriding rule is that no right of action accrues unless there is some person in adverse possession in whose favour the limitation period can run.

Future interests [3.185]  The general rule is that the right of action of the holder of a future interest181 accrues

on the date on which the estate becomes one in possession.182 Thus, for example, if X grants to A for life and to B in fee simple remainder, B’s right to bring an action accrues on the date of A’s death. That is, the right accrues at the moment his or her interest changes from a future to a present interest. The relevant provisions setting out this principle must be read together with the overriding rule that no cause of action shall be deemed to accrue unless there is a person in adverse possession in whose favour the limitation period can run. [3.190]  In Victoria, Queensland and Tasmania, if the land has been adversely possessed while

the present interest is on foot, the holder of the future interest may not have the full limitation period to bring an action from the time the interest becomes one in possession. Section 10(2)

178 See, for example, Douglas v Forrest (1828) 4 Bing 686; 130 ER 933; Chetty v Chetty [1916] 1 AC 603 (PC); Finnegan v Cementation Co [1953] 1 QB 688 (CA). 179 See Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service) at [10.300] where he discusses the position of an administrator of the estate of a person dying intestate where the administrator wishes to institute an action. 180 Limitation Act 1969 (NSW), s 30; Limitation of Actions Act 1958 (Vic), s 9(3); Limitation of Actions Act 1974 (Qld), s 14(3); Limitation of Actions Act 1936 (SA), s 8; Limitation Act 2005 (WA), s 68; Limitation Act 1974 (Tas), s 11(3). The same rule applies with respect to rentcharges. 181 In some instances it may not be wholly clear whether a “future” interest exists. In the case of a existing discretionary trust where a person has a vested right to the residue of capital when the trust is terminated, the interest is properly termed a future interest, even though in order to take the beneficiary the person has to survive until the termination of the trust: see Johns v Johns [2004] 3 NZLR 202, where such a beneficiary who wanted to sue for breaches of trust many years earlier had six years from when his interest became a present one: see [3.205]. Note, however, that the discretionary right to receive income is not a legal or equitable (present or future) interest. 182 Limitation Act 1969 (NSW), s 31; Limitation of Actions Act 1958 (Vic), s 10(1); Limitation of Actions Act 1974 (Qld), s 15(1); Limitation of Actions Act 1936 (SA), s 9; Limitation Act 2005 (WA), s 69; Limitation Act 1974 (Tas), s 12(1). [3.190]  151

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of the Limitation of Actions Act 1958 (Vic) is typical of the statutory provisions on this point.183 It provides that if the holder of the preceding estate was not in possession at the date his or her estate determined, the holder of the succeeding estate has 15 years from the date on which the right of action accrued to the holder of the preceding estate or six years from the date his or her own right of action accrued,184 whichever is the longer. Assume that in the example of the grant given by X to A for life and to B in fee simple remainder, the grant was made in 2000 and in 2002, A was dispossessed by S. If A died in 2005, B would have until 2017, that is 15 years from when the right of action accrued to A, to bring an action to recover the land from S.185 The qualification cannot be circumvented by creating new interests in land by way of assurance.186 For example, if A transferred her life estate to Z in 2003, no fresh right of action arises. Z would have 15 years from when A’s cause of action accrued and B, the holder of the future interest, would be in the same position as if A had not transferred her interest; that is, B would have 15 years from when the right of action accrued to A or six years from when her own right of action accrued, whichever is the longer, to institute an action. [3.195]  Where a person is entitled to both a present interest and a future interest in the land

(successive interests), and the right to recover the estate or interest in possession is barred, no action may be brought in respect of the future estate unless, in the meantime, possession has been recovered by a person entitled to an intermediate estate.187 Thus, if the grant is to A for life, to B for life in remainder and then to A in fee simple remainder and A, during the currency of the life estate, is dispossessed for the statutory period, she and her successors lose the right of action with respect to both the life estate and the fee simple remainder. If, however, B recovered possession subsequently, the estate of A would have a right to recover in respect of the fee simple upon B’s death.188

Land held on trust [3.200]  The limitation statutes make clear that the provisions of the statutes apply to equitable

interests in the same way as they apply to legal interests.189 There are two situations where a beneficiary may be affected by the wrongful possession of another: first, where a right of

183 Limitation of Actions Act 1974 (Qld), s 15(2); Limitation Act 1974 (Tas), s 12(2). 184 That is, the date of death of the holder of the preceding estate, assuming the land was held in adverse possession by another person. 185 B’s own right of action accrued in 2005 and the six years from that date is the shorter period. 186 Limitation of Actions Act 1958 (Vic), s 10(3); Limitation of Actions Act 1974 (Qld), s 15(3); Limitation Act 1974 (Tas), s 12(5). Note that “assurance” in the context of these particular provisions presumably includes assurance by way of will: no specific exemption is made for wills as is made, for example, in Limitation of Actions Act 1958 (Vic), s 9(3). See [3.180]. 187 Limitation Act 1969 (NSW), s 67; Limitation of Actions Act 1958 (Vic), s 10(4); Limitation of Actions Act 1974 (Qld), s 15(4); Limitation of Actions Act 1936 (SA), s 22; Limitation Act 2005 (WA), s 77; Limitation Act 1974 (Tas), s 12(6). 188 Limitation Act 1969 (NSW), s 67; Limitation of Actions Act 1958 (Vic), s 10(4); Limitation of Actions Act 1974 (Qld), s 15(4); Limitation of Actions Act 1936 (SA), s 22; Limitation Act 2005 (WA), s 77; Limitation Act 1974 (Tas), s 12(6). 189 Limitation Act 1969 (NSW), s 36; Limitation of Actions Act 1958 (Vic), s 11(1); Limitation of Actions Act 1974 (Qld), s 16(1); Limitation of Actions Act 1936 (SA), s 32(1)(a); Limitation Act 2005 (WA), s 61; Limitation Act 1974 (Tas), s 13(1). See also the definition sections in the limitation statutes, which provide that “land” includes equitable interests: Limitation Act 1969 (NSW), s 11(1); Limitation of Actions Act 1958 (Vic), s 3(1); Limitation of Actions Act 1974 (Qld), s 5(1); Limitation Act 2005 (WA), s 3; Limitation Act 1974 (Tas), s 2(1). 152 [3.195]

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action accrues to the beneficiary against the trustee (see [3.205]) and, secondly, where a right of action accrues to the beneficiary or the trustee as a result of adverse possession being taken by a stranger: see [3.210]. Further, consideration must be given to the question of whether a beneficiary can ever bar the title of the trustee. Adverse possession by the trustee [3.205]  Despite the general position regarding equitable interests described at [3.200], in all

States other than New South Wales and Western Australia a trustee cannot obtain a title to the land by way of adverse possession against the beneficiaries. No period of limitation applies to an action by a beneficiary in respect of any fraud or fraudulent breach of trust to which the trustee was privy, or to recover from the trustee trust property or the proceeds thereof in the possession of the trustee or previously received by the trustee and converted to his or her use.190 In Rasmussen v Rasmussen [1995] 1 VR 613 the plaintiff’s claim to a common intention constructive trust was upheld. It was further held that the plaintiff’s claim was not statute barred because the action was in respect of a fraud or fraudulent breach of trust and therefore, pursuant to s 21(1)(a), was not subject to a limitation. In New South Wales and Western Australia the trustee is entitled to the benefit of limitation periods.191 Section  47 of the Limitation Act 1969 (NSW) provides that a beneficiary has 12 years from the time he or she discovered, or could with reasonable diligence have discovered, that he or she had a cause of action to recover the land.

190

Limitation of Actions Act 1958 (Vic), s 21(1); Limitation of Actions Act 1974 (Qld), s 27(1); Limitation of Actions Act 1936 (SA), s 32(1); Limitation Act 1974 (Tas), s 24(1). It appears that these provisions are to be construed strictly. In England, the Supreme Court of the United Kingdom has decided that the similarly worded s 21(1) of the Limitation Act 1980 (UK) applied only to actions against trustees in the orthodox sense, and not to actions against third parties who dishonestly assist in a breach of trust or who knowingly receive trust property in breach of trust: Williams v Central Bank of Nigeria [2014] AC 1189 at 1209 [33], [36] per Lord Sumption JSC (Lord Hughes JSC agreeing), at 1233 [100] per Lord Neuberger of Abbotsbury PSC. (Contrast the position in New South Wales, where “trust” is defined more broadly in s 11(1) of the Limitation Act 1969 (NSW) to extend to circumstances in which “the trust arises only by reason of the transaction impeached”. See Sze Tu v Lowe (2014) 89 NSWLR 317 at 376–​377 [332]–​[338]; Lewis Securities Ltd (in liq) v Carter (2018) 334 FLR 9 at 23–​25 [53]–​[590].) In Re J Flavelle (decd), Moore v Flavelle [1969] 1 NSWR 361 Helsham J took the view that the terminology “an action by a beneficiary to recover from the trustee trust property or the proceeds thereof in the possession of the trustee” must be interpreted strictly: on the facts, the action for the taking of accounts could not be construed as an action for the recovery of trust property, although the ultimate aim of the beneficiaries in instituting the action was to recover trust property. There is a general limitation period of six years to recover trust property or in respect of breach of trust, in cases where no other limitation period is prescribed: Limitation Act 1969 (NSW), s 48; Limitation of Actions Act 1958 (Vic), s 21(2); Limitation of Actions Act 1974 (Qld), s 27(2); Limitation of Actions Act 1936 (SA), ss 32, 35; Limitation Act 1974 (Tas), s 24(2). It does not apply to the circumstances set out in the provisions such as s 21(1) of the Victorian Act. 191 The NSWLRC took the view that trustees, even fraudulent ones, should gain some protection from the limitation legislation: NSWLRC, Report No 3 at [230]–​[236]. See generally Morlea Professional Services Pty Ltd v Richard Walter Pty Ltd (1999) 169 ALR 419. In Western Australia the lack of a specific provision relating to this matter in the new legislation is apparently deliberate. In the second reading speech, the Attorney-​General stated that limitation periods are to apply to “all breaches of trust … and to all claims based on fraud or mistake”: Parliamentary Debates, Legislative Assembly WA, 20 October 2004, pp 6949b–​6952a. See ss 27 and 61 of the Limitation Act 2005 (WA). See also Queensland Law Reform Commission, Review of Limitation of Actions Act 1974 (Qld), Report No 53 (September 1998), p 115 similarly suggesting that claims for fraudulent breach of trust should not be specifically excluded from the legislation. [3.205]  153

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Adverse possession by a stranger [3.210]  Where a stranger takes adverse possession of the trust property, the normal limitation

periods apply and apply equally to legal and equitable interests. However, generally the limitation statutes provide that adverse possession by a stranger for the statutory period will not bar the trustee’s legal title until the interests of all the beneficiaries have been extinguished.192 For example, if T holds property on trust for A for life and for B in fee simple remainder, and S takes adverse possession and remains in possession for the statutory limitation period, A’s right of action would be barred. T’s legal estate however, is not extinguished until B’s right of action is extinguished. B’s right to bring an action does not arise until A’s death. In effect, once A’s equitable life interest is extinguished, S gains an equitable interest pur autre vie.193 Upon A’s death, B’s interest becomes one in possession and his right to bring an action accrues. There is provision for the trustee to bring an action on behalf of a person who holds a beneficial interest in possession. In the example given, therefore, T could bring an action on behalf of B. Adverse possession by a beneficiary [3.215] By inference, the limitation statutes provide that a beneficiary may, in certain

circumstances, extinguish the title of the trustee.194 In the case of land held on trust for sale or settled land,195 time may run against the trustee if the beneficiary is in possession of the land and is solely and absolutely entitled to the beneficial interest.196 It is suggested that where land is held on any other type of trust, the beneficiary is in at least as strong a position as if he or she were a beneficiary under a trust for sale or settled land.197 In referring to this matter, Harman J in Bridges v Mees [1957] Ch 475 quoted with approval from Underhill on Trusts:198

192

Limitation Act 1969 (NSW), s 37; Limitation of Actions Act 1958 (Vic), s 11(2), (3); Limitation of Actions Act 1974 (Qld), s 16(2), (3); Limitation Act 2005 (WA), s 78; Limitation Act 1974 (Tas), s 13(3), (4); cf the situation in South Australia where there are no such provisions. 193 B has no right to bring an action until her estate is one in possession, that is, upon A’s death. T has no right to bring an action on B’s behalf until B’s estate is one in possession. See Limitation Act 1969 (NSW), s 37(1); Limitation of Actions Act 1958 (Vic), s 11(4); Limitation of Actions Act 1974 (Qld), s 16(3); Limitation Act 2005 (WA), ss 62, 78; Limitation Act 1974 (Tas), s 13(4). 194 Limitation Act 1969 (NSW), s 37(2), (3); Limitation of Actions Act 1958 (Vic), s 11(3), (5); Limitation of Actions Act 1974 (Qld), s 16(4); Limitation Act 2005 (WA), s 78(1); Limitation Act 1974 (Tas), s 13(5). 195 In South Australia there is no provision to suggest otherwise. See [13.20]–​[13.40] for discussion of the terms “trust for sale” and “settled land”. 196 Limitation Act 1969 (NSW), s 37(2), (3); Limitation of Actions Act 1958 (Vic), s 11(3), (5); Limitation of Actions Act 1974 (Qld), s 16(4); Limitation Act 2005 (WA), s 78(1); Limitation Act 1974 (Tas), s 13(5). In Murdoch v Registrar of Titles [1913] VLR 75 it was held that time does not run against a legal owner of land until he or she has an effective right of action for recovery. Thus, provided the person in possession is entitled in equity to possession, time would not run against the legal owner because the possession is not adverse. It is submitted that this case is no longer good law in view of the implications to be drawn from the specific statutory provisions such as s 11(3) and (5) of the Limitation of Actions Act 1958 (Vic). 197 Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service) at [10.320]; cf Hyde v Pearce [1982] 1 All ER 1029. Compare also Jourdan, Adverse Possession (Butterworths, London, 2003), pp 529–​536, who argues convincingly that Bridges v Mees [1957] Ch 475 was incorrectly decided on the basis that a trustee of a bare trust does not have a right to possession and, therefore, no cause of action in relation to which time can run arises in his or her favour. 198 See now Hayton, Matthews and Mitchell, Underhill and Hayton Law of Trusts and Trustees (19th ed, LexisNexis, London, 2016), pp 634–​635. 154 [3.210]

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[I]‌t is apprehended that any other trustee, including a constructive trustee (as, for example, a vendor under an uncompleted contract), is liable to be divested of the legal estate by possession of a person entitled in equity in exactly the same way as if the latter were “a stranger”.

Therefore, where a purchaser is in possession under an uncompleted contract of sale and has paid the whole of the purchase price and the vendor thereby holds on a constructive trust for the purchaser, time will run in favour of the purchaser-​beneficiary who is solely and absolutely entitled and will run against the vendor-​trustee. Of course, it must be shown that the beneficiary is not there by the licence of the legal owner.199 Even where the purchaser has not paid the whole of the purchase moneys, the result may be the same provided the purchaser-​beneficiary is not viewed as being there by the licence of the vendor-​trustee.200 The doctrine of laches [3.220] Although the general rule now is that the provisions of the limitation statutes

apply to equitable interests, there are some examples where these provisions do not apply to equitable claims. For instance, in all States except New South Wales and Western Australia a trustee’s possession is not considered to be adverse to the beneficiary: see [3.205]. Further, in most States the statutory bars do not apply to claims for equitable relief, such as specific performance or an injunction in actions on contract or in torts, unless they can be applied by analogy to the statutes.201

199

200

201

The statutory provisions governing the case in Bridges v Mees [1957] Ch 475 were equivalent to the Victorian provisions on this point. In Bridges v Mees the purchaser originally entered the premises by the permission of the vendor who retained a vendor’s lien. Once the whole of the purchase moneys had been paid, the lien disappeared and, prima facie, the vendor with the legal title had a right to enter possession. The fact that the trustee could not have brought an effective action to recover the land because the whole beneficial estate was vested in the purchaser was considered irrelevant: see [1957] Ch 475 at 485, relying upon Re Cussons Ltd (1904) 73 LJ Ch 296. Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service) at [10.320] and the interpretation given there of s 11(3) and (5) of the Limitation of Actions Act 1958 (Vic). Compare Hyde v Pearce [1982] 1 All ER 1029, where a purchaser under an uncompleted contract of sale, who had not paid the whole of the purchase price, was held not to have extinguished the title of the legal owner. The Court of Appeal appeared to take the view that a beneficiary cannot establish adverse possession against his or her trustee. The court was not referred to the decision in Bridges v Mees [1957] Ch 475. If it could be shown that the purchaser had been in possession without the licence of the vendor (query this on the facts), it is suggested the decision should have been different. See Thompson, “Establishing Adverse Possession” (1983) 127 Sol J 210 at 212. Compare Jourdan, Adverse Possession (Butterworths, London, 2003), pp 535–​536. Limitation Act 1969 (NSW), s 23; Limitation of Actions Act 1958 (Vic), s 5(8); Limitation of Actions Act 1974 (Qld), s 10(6)(b); Limitation Act 1974 (Tas), s 9. See Cohen v Cohen (1929) 42 CLR 91; see also [3.225]. Compare Western Australia, where s 27 of the Limitation Act 2005 (WA) now provides specific limitation periods for equitable actions (ie, where relief is sought in equity (eg, specific performance or injunction) or where the limitation period cannot be determined by analogy with a legal action: see s 61). In this context, note also s 80 of Limitation Act 2005 (WA), which provides that nothing in the Act affects equitable jurisdiction to refuse relief on the grounds of laches, acquiescence or otherwise. (For a discussion of various reforms in Western Australia, see Skead, “Limitations Act 2005 (WA) and Equitable Actions: A Fatal Blow to Judicial Discretion and Flexibility –​How Other Australian Jurisdictions Might Learn from Western Australia’s Mistakes” (2009) 11 University of Notre Dame Australia Law Review 1.) The Queensland Law Reform Commission recommended that generally equitable claims should be subject to the limitation legislation: see Review of Limitation of Actions Act 1974 (Qld), Report No 53 (September 1998), p 114. It also recommended, however, that any such new scheme should not prevent the court from refusing relief on equitable grounds (eg, the doctrine of laches) (at p 120). [3.220]  155

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However, a person who has a right of action to which no statutory bar applies cannot delay indefinitely the bringing of the action. Courts of equity have always required the plaintiff to use due diligence in proceeding with a claim and have discouraged laches, which means literally “negligent inactivity”202 or, more specifically, a failure to proceed with a claim within a reasonable time after becoming aware of the right. The term “acquiescence” is important in a consideration of the doctrine of laches. In the general sense, acquiescence is an equitable defence available where the plaintiff has allowed his or her rights to be violated and has sought no redress. The conduct of the plaintiff has no specific relationship to a lapse of time, but amounts to an abandonment of rights such that the plaintiff is estopped from enforcing these rights at a later time.203 However, acquiescence may be inferred if there is an unreasonable delay in the bringing of an action and this inferred acquiescence is the principal criterion in the doctrine of laches. [3.225] The operation of the doctrine of laches may arise in two different sets of

circumstances:  first, where the equitable remedy corresponds to a legal remedy for which there is a statutory bar and, secondly, where there is no corresponding claim at common law or, even if there is, the equitable claim has been specifically excluded from any statutory bar. If the equitable remedy being sought corresponds to an action at law that is within a statute of limitation, the courts have applied by analogy the statutory bar applicable to the legal right of action.204 In Gerace v Auzhair Supplies Pty Ltd (2014) 310 ALR 85 at 104 [70], Meagher JA (Beazley P and Emmett JA agreeing) explained the position as follows: The authorities … show that in purely equitable proceedings, where there is a corresponding remedy at law in respect of the same matter and the remedy is the subject of a statutory bar, equity will apply the bar by analogy unless there exists a ground which justifies its not doing so because reliance by the defendant on the statute would in the circumstances be unconscionable. They do not support the proposition that equity retains any broader discretion whether to apply the bar.

In applying the doctrine of laches, the courts of equity attempt to mirror the statutory bar for a corresponding legal action. This principle of application by analogy of a statutory bar is less relevant now the limitation statutes specifically provide for their provisions to apply to most equitable claims. Where such analogy cannot be used, equity is forced to find its own definition of what constitutes unreasonable delay. The basic inquiry is whether acquiescence in the state of affairs can be inferred from the plaintiff’s delay. The plaintiff must be aware of the relevant facts.205 Apart from examining the plaintiff’s conduct, the court will consider whether the plaintiff’s delay has prejudiced the defendant. If there is prejudice to the defendant, this will be a factor in refusing to permit the plaintiff to proceed.206 So, for example, where a beneficiary seeks

202 Partridge v Partridge [1984] 1 Ch 351 at 360. 203 See generally, Leeming, “How Long Is Too Long for an Equitable Claim?” (2014) 88 Australian Law Journal 621 at 622. 204 See, for example, Beckford v Wade (1805) 17 Ves Jun 87; 34 ER 34 at 97 (Ves Jun), 38 (ER). 205 Life Association of Scotland v Siddal (1861) 3 De GF & J 58; 45 ER 800 at 73 (De GF & J), 806 (ER); Lindsay Petroleum v Hurd (1874) LR 5 PC 221 at 241; Allcard v Skinner (1887) 36 Ch D 145 at 188 (CA); Gerace v Auzhair Supplies Pty Ltd (2014) 310 ALR 85 at 104 [73]. 206 Gresley v Mousley (1859) 4 De G & J 78; 45 ER 31; Turner v Collins (1871) 7 Ch App 329; Allcard v Skinner (1887) 36 Ch D 145; Lamshed v Lamshead (1963) 109 CLR 440. 156 [3.225]

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to recover trust property from the trustee (an equitable claim which has been specifically excluded from a statutory bar), that right may be barred by the operation of the doctrine of laches if there is “unreasonable delay” by the beneficiary.

Limitation and leasehold estates Between the landlord and tenant

Land comprised in lease [3.230]  A landlord’s right to recover possession of the land from the tenant accrues at the end

of the term of the lease. Thus, with respect to a fixed-​term lease, time starts running against the landlord when the term of the lease has expired.207 The fact that any due rent has not been paid by the tenant does not affect the landlord’s title to the land.208 The landlord is barred from bringing an action to recover any particular instalment of rent six years from the date on which the rent became due, but this has no effect on his or her title to the land.209 A failure to pay rent may give rise to the landlord having a right to recover the land. This occurs where the lease contains a forfeiture clause for breach of condition, for example, non-​payment of rent. In all States, except New South Wales and Tasmania, the right to recover possession of the land pursuant to such a clause accrues at the time of the forfeiture.210 In New South Wales and Tasmania the right of action accrues when the lessor could with reasonable diligence have discovered the facts giving rise to the right to forfeiture.211 The failure by the landlord to bring an action pursuant to the forfeiture has no effect on the landlord’s quite separate right of action to recover the land at the natural expiration of the term of the lease. This right of action will not be barred until the limitation period has expired.212 [3.235]  Special provision is made in the limitation statutes with respect to the accrual of the

landlord’s right of action against the tenant where the tenancy is periodic and not in writing or is one at will. The limitation statutes provide that a tenancy at will is deemed to be determined at the expiration of one year from its creation, unless it has previously been determined and that, accordingly, the right of action of the person entitled to the land subject to the tenancy is deemed

207 See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 278. 208 Doe d Davy v Oxenham (1840) 7 M & W 131; 151 ER 708. 209 Limitation Act 1969 (NSW), s 24; Limitation of Actions Act 1958 (Vic), s 19; Limitation of Actions Act 1974 (Qld), s 25; Limitation of Actions Act 1936 (SA), s 35(f); Limitation Act 1974 (Tas), s 22; cf Limitation Act 2005 (WA), s 13(1) –​rent presumably subsumed under general provision. 210 See, for example, Limitation of Actions Act 1958 (Vic), s 12; Limitation of Actions Act 1974 (Qld), s 17; Limitation of Actions Act 1936 (SA), s 10; by inference in Western Australia. Account must also be taken of statutory regimes affecting some types of tenancies (eg, retail or residential tenancies in some States: see Chapter 14 and [15.25]–​[15.40] respectively). 211 Limitation Act 1969 (NSW), s 32(1); Limitation Act 1974 (Tas), s 14(1). 212 A fresh right of action accrues each time the tenant breaches the condition. With respect to continuing breaches, forfeiture may be used at any time because time runs anew continually: see Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 280. [3.235]  157

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to accrue on the date of the determination.213 Thus, in the absence of actual determination by the landlord, time begins to run against the landlord at the end of one year after the creation of the tenancy. Licensees are not provided with the same advantages as tenants at will.214 If it can be shown that a person has a licence, rather than a leasehold interest,215 the statutory provisions have no effect and the owner’s title cannot be extinguished. The only way in which time can start running against the true owner is if the licence has been actually terminated. Upon revocation of the licence, the true owner has a right to bring an action to recover the land. Failure to exercise that right within the limitation period results in the true owner’s title being extinguished. The anomalous distinction between the position of a tenant at will and a licensee has been removed from the limitation legislation in the United Kingdom.216 It is suggested that similar amendments to the Australian limitation statutes should be made in order to provide that the limitation period commences to run only upon an actual, rather than deemed, termination of a tenancy at will. [3.240]  In the case of a periodic tenancy without a lease in writing,217 it is provided that the

tenancy shall be deemed to be determined at the end of the first year or other period and the right of action of the person entitled to the land shall be deemed to have accrued at the date of the determination. If rent is subsequently received, the right of action is deemed to accrue on the date of the last receipt of rent.218 [3.245] The provisions discussed at [3.65]–​[3.80] and [3.175]–​[3.185] with respect to the accrual of rights of actions demonstrate that no right of action shall arise unless the land is in the possession of some person in whose favour the period of limitation can run (that is, unless some person is in adverse possession). Thus, although, for example, s 9(1) of the Limitation of Actions Act 1958 (Vic) provides that a right of action arises when a person has been dispossessed of land or has discontinued his or her possession, s 14(1) makes it clear that no right will so arise unless another person is in adverse possession of the land. The provisions relating to the accrual of rights of action in relation to periodic tenancies and tenancies at will deem that, in particular circumstances, a right of action will accrue

213

Limitation Act 1969 (NSW), s 34(1)(b), (2)(b); Limitation of Actions Act 1958 (Vic), s 13(1); Limitation of Actions Act 1974 (Qld), s 18(1); Limitation of Actions Act 1936 (SA), s 15; Limitation Act 2005 (WA), s 72(2); Limitation Act 1974 (Tas), s 15(1). 214 See Ramnarace v Lutchman [2001] 1 WLR 1651 (Privy Council). 215 See [14.80]–​[14.90] for a discussion of the lease/​licence distinction. Query whether it is correct to define a tenancy at will as a leasehold estate: see [14.60]. 16 Limitation Amendment Act 1980 (UK), s 3(1), repealed by the Limitation Act 1980 (UK). See now Limitation 2 Act 1980 (UK), ss 17, 29(5), (6). The change was made in response to the English Law Reform Committee’s recommendation: see Final Report on Limitation of Actions (Cmnd 6923, 1977) at [3.54]–​ [3.56]. The Committee also recommended the abolition of the provision discussed at [3.240] relating to periodic tenancies, but this recommendation was not acted upon by the legislature. There do seem to be grounds for distinction between the periodic tenancy and the tenancy at will. In the former case the landlord has received and expects to receive rent on a regular basis and, if such rent is not received, the change in circumstances should be noted by the landlord and, if necessary, acted upon. 217 For interpretations of these terms, see Moses v Lovegrove [1952] 2 QB 533; Jessamine Investment Co v Schwartz [1978] QB 264; Long v Tower Hamlets LBC [1998] Ch 197. 18 Limitation Act 1969 (NSW), s 34(1)(a), (2)(a); Limitation of Actions Act 1958 (Vic), s 13(2); Limitation of 2 Actions Act 1974 (Qld), s 18(2), (2A); Limitation of Actions Act 1936 (SA), s 16; Limitation Act 2005 (WA), s 72(1); Limitation Act 1974 (Tas), s 15(2), (3). 158 [3.240]

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(for example, s  13(1) and (2) of the Victorian Act). These provisions mirror the provision relating to present interests, which also deem a right of action to accrue on the occurrence of particular circumstances (for example, s 9(1) of the Victorian Act). As s 9(1) is designed to be read in conjunction with s 14(1), it is suggested that so too should s 13(1) and (2) be read in conjunction with s 14(1). In most instances where a tenant does not pay rent and continues in possession, it would be difficult to deny that he or she was in adverse possession pursuant to s 14(1). Nevertheless, there may be special facts indicating that there was no adverse possession by the tenant, no person in whose favour the limitation period could run and, thus, pursuant to s  14(1), no accrual of a right of action. For example, a tenant under a periodic tenancy may not ever have taken possession219 pursuant to the tenancy. Although prima facie failure to pay rent would give rise, pursuant to s 13(1), to a right of action in the landlord, it is suggested that s 14(1), providing that no right of action will accrue unless some person has adverse possession, would apply and negate the accrual of a right of action. The above analysis has been placed in the realm of supposition as a result of the English Court of Appeal decision in Hayward v Chaloner [1968] 1 QB 107. In this case the English provisions equivalent to ss 13(2) and 14(1) of the Limitation of Actions Act 1958 (Vic) were considered. The majority of the Court of Appeal took the view that the s 14(1) provision bore no further on the s 13(2) provision. As Russell LJ stated at 122:220 I have no doubt that the possession of a tenant is to be considered adverse once the period covered by the last payment of rent has expired, so that s 10(1) [s 14(1) of the Victorian Act] does not bear further on s 9(2) [s 13(2) of the Victorian Act].

Although of persuasive authority, the decision in Hayward v Chaloner is not binding in Australia. A  subsequent English Court of Appeal, although bound by Hayward’s case, by inference doubted the correctness of the decision.221 It is suggested that, in Australia, no cause of action should accrue in the tenancy examples unless the tenant is in adverse possession. It is important to reiterate that in most fact situations the tenant relying upon the s 13(1) or (2) type of provision will also satisfy s 14(1).222

Land of landlord or a stranger not included in the lease [3.250]  If the tenant encroaches on to other land of the landlord, on to waste land or on to

the land of a third person, “the encroachment must be considered as annexed to the holding, unless it clearly appears that the tenant made it for his own benefit”.223 As the land encroached upon forms part of the demised premises, it is subject to the terms of the tenancy and must

19 That is, physical possession or receipt of rent. 2 220 See the judgment of Lord Denning, in dissent, where his Honour took the view that the ss 13(2) and 14(1) type provisions should be read together. 221 Jessamine Investment Co v Schwartz [1978] QB 264 at 276. 222 It is interesting to note that although Williams Bros Direct Supply Ltd v Raftery [1958] 1 QB 159 (see [3.105] and [3.130]) was a case concerning a dispute between a landlord and a tenant, the principle discussed in this section was not referred to in argument by counsel or by the court. This point is taken up by Pennycuick V-​C in Smirk v Lyndale Developments [1975] 1 Ch 317 at 332. 223 Kingsmill v Millard (1855) 11 Exch 313 at 318 per Parke B, appd in Smirk v Lyndale Developments [1998] Ch 197 at 324 per Pennycuick V-​C and by the Court of Appeal. Also see Ian Rumney Office Equipment Pty Ltd v Tasmania (unreported, Supreme Court of Tasmania, Zeeman J, 18 June 1997). This is a presumption which can be rebutted: see Ali v Tower Hamlets LBC [1996] EGCS 193. [3.250]  159

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be surrendered to the landlord at the expiration of the term of the lease.224 Thus, if the land encroached upon is that of a third party, any rights arising pursuant to a limitation statute enure for the benefit of the landlord.225 The presumption that the tenant holds the land encroached upon as part of the demised premises can only be rebutted by strong and clear proof that the tenant intends to take for his or her own benefit. The tenant must communicate this intention to take for his or her own use and benefit to the landlord.226 For instance, if the tenant conveyed the land to a third party during the tenancy and informed the landlord of the action, the presumption would be rebutted.227 Between landlord and stranger [3.255] Where a tenant is dispossessed of the demised land by a stranger, a right to bring

an action to recover the land accrues to the tenant. It seems, however, that no right of action accrues to the landlord until the expiration of the lease. Strictly, the landlord is said to have the fee simple estate in possession subject to the term, and not the fee simple estate in reversion.228 A logical corollary of the landlord holding an estate in possession would be that the landlord’s right of action would arise as soon as the adverse possessor took possession. For the purposes of the operation of the limitation statutes, however, it appears to have been accepted that the landlord has “an estate or interest in reversion or remainder”.229 Consequently, the right of action against the adverse possessor is deemed to accrue when the lease comes to an end and the estate of the landlord “falls into possession”.230 In Victoria and Tasmania the landlord has the full limitation period from when his or her own cause of action arose in which to bring the action.231 Although the tenant’s right to recover the land is lost at the expiration

224

J F Perrott & Co Ltd v Cohen [1951] 1 KB 705; Smirk v Lyndale Developments; Long v Tower Hamlets LBC [1998] Ch 197. 225 Kingsmill v Millard (1855) 11 Exch 313; Tabor v Godfrey (1895) 64 LJ QB 245; Ian Rumney Office Equipment Pty Ltd v Tasmania (unreported, Supreme Court of Tasmania, Zeeman J, 18 June 1997); Batt v Adams (2001) 82 P &CR 32; Smirk v Lyndale Developments [1998] Ch 197; Kierford Ridge Pty Ltd v Ward [2005] VSC 215; Tower Hamlets LBC v Barrett [2006] 1 P & CR 9. 226 Kierford Ridge Pty Ltd v Ward [2005] VSC 215. 227 Smirk v Lyndale Developments [1998] Ch 197; cf Lord Hastings v Saddler (1898) 79 LT 355. 228 Chung Ping Kwan v Lam Island Co Ltd [1997] AC 38. See [10.20]. This is because the lessee does not take seisin. 229 See Fairweather v St Marylebone Property Co Ltd [1963] AC 510 at 536 per Lord Radcliffe following Doe d Davy v Oxenham (1840) 7 M & W 131; 151 ER 708; Chan Tin Shi v Li Tin Sung [2006] HKCFA 7. Compare Wakefield & Barnsley Union Bank Ltd v Yates [1916] 1 Ch 452 at 460 (CA). See also the terminology used, for example, in s 10(2) of the Limitation of Actions Act 1958 (Vic), which suggests clearly that the landlord’s interest is to be considered a reversion for limitation purposes. 230 Limitation Act 1969 (NSW), s 31; Limitation of Actions Act 1958 (Vic), s 10(1); Limitation of Actions Act 1974 (Qld), s 15(1); Limitation of Actions Act 1936 (SA), s 9; Limitation Act 2005 (WA), s 69; Limitation Act 1974 (Tas), s 12(1). See Chung Ping Kwan v Lam Island Co Ltd [1997] AC 38; Chan Tin Shi v Li Tin Sung [2006] HKCFA 7; McFarland v Gertos [2018] NSWSC 1629. 231 The provision relating to future interests contained in s 10(2) of the Limitation of Actions Act 1958 (Vic) and s 12(2) of the Limitation Act 1974 (Tas), under which the limitation period may be shortened, is inapplicable to leasehold reversions. However, it appears to be applicable to leasehold reversions in Western Australia (Limitation Act 2005 (WA), s 69) and Queensland (Limitation of Actions Act 1974 (Qld), s 15(2)).

160 [3.255]

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of the limitation period, the landlord’s right to recover the land does not even arise until the expiration of the term. The only way in which the landlord’s title to the land can be extinguished during the term of the lease is if “adverse possession” of the rent is taken by a stranger. If the tenant pays the rent to a third party, time runs against the landlord from the time the rent is paid to the third party provided the rent is not a nominal sum.232

Limitation and mortgages233 Right to redeem [3.260] The mortgagor’s right to redeem the land234 is lost if the mortgagee remains in

possession235 of the mortgaged land for the limitation period,236 and neither gives a written acknowledgment of the mortgagor’s title or equity of redemption, nor receives any money from the mortgagor on account of principal or interest.237 Receipt of rent while in possession is not considered to be receipt of principal or interest.238

232

Limitation of Actions Act 1958 (Vic), s 13(3) ($2 or more a year); Limitation of Actions Act 1974 (Qld), s 18(3); Limitation of Actions Act 1936 (SA), s 17 ($2 or more a year); Limitation Act 1974 (Tas), s 15(3) ($100 or more a year). Compare Limitation Act 1969 (NSW), s 33 ($2 or more a year) and Limitation Act 2005 (WA), s 71 ($2 or more a year), where it is provided that in order for a cause of action to accrue to the landlord, a further condition must be satisfied: the term of the lease must have become liable to determination by virtue of forfeiture or breach of condition. 233 See Prime, “Mortgage Default, Limitation, and Law Reform” [2005] Conveyancer and Property Lawyer 566–​ 679, where the author discusses the issue of limitation in relation to proprietary and personal remedies of the mortgagee in light of recent English decisions. 34 In New South Wales, Victoria, Queensland, Western Australia and Tasmania it is clear that the mortgagor’s 2 title also is extinguished at the expiration of the limitation period: see Limitation Act 1969 (NSW), s 65, Sch 4; Limitation of Actions Act 1958 (Vic), s 18; Limitation of Actions Act 1974 (Qld), s 24(1); Limitation Act 2005 (WA), ss 25, 75(a); Limitation Act 1974 (Tas), s 21. Query the position in South Australia: see Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 925. If the land is Torrens land, however, the position may be different. In Queensland it is specifically provided that s 24 is subject to the Torrens legislation (reference to Real Property Act 1861 (Qld) instead of Land Title Act 1994 (Qld) presumably drafting oversight). See generally Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 948–​949. 235 See Park v Brady [1976] 1 NSWLR 119; [1976] 2 NSWLR 329 (CA), where it was held that “possession” in this context means possession in the capacity as mortgagee. See also Addison v Billion (1983) 1 NSWLR 586. 236 Limitation Act 1969 (NSW), s 41 (12 years); Limitation of Actions Act 1974 (Qld), s 20 (12 years); Limitation of Actions Act 1936 (SA), s 27 (15 years); Limitation Act 1974 (Tas), s 18 (12 years); Limitation of Actions Act 1958 (Vic), s 15 (15 years); Limitation Act 2005 (WA), s 25 (12 years). Note that formal entry does not constitute possession: Limitation Act 1969 (NSW), s 39; Limitation of Actions Act 1974 (Qld), s 21; Limitation of Actions Act 1936 (SA), s 18; Limitation Act 1974 (Tas), s 19; Limitation of Actions Act 1958 (Vic), s 16; Limitation Act 2005 (WA), s 84. 37 Limitation Act 1969 (NSW), ss 41, 54; Limitation of Actions Act 1958 (Vic), ss 24(2), 26; Limitation of Actions 2 Act 1974 (Qld), ss 35, 37; Limitation Act 2005 (WA), ss 25, 46, 48; Limitation Act 1974 (Tas), ss 29, 31. See generally Young v Clarey [1948] Ch 191. Compare the position in South Australia (Limitation of Actions Act 1936 (SA), s 27), where an acknowledgment of title must be given. See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 925. 238 Harlock v Ashberry (1882) 19 Ch D 539; UBC Corporate Services Ltd v Kohli [2004] EWHC 1126 at [48]. See further the relevant provisions referred to above for the effect of acknowledgment or part-​payment on persons other than the maker or recipient.

[3.260]  161

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Mortgagee’s rights [3.265] The mortgagee’s rights to foreclose,239 to claim possession240 and to sue for the

principal sum241 accrue when repayment becomes due under the mortgage. The mortgagee loses those rights after the relevant limitation period has elapsed. Time runs anew if the mortgagor makes a written acknowledgment or if the mortgagor, or the person in possession of the land, makes any payment of principal or interest.242 The recent English Court of Appeal decision in Ashe v National Westminster Bank plc [2008] 1 WLR 710 is likely to be of relevance to questions in the Australian context about the extinguishment of mortgages by the doctrine of adverse possession. In this case a mortgagee was entitled to go into possession of the mortgagor’s land immediately following the granting of the mortgage, but elected not to do so. The mortgagor subsequently defaulted in the payment of instalments under the mortgage. After the limitation period had run since the date of the last payment actually made by the mortgagor, a claim was made that the mortgage has been extinguished. The Court upheld the claim. It held that an action by a mortgagee to recover possession of the land was a claim under para 3 of Sch 1 to the Limitation Act 1980 (UK)243 and therefore, pursuant to Sch 1, para 8, time would only run against the mortgagee if there were someone in adverse possession of the land. Further, the Court held that the mortgagor was in adverse possession of its own land. In this respect it did not matter that the mortgagee had acquiesced to the mortgagor remaining in possession. The mortgagor remained in possession pursuant to its own registered legal title, and not because of any express or implied permission given by the mortgagee, which had neither been sought nor given. Accordingly, the limitation period started to run on the granting of the mortgage and the mortgage was extinguished.244 We have seen at [3.65] that in all Australian States an action to recover land does not accrue, and the limitation period does not run, until there is someone in adverse possession. The decision in Ashe will thus be of direct relevance in New South Wales, Victoria, Queensland, Western Australia and Tasmania, where an action to recover land is expressly defined to extend to a right to go into possession of land.245 It should be noted, however, that in all

239 See generally Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 914–​992, 941–​947. Barker J in Sardon Pty Ltd v Registrar of Titles [2004] WASC 56 discussed in detail the operation of limitation provisions in relation to Torrens land and, in particular, mortgages of Torrens land. For instance, in relation to a statutory Torrens right to foreclose, the right is not an “action” and would not be automatically barred at the expiration of the limitation period. As Barker J noted, however, this may not be significant if the mortgagee loses his title under another provision barring the right and title of the mortgagee at the expiration of the limitation period. 240 See, for example, s 3(5) of the Limitation of Actions Act 1958 (Vic), which provides that a right of action to recover land shall include a reference to a right to enter into possession of the land. See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 914–​923. 241 See, for example, Limitation of Actions Act 1958 (Vic), s 20(1). See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 928–​932. 242 See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 928–​941. 243 That is, an action to recover land in favour of someone who has taken an assurance of the land but has not gone into possession. 244 Ashe v National Westminster Bank plc [2008] 1 WLR 710 at 720, 724–​725. 245 Limitation Act 1969 (NSW), s 11(2)(b); Limitation of Actions Act 1958 (Vic), s 3(5); Limitation of Actions Act 1974 (Qld), s 5(5); Limitation Act 2005 (WA), s 3(4); Limitation Act 1974 (Tas), s 2(6). With regard to the position in South Australia, given that para 3 of Sch 1 of the Limitation Act 1980 (UK) is mirrored by s 8 of the Limitation of Actions Act 1936 (SA), it is likely that in South Australia the limitation period would also begin to run as soon as the mortgagee was entitled to go into possession. Indeed, given that in other States 162 [3.265]

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jurisdictions other than South Australia, it is provided that an action by the mortgagee to recover the principal sum secured by the mortgage is also subject to a limitation period. In the context of non-​payment of the principal sum, the mortgage could be effectively extinguished without the need for someone to be in adverse possession of the land.246

Limitation and co-​ownership [3.270]  At common law, each co-​owner is entitled to the use, and possession of, the whole of

the land: see [12.05]. Thus, possession by one co-​owner cannot be considered to be adverse vis-​ à-​vis the other co-​owners. In the absence of wrongful exclusion and of statutory intervention, possession by one co-​owner for any period of time would not bar the right and title of the co-​owners out of possession. In all States there are provisions in the limitations statutes relating to the situation where a co-​owner has taken possession of more than his or her own share for his or her own benefit.247 In these circumstances, it is provided that such possession or receipt by a co-​owner shall not be deemed to be the possession or receipt of the other co-​owners. The result is that the common law presumption that possession of one of the co-​owners is the possession of all of them is displaced.248 In New South Wales, Victoria, Western Australia and Tasmania the relevant statutory provisions further stipulate that such possession by a co-​owner is, or is deemed to be, adverse possession. It is apparently irrelevant that the occupation of the co-​ owner in possession is by the licence of the other co-​owners; the possession is deemed to be adverse.249 In these States the right of the co-​owner or co-​owners out of possession to bring an action to recover the land is barred after the relevant statutory period.250 If, however, there is evidence to demonstrate that the possession of one co-​owner was not, in the terms of the statute, “for his or her own benefit” but for the benefit of all the owners, time will not run in favour of the co-​owner in possession.251

246 247

248

249

250 251

there is an express requirement for someone to be in adverse possession in order for the limitation period to run, but in South Australia any such requirement will only be implied (see n 65), it would be unlikely that in South Australia the ongoing possession of the mortgagor would be seen as precluding the limitation period running in respect of the mortgagee’s right to take possession. Limitation Act 1969 (NSW), s 42(1)(a); Limitation of Actions Act 1958 (Vic), s 20(1); Limitation of Actions Act 1974 (Qld), s 26(1); Limitation Act 2005 (WA), s 20(1)(a); Limitation Act 1974 (Tas), s 23(1). Limitation Act 1969 (NSW), s 38(5); Limitation of Actions Act 1958 (Vic), s 14(4); Limitation of Actions Act 1974 (Qld), s 22; Limitation of Actions Act 1936 (SA), s 20; Limitation Act 2005 (WA), s 3(6)(d); Limitation Act 1974 (Tas), s 16(4). Radonich v Radonich [1999] WASC 165; Payne v Dwyer (2013) 46 WAR 128 at [43], [71]. In Bartha v O’Riordan [2004] QSC 205 at [14], Wilson J suggested that the new presumption set up in the statutes was a rebuttable one. See Paradise Beach and Transportation Co Ltd v Price-​Robinson [1968] AC 1072. See [12.45]–​[12.50] for a consideration of the view that, in the absence of a relevant statutory provision, there may be no general liability to account between co-​owners where one co-​owner receives more than his or her joint share or proportion. Query, however, whether this right must be deemed to exist in view of these statutory provisions in the limitation statutes discussed here. If a co-​owner’s title can be barred by a failure to claim his or her just share or proportion, a right to claim must surely exist. See, however, the provisions relating to Torrens land in Tasmania and New South Wales discussed at [3.395] and [3.405]. See Webeck v Foley (1992) NSW ConvR 59,717. In this case the co-​owner in possession required contributions for rates and charges on the property and also acknowledged that the other co-​owners had a right to use the land. These factors demonstrated that the possession was for the benefit of all the co-​owners. Query the suggestion that possession of one with the consent of the others precluded adverse possession. Perhaps in [3.270]  163

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In Queensland and South Australia there is no specific provision deeming adverse the occupation of a co-​owner who has taken possession of more than his or her share. The statutory provisions simply ensure that the common law presumption that possession by one co-​owner is the possession of all is inapplicable: the question of whether the possession of a co-​owner is adverse must be determined on the facts of each case according to the usual rules. Thus, if the possession of one co-​owner is with the consent of or by the licence of the other co-​owner or co-​owners, it cannot be adverse possession.252 Where, however, it is clear that one co-​owner enjoyed exclusive possession of the property or took more than his or her share of the rents without the licence of the other co-​owner, the right of action of the non-​occupying co-​owner would be barred after expiration of the statutory period.253

Limitation and Aboriginal claims [3.275] The High Court in Mabo v Queensland (No  2) [1992] 175 CLR 1 decided the

issue of the land rights of a group of indigenous people, the Meriam people, on the basis of “native title”.254 The only judge to consider the applicability of the principles of possessory title to the fact situation was Toohey  J, although he too decided the case on the basis of native title. Toohey J used the common law tests for possession –​factual control appropriate to the circumstances and intention to occupy and use the land for one’s own purposes. He concluded that where the indigenous people were a settled group who used the land in dispute for dwelling purposes and for hunting and gathering food, they may be able to establish possessory title at common law. Even in the more common situation of a nomadic group, Toohey J took the view (at 210ff) that possessory title might still be demonstrated where the group used a large area of land on an intermittent basis for economic and dwelling purposes. Such a claim would be enhanced if there were evidence that other groups asked permission to use the land. If a possessory interest could be proven, Toohey J accepted the view that such a title could be maintained against the whole world except someone who could show a better title to the land. Thus, in determining the relative strength of an established possessory title, the question to be determined would be whether any other party could claim a better title to the land. In light of the decision in Mabo, it seems clear that the Crown did not acquire a better title at the time of settlement. The majority of the justices in the Mabo case, including Toohey J, held that on settlement the Crown acquired a radical title. This title did not give rise to a possessory interest in land occupied by indigenous peoples.255 A better right to possession may also be shown, however, where another has taken adverse possession for the limitation period. In

252 253

254 255

most circumstances where such consent is given it can be concluded that the possession of one was for the “benefit” of all. Ghilarducci v Ghilarducci (1993) ANZ ConvR 331; Radonich v Radonich [1999] WASC 165. Compare Paradise Beach and Transportation Co Ltd v Price-​Robinson [1968] AC 1072. See Wills v Wills [2004] 1 P & CR 37, where the Privy Council so held in interpreting an equivalent provision in the Jamaican limitation legislation. See also Re Franklin [2009] VSC 496, in which it was held that where the possessing co-​owner was a joint tenant who subsequently died, his or her estate succeeded to the possessory interest, rather than that interest passing by survivorship to the surviving joint tenant (who was out of possession). Discussed in [6.315]–​[6.335]. Discussed in O’Connor, “Aboriginal Land Rights at Common Law: Mabo v Queensland” (1992) 18 Mon LR 264; Pohle, “Possessory Title in the Context of Aboriginal Claimants” (1995) 11 QUTLJ 200.

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most instances, persons holding freehold titles originally granted by the Crown would be able to satisfy this test and thus demonstrate a better title to the land than the original indigenous inhabitants. Even where the Crown has granted a lease, adverse possession can probably be demonstrated; sufficient control is shown by the grant of the lease.256 It has been suggested that the facts, which could support possessory title, would also substantiate a claim for native title and that therefore it is unnecessary to consider possessory title as an independent separate cause of action.257 O’Connor, however, has argued that a claim for possessory title may sometimes be easier to make out258 and may result in a stronger, better title.259

POSTPONEMENT OF COMMENCEMENT OF LIMITATION PERIOD AND EXTENSION OR SUSPENSION OF IT [3.280]  In certain circumstances, the limitation statutes provide for an effectively extended

limitation period, either by postponing the time at which the cause of action is deemed to accrue or by suspending the running of the limitation period for a particular time. The extended limitation period may apply where there is a disability, such as infancy or mental incapacity, in the person to whom the cause of action has accrued260 or where the action is based on fraud261 or mistake.262 Where a cause of action is fraudulently concealed, an extension of time may also

256 See Pohle, “Possessory Title in the Context of Aboriginal Claimants” (1995) 11 QUTLJ 200 at 204. But see Wik Peoples v Queensland (1996) 187 CLR 1 and the discussion at [2.10] and [2.35]. 257 Nettheim, “The Wik Peoples v Queensland and Others” (1994) 3 Aboriginal Law Bulletin 17. 258 For example, not dependent on traditional laws and customs: see O’Connor, “Aboriginal Land Rights at Common Law: Mabo v Queensland” (1992) 18 Mon LR 264 at 264–​265. 259 For example, not subject to extinguishment: see O’Connor, “Aboriginal Land Rights at Common Law: Mabo v Queensland” (1992) 18 Mon LR 264 at 264. 260 Limitation Act 1969 (NSW), ss 52, 11(3); Limitation of Actions Act 1958 (Vic), ss 23, 3(3); Limitation of Actions Act 1974 (Qld), ss 29, 5(2), (3); Limitation of Actions Act 1936 (SA), ss 45, 3(1); Limitation Act 2005 (WA), ss  30–​36; Limitation Act 1974 (Tas), ss 26–​28, 2(2), (3). In determining whether the tests for establishing “unsound mind” are satisfied, see King v Coupland [1981] Qd R 121; Flemming v Gibson (2001) 34 MVR 40; [2001] QCA 244; Smith v Advanced Electrics Pty Ltd [2005] 1 Qd R 65; Reid v Queensland [2010] QSC 212. Guidelines to be considered include capacity to instruct a solicitor properly; capacity to execute a reasonable judgment upon a suggested settlement; and capacity to appreciate the nature and extent of a possible claim. In Western Australia, the Limitation Act 2005 (WA) has introduced a number of reforms to update many aspects of the limitation regime, including the area of suspension or extension of time in the case of disability: see ss 30–​54. 261 Limitation Act 1969 (NSW), s 55; Limitation of Actions Act 1958 (Vic), s 27; Limitation of Actions Act 1974 (Qld), s 38; Limitation of Actions Act 1936 (SA), s 48 (court has general power to extend limitation periods); Limitation Act 2005 (WA), s 38 (on application to the court. Note generally the power of the court to extend (ss 38–​44) and the ability to extend by agreement (s 45)); Limitation Act 1974 (Tas), s 32. The Law Reform Commission of Western Australia had suggested that issues of extension of time relating to fraud and fraudulent concealment should be dealt with by the exercise of judicial discretion: see Law Reform Commission of Western Australia, Report on Limitation and Notice of Actions (Project No 36, Part II, January 1997), p 329. The Queensland Law Reform Commission has also recommended that these issues be dealt with by the exercise of judicial discretion: Queensland Law Reform Commission, Review of Limitation of Actions Act 1974 (Qld), Report No 53(September 1998), p 178. 262 Limitation Act 1969 (NSW), s 56; Limitation of Actions Act 1958 (Vic), s 27; Limitation of Actions Act 1974 (Qld), s 38; Limitation of Actions Act 1936 (SA), s 48; Limitation Act 1974 (Tas), s 32. In Phillips-​Higgins v Harper [1954] 1 QB 411 it was held that the provision relating to mistake had a very narrow operation and that relief is only available under this provision “where the mistake is an essential ingredient of the cause of action”. This construction was approved of in Hillebrand v Council of the City of Penrith [2000] NSWSC [3.280]  165

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be given.263 In South Australia, the court has a general power to extend periods of limitation264 and in Western Australia, the court has power to extend in certain circumstances.265 The specific details of the statutory provisions relating to extension of time differ from jurisdiction to jurisdiction.266 There is a maximum limitation period where the person with the cause of action is under a disability.267 [3.285] There have been a number of cases concerning fraudulent concealment268 in the

context of actions for the recovery of land.269 Fraudulent concealment does not necessarily 1058 and in Sinclair v Registrar-​General [2010] NSWSC 173. An action for the recovery of money paid under mistake of fact is an example of the mistake being an essential criterion of the cause of action. In Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 the House of Lords held that a claim for recovery of money paid under a mistake of law is covered. In contrast, there is no general rule that a mistake prevents time from running. For example, an owner of land who permits a neighbour to take adverse possession of part of his or her land because of a “mistake” about the boundary may not rely on the provision to prevent time from running. In Western Australia there is now no specific provision relating to extension for mistake. The Queensland Law Reform Commission has recommended that there should not be a specific provision suspending the limitation period where there has been a mistake by the plaintiff: rather appropriately drawn provisions allowing for extension of time by the use of judicial discretion should be sufficient to protect the plaintiff’s interests. See Queensland Law Reform Commission, Review of Limitation of Actions Act 1974 (Qld), Report No 53 (September 1998), p 182. 263 Limitation Act 1969 (NSW), s 55; Limitation of Actions Act 1958 (Vic), s 27; Limitation of Actions Act 1974 (Qld), s 38; Limitation of Actions Act 1936 (SA), ss 25 (“concealed fraud”), 48; Limitation Act 2005 (WA), s 38 (“improper conduct” rather than fraudulent concealment); Limitation Act 1974 (Tas), s 32. 264 Limitation of Actions Act 1936 (SA), s 48. Before exercising such a power the court must be satisfied as to one of two matters: first, material facts were not ascertained by the plaintiff until some time occurring within the 12 months before the expiration of the limitation period or occurring after the expiration of the limitation period and that the action was instituted within 12 months of the plaintiff ascertaining those facts; or, secondly, that the plaintiff failed to institute the action because of representations or conduct of the defendant and that the failure was reasonable in view of the representations or conduct. Further, it must be just in all the circumstances to grant the extension. 265 Limitation Act 2005 (WA), ss 38–​44. 266 Note the Western Australian provisions have been altered considerably by the Limitation Act 2005 (WA). 67 Limitation Act 1969 (NSW), s 51(1) (disability, fraud, mistake); Limitation of Actions Act 1958 (Vic), s 23(1) 2 (c); Limitation of Actions Act 1974 (Qld), s 29(2)(b); Limitation of Actions Act 1936 (SA), s 45(3); Limitation Act 2005 (WA), s 36(3); Limitation Act 1974 (Tas), s 26(4). See Flemming v Gibson (2001) 34 MVR 40; [2001] QCA 244, where disability of unsoundness of mind held to continue after disability of infancy finished. 268 The ground of “fraud” is less likely to arise in actions for the recovery of land even though fraud within the meaning of these provisions no longer seems to be confined to common law fraud. (Compare Hamilton v Kaljo (1989) 17 NSWLR 381 at 386, where “fraud” in this context was said to have the same strict meaning as fraud when used in the indefeasibility provisions.) It is sufficient if there was a consciousness of wrongdoing and a willingness to take advantage of that, or if the conduct of the defendant was so unconscionable that it would be inequitable to allow her or him to rely on the statutory limitation period to defeat the true owner’s claim: Applegate v Moss [1971] 1 QB 406; Tito v Waddell (No 2) [1977] Ch 106; Seymour v Seymour (1996) 40 NSWLR 358 at 372; Grahame Allen and Sons Pty Ltd v Water Resources Commission [2000] 1 Qd R 523; Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [2007] WASC 118 at [54]; Levy v Watt (2014) 398 ALR 748 at 722. (See Fourniotis v Vallianatos [2018] VSC 369 at [127]–​[135], where Croft J considered, without deciding, whether fraudulent concealment required moral turpitude, wrongdoing or, alternatively, unconscionability.) Nevertheless, the action of taking possession with the intention of possessing the land as one’s own and with intention of excluding all others (including the true owner as far as legal rights permit) is not fraud per se within this context. See also Commonwealth v Cornwell (2007) 229 CLR 519 at 532–​534, where the High Court considered in a preliminary manner, and without coming to a concluded view, s 33 of the Limitation Act 1985 (ACT), which deals with the postponement of the commencement of the limitation period in the context of a deliberate concealment of a relevant fact. 269 Examples of fraudulent concealment include the obtaining of a conveyance from a person under a disability such as insanity (Lewis v Thomas (1843) 3 Hare 26; 67 ER 283); the concealment of a title deed or deeds 166 [3.285]

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involve fraud which would be sufficient to give rise to an independent cause of action;270 rather, it involves a situation where the defendant knowing to whom a right of action belongs conceals the circumstances giving rise to the right of action.271 Clearly, a person who conceals from the ultimate plaintiff that he or she had a right to the land and has by such concealment enabled himself or herself or some other person to hold the land in adverse possession has concealed by fraud a right of action. Specifically, it has been held that a right of action has been fraudulently concealed where title deeds to the property showing the plaintiff to have an interest have been withheld or destroyed.272 In several States it is expressly provided that the defences of fraud and fraudulent concealment may not be used to extend the limitation period if the defendant is (or claims through) a purchaser for valuable consideration who was not a party to the fraud and did not know at the time of the purchase or have reason to believe that any fraud had been committed.273

RUNNING OF THE LIMITATION PERIOD [3.290]  A person’s right to bring an action to recover land will not be barred unless it is proved

that adverse possession of the land has continued unbroken for the limitation period. The limitation statutes provide specifically that no cause of action accrues until adverse possession is taken of the land, and that a cause of action which has accrued will be deemed not to have accrued if the land ceases to be in adverse possession.274 Thus, it is clear that there must be a continuous, uninterrupted period of adverse possession for the whole of the limitation period before the owner’s right to recover the land is lost. For various reasons, the person who originally takes adverse possession may not complete the full period of adverse possession himself or herself.

270

271 272 273 274

which showed the plaintiff to have an interest (Re McCallum [1901] 1 Ch 143). Compare Rains v Buxton (1880) 14 Ch D 537, where the occupation of subterranean land without the knowledge of the owner did not amount to fraudulent concealment. See also Vane v Vane (1873) LR 8 Ch App 383; Applegate v Moss [1971] 1 QB 406 (agent/​independent contractor); Bulli Coal Mining Co v Osborne [1899] AC 351. It is irrelevant whether the concealment occurs at the time the cause of action accrued or during the running of the limitation period: see Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd [1996] AC 102. See generally Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 1154–​1155; Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 288–​289. Beaman v ARTS Ltd [1949] 1 KB 550 at 559 per Lord Greene MR; Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 288. In England the term “fraudulent concealment” was changed to “deliberate concealment” (s 32(1) of the Limitation Act 1980 (UK)). This was not to change the law but to restate it in more modern language: see Jourdan, Adverse Possession (Butterworths, London, 2003), pp 311–​312. There must still be some deliberate wrongdoing, which in most instances will involve an element of unconscionability: Cave v Robinson Jarvis and Rolfe [2003] 1 AC 384. See also Giles v Rhind [2009] Ch 191. Lord Evershed MR in Kitchen v Royal Air Force Association (1958) 1 WLR 563 at 572–​573; Petre v Petre (1853) 1 Drew 371; 61 ER 493 at 397–​398 (Drew), 504. Lawrance v Lord Norreys (1890) 15 App Cas 210. Limitation Act 1969 (NSW), s 55(4); Limitation of Actions Act 1958 (Vic), s 27; Limitation of Actions Act 1974 (Qld), s 38(2); Limitation Act 1974 (Tas), s 32(2)(a). Limitation Act 1969 (NSW), s 38(3); Limitation of Actions Act 1958 (Vic), s 14(2); Limitation of Actions Act 1974 (Qld), s 19(2); Limitation Act 2005 (WA), s 65(3); Limitation Act 1974 (Tas), s 16(2). Effect obtained by implication in South Australia: see [3.65]. [3.290]  167

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Alienation by adverse possessor [3.295] The possessor of land has a proprietary interest in the land, a title based on

possession.275 This right is enforceable against the whole world except someone with a superior right to possession (the true owner or a person with a prior possessory interest, such interest not having been abandoned). The possessory interest of the adverse possessor is capable of being disposed of to another person. The adverse possessor can sell, give or devise his or her title and the recipient of the interest has an interest in the land which is the same as that of the adverse possessor. For example, if S has been in adverse possession of A’s land, Blackacre, for six years, and S dies leaving her possessory interest in Blackacre to Z, then Z, who goes into possession of Blackacre, may add S’s period of adverse possession to her own. Therefore, if the action arose in Victoria where the limitation period is 15 years, A’s title would be extinguished at the end of a further nine-​year period of adverse possession by Z. Z, who is S’s devisee, can add the two periods together. It is important to note that if Z does not take adverse possession herself, time stops running against A and any accrued time is nullified. [3.300]  In order for the true owner’s title to be lost in these circumstances, it is not essential

that the adverse possessor formally conveys the interest by appropriate documentation.276 Provided there has been continuous adverse possession for the statutory period, the true owner’s right of action is lost. Nevertheless, in a dispute between two persons each claiming under possessory titles, the presence or absence of formal documentation may be important.277 Assume that S took adverse possession of O’s land, remained there for 10 years and then conveyed the possessory title to X. Assume further that Y, not X, took adverse possession at the time S left the land and stayed there for the remainder of the statutory period. Between X and Y, X has the better possessory interest because X can rely on the prior possession of S; the possessory title had been conveyed to him.278 Without proof of the formal conveyance from S to X, X would have no right against Y. O’s position, however, does not depend on the existence of formal documentation. Continuous adverse possession for the statutory period extinguishes O’s title.

Successive adverse possessors [3.305] If the adverse possessor is dispossessed by another, the second adverse possessor

can add the first period of adverse possession to his or her own for the purpose of barring the true owner’s right of action.279 For example, if S takes adverse possession of A’s land,

275 For discussion of this matter, see [2.45]–​[2.80]. See Asher v Whitlock (1865) LR 1 QB 1; Allen v Roughley (1955) 94 CLR 98. 276 Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 471. Compare the position under the Nullum Tempus Act discussed at [3.45]. 277 Mulcahy v Curramore Pty Ltd [1973] 1 NSWLR 737 at 746 per Helsham J; Kirk v Sutherland [1949] VLR 33. 278 Note that in New South Wales s 50(2) of the Conveyancing Act 1919 (NSW), which is derived from the Pretenced Titles Act 1540 (UK), may have the effect of preventing a person in X’s position from ejecting a person in Y’s position. Under s 50(2), the conveyance of, or the agreement to convey, a right of entry is void against the person in possession unless the person conveying or agreeing to convey the right, or the person through whom he or she claims, was in possession of the land within 12 months of the date of the conveyance or agreement. 279 Shaw v Garbutt (1996) 7 BPR 14,816; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 476; Shelmerdine v Ringen Pty Ltd [1993] I VR 315; Willis v Earl Howe [1893] 2 Ch 545; Salter v Clarke (1904) 4 SR (NSW) 280. 168 [3.295]

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remains there for six years and is then in turn dispossessed by T, A’s title to the land would be extinguished after a further nine years’ adverse possession by T.280 In fact, the limitation period may comprise adverse possession by any number of unrelated adverse possessors. The only proviso is that there must be continuous and uninterrupted adverse possession for the duration of the relevant limitation period. As Bowen CJ stated in Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 476: Where there have been a series of trespassers, not deriving title from each other, who have been in adverse possession for [the limitation period, the statute] will operate to extinguish the true owner’s title. It is emphasised that possession by successive trespassers must be continuous to have this effect.

This principle is now expressly statutorily enacted in New South Wales and Western Australia.281 In the example above, A’s right of action is barred and his title is extinguished at the end of the limitation period. The question then arises as to whether S or T has a better right to the land. Possession is prima facie evidence of title. S, while in possession, was dispossessed by T. S, who had the prior possessory interest, has a right to bring an action against T to recover the land from the wrongdoer.282 S’s right to bring an action will in turn be barred if T remains in adverse possession for the limitation period that commenced when T dispossessed S. The examples above concern the situation where an adverse possessor is dispossessed by a subsequent adverse possessor. In some circumstances, however, an adverse possessor may “relinquish” or abandon his or her interest to a subsequent adverse possessor (that is, the subsequent adverse possessor does not take the land wrongfully). In this situation, provided there is no break in the adverse possession, time continues to run against the documentary owner.283 However, the first adverse possessor, having given up his or her interest, could not maintain a claim to recover possession against the subsequent adverse possessor.284

Abandonment by the adverse possessor [3.310]  An adverse possessor whose only title to the land is based on possession loses any

interest in the land upon the abandonment of possession before the full limitation period has run. The true owner of the land, or any other person, who had a right to recover the land from the adverse possessor is in the same position as if the land had never been adversely possessed.285 Thus, when the land is taken into adverse possession again after an abandonment, the two separate periods of adverse possession cannot be added together. [Upon abandonment the adverse possessor] leaves no cloud on the true owner’s title, which is then restored to its pristine force, and another person … who later enters into adverse

280 In jurisdictions with a 12-​year limitation period, A’s title would be extinguished after a further six years’ adverse possession by T. 281 Limitation Act 1969 (NSW), s 38(2); Limitation Act 2005 (WA), s 65(2). 282 See Allen v Roughley (1955) 94 CLR 98 at 110 per Dixon CJ. 283 Site Developments (Ferndown) Ltd v Cuthbury Ltd [2011] Ch 226 at 241 [176]. 284 See Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 477. 285 Allen v Roughley (1955) 94 CLR 98; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464; Trustees Executors & Agency Co Ltd v Short (1888) 13 App Cas 739; Roy v Lagona [2010] VSC 250 at [180]–​[181]. See, however, the comments at [3.305]. [3.310]  169

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possession of the property, cannot add the period of [the first adverse possessor’s] possession to his own so as to extinguish the title of the true owner.286

The issue of what constitutes abandonment is a question of fact. Guidance on this matter is gained from looking at the materials on adverse possession at [3.85]–​[3.165]. The question as to whether or not there has been an abandonment must be determined by deciding whether or not the adverse possessor is still in “possession” of the land. Whether the adverse possessor has retained possession in any given instance will depend upon matters such as the nature and character of the land, the usual and natural mode of using it and the animus possidendi.287 The adverse possessor who abandons the land before the expiration of the limitation period thereby loses the interest in the land. The title of the adverse possessor is based upon possession; the abandonment of possession means the loss of title.288 Thus, if S takes adverse possession of A’s land, remains for six years and then abandons the land, his possessory title is lost. If T subsequently goes into adverse possession, S has no right of action against T to recover the land. However, a fresh right of action in favour of the owner of the land, A, accrues when T takes adverse possession. [3.315]  The matter is not as simple if the adverse possessor remains in adverse possession for

the limitation period and subsequently “abandons” possession. Several cases support the view that, in this case, the rights of the adverse possessor are not lost by abandonment.289 Once the statutory limitation period has expired, the adverse possessor acquires a title in fee simple to the land, which is good against the whole world, including the true owner.290 The clear inference to be elicited from this principle is that the adverse possessor has an interest which “extends beyond his actual possession”.291 In Kirk v Sutherland [1949] VLR 33 H enclosed part of the land of his neighbour, B. B knew of the enclosure but did not assert title to the land or demand any rent from H. The area of land remained enclosed by H for a period in excess of the statutory limitation period. Subsequently, H sold the land of which he was the registered proprietor to X and, several years later, X sold the land to the plaintiffs. B sold the land of which he was the registered proprietor to the defendant. Seven years after the sale of his land to X, H purported to convey to the defendant that portion of B’s land enclosed by the fence. H claimed that he had acquired a title through adverse possession and that he had not transferred this title at the time he sold the land of which he was the registered proprietor. The plaintiffs brought an action seeking a declaration that they were entitled to be registered as proprietors of the strip of B’s land enclosed by the fence.

286 287

288 289

290 291

Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464 at 476. See Nicholas v Andrew [1920] 20 SR (NSW) 178 at 184, where it was held that non-​user per se (in this case periods of up to three months) is not irrefutable proof of abandonment; Wogama Pty Ltd v Harris (1968) 89 WN (NSW) 62 at 66; KY Enterprises Pty Ltd v Darby [2013] VSC 484 at [117]–​[122] (absence for a period of one year to travel around Australia not abandonment). Allen v Roughley (1955) 94 CLR 98. Perry v Clissold [1907] AC 73; Ferguson v Registrar of Titles [1919] VLR 509; Kirk v Sutherland [1949] VLR 33; Allen v Roughley (1955) 94 CLR 98; Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464. See [3.380]–​[3.405] for the position regarding Torrens land generally. Allen v Roughley (1955) 94 CLR 98; Asher v Whitlock (1865) LR 1 QB 1. See also Bayport Industries Pty Ltd v Watson (2006) V ConvR 54-​709 at [40]. Kirk v Sutherland [1949] VLR 33 at 37; Mabo v Queensland (No 2) (1992) 175 CLR 1 at 210 per Toohey J.

170 [3.315]

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The Supreme Court of Victoria refused to grant the declaration. Although H had acquired a title through adverse possession, the title had not been transferred to the successors in title to the land of which he was the registered proprietor. Further, it was held that possessory rights, which have endured for the limitation period, are not lost if possession no longer continues.292 The title gained by the adverse possessor, although not the same as that lost by the true owner, is good against the whole world including the true owner. Although X and then the plaintiffs had been in adverse possession of the disputed land against H for some seven years, H retained “title” to the land and was able to transfer his interest to the defendant.

THE EFFECT OF TIME LAPSING Person dispossessed [3.320]  Limitation statutes originally operated to bar the remedy, but not to extinguish the

title, of the person dispossessed.293 Therefore, a person whose right of action to recover land had been barred, and who regained possession of the land peaceably, could reassert title against the adverse possessor. As discussed at [3.35], the limitation statutes in all Australian States now provide that both the right of action and the title of the claimant are extinguished at the end of the limitation period.294 The extinguishment of title, however, is not as complete and wide-​ranging as the above analysis tends to suggest. In a straightforward fact situation, the extinguishment of title is final. For example, where S dispossesses A of her land and remains there for the limitation period, A loses her right of action and her title is finally extinguished against S. There is no method by which she can revive her title so as to defeat S. It is important to note, however, that the title of the dispossessed person is extinguished only against the adverse possessor.295 In the uncomplicated example above, extinguishment of title against the adverse possessor results in the true owner, A, losing the land finally and completely. The extinguishment of the fee simple as against the adverse possessor is effectively the same as extinguishment of title per se; there is no method by which the person dispossessed can reassert title. However, where the person dispossessed is a lessee, the position is different. Although the lessee’s right of action and title are extinguished, as against the adverse possessor, the lessee’s title remains good as against the lessor. Thus, the lessee can go back into possession under the lease if the adverse possessor leaves the land.296 The corollary is that even after her 292 Kirk v Sutherland [1949] VLR 33 at 37; Mabo v Queensland (No 2) (1992) 175 CLR 1 at 210 per Toohey J. 293 For a discussion of this historical point, see Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 1127–​1128; Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 292; Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), p 1133–​134. 294 As to land under the Torrens system of land registration, this is not always the case: see [3.380]–​[3.405]. As discussed at [3.210], the right of action and the title of the trustee are not lost until the rights of action of all beneficiaries have been barred. As to the situation concerning mortgages, see [3.260]–​[3.265]; see also and Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 913ff. The documentary owner’s title is extinguished but the interests of third parties who held interests in the title may not be: see Chung Ping Kwan v Lam Island Development Co Ltd [1997] AC 38 at 47. 295 Fairweather v St Marylebone Property Co Ltd [1963] AC 510; Taylor v Twinberrow [1930] 2 KB 16. Compare Re Field [1918] 1 IR 140. 296 See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), p 1151. Where, however, the tenant attempts to regain possession by exercising an option to renew in the [3.320]  171

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leasehold title is extinguished as against the adverse possessor, the lessee remains liable on the covenants in the lease.297

Title of the adverse possessor [3.325]  The adverse possessor holds a title in the land based on possession. Even before the

limitation period has expired, the adverse possessor holds an interest in the land, based on possession, which is enforceable against the whole world except a person with a better legal right to possession.298 Once the limitation period has expired, the adverse possessor does not “acquire” or have transferred to him or her the estate or title of the person whose title has been extinguished. The interest in the land remains based upon possession. Lord Radcliffe in Fairweather v St Marylebone Property Co Ltd [1963] AC 510 at 535 commented upon the title of the adverse possessor:299 He is not at any stage of his possession a successor to the title of the man he has dispossessed. He comes in and remains in always by right of possession, which in due course becomes incapable of disturbance as time exhausts the one or more periods allowed by statute for successful intervention. His title, therefore, is never derived through but arises always in spite of the dispossessed owner.

The interest of an adverse possessor is capable of “progressive improvement”.300 The following examples demonstrate the meaning of this phrase. First, if S takes adverse possession of A’s land and remains there for eight years before being dispossessed himself by T, S has a title which, at the time of his dispossession, is good against the whole world except A. If T remains in adverse possession for a further seven years (assuming the limitation period to be 15 years), A’s title is barred and S has the best title to the land. S’s interest in the land has progressively improved. Secondly, if S takes adverse possession of leased land and bars the interest of the tenant, he has an interest in the land that is good against everyone except the landlord. S’s interest may “improve” into one which is enforceable against everyone, including the landlord, if the landlord fails, when his own cause of action has arisen, to bring an action to recover the land within the relevant limitation period. Rights of third parties [3.330]  The adverse possessor, by dispossessing the true owner of the fee simple and retaining

adverse possession for the relevant limitation period, does not extinguish the title of a third

lease, the tenant would be unsuccessful against the squatter: see Chung Ping Kwan v Lam Island Development Co Ltd [1997] AC 38. 297 See Taylor v Twinberrow [1930] 2 KB 16. 298 Compare the views of the Law Commission in the UK where the Commission suggested that adverse possession claims should only be allowed in very limited circumstances and should only take effect upon registration. (Recommendations subsequently acted upon in Land Registration Act 2002 (UK).) The Commission did not address directly the issue of the nature of the adverse possessor’s rights before such registration (Law Commission (No 254), Sept 1998). As Griggs noted, however, the tenor of the report was that the adverse possessor had no interest at all before registration and no interest with which to bring an action against any subsequent trespasser: see Griggs, “Possessory Titles in a System of Titles by Registration” (1999) 21 Adel L Rev 157 at 166. 99 See, however, [3.380]–​[3.405] for the position in regard to Torrens land in some jurisdictions. 2 300 Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 293–​294. 172 [3.325]

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party who has a proprietary interest in the land.301 The adverse possessor is bound by easements or restrictive covenants affecting the land.302 By express provision, the limitation statutes do not apply to easements303 and the majority of the English Court of Appeal in Re Nisbet and Potts’ Contract [1906] 1 Ch 386 took the view that the benefit of a restrictive covenant was not a right which could be barred by the operation of the limitation statute.304 Adverse possession of leased land [3.335]  When a person takes adverse possession of leased land and remains for the relevant

limitation period, the right of action of the tenant is barred. The landlord’s title remains valid, however, and, upon the expiration of the lease, the landlord will have a full limitation period in which to bring an action to recover the land.305 The fact that the adverse possessor extinguishes the right of action and the title of the tenant does not result in a positive transfer of the leasehold estate to the adverse possessor. As explained at [3.35], the limitation statutes operate negatively –​the adverse possessor’s title is founded on possession. The interest is best described as a legal fee simple interest subject to the landlord’s right of entry at the end of the term of the lease. As there is no “transfer” of the leasehold estate from the lessee to the adverse possessor, it is clear that there is no privity of estate between the landlord and adverse possessor and that, therefore, the adverse possessor is not liable on the covenants in the lease.306 The adverse possessor is directly liable only with respect to covenants that are enforceable as restrictive covenants.307 Nevertheless, if the lease contains a forfeiture clause for breach of condition, the landlord may effectively force the adverse possessor to comply with the covenants. Although there is no privity of estate, a clause giving a right of re-​entry is proprietary in nature and binds successors in title, including adverse possessors.308 If the adverse possessor is forced to pay rent to the landlord in order to prevent the landlord from exercising the right of forfeiture, the adverse possessor becomes a periodic tenant.309 In order to avoid a finding that he or she is estopped from denying that he or she is holding under the lease, the adverse possessor must

301 Re Nisbet and Potts’ Contract [1905] 1 Ch 391; Chung Ping Kwan v Lam Island Co Ltd [1997] AC 38. 302 If the interest is legal in nature, it binds the whole world. If it is equitable in nature, it binds the adverse possessor because the adverse possessor is not a bona fide purchaser of the legal estate for value without notice. 303 See the definitions of “land” which do not include incorporeal hereditaments: Limitation Act 1969 (NSW), s 11(1); Limitation of Actions Act 1958 (Vic), s 3(1); Limitation of Actions Act 1974 (Qld), s 5(1); Limitation of Actions Act 1936 (SA), s 3(1); Limitation Act 2005 (WA), s 3(1); Limitation Act 1974 (Tas), s 2(1). 304 Compare the judgment of Collins MR who held that the statute may operate to bar such a right if the right were infringed. It should be noted that easements and restrictive covenants may be extinguished in the usual ways: see [17.395]–​[17.445] and [18.195]–​[18.240] respectively. 305 See [3.255]. 306 Tichborne v Weir (1892) 67 LT 735; Perry v Woodfarm Homes Ltd [1975] IR 104. 307 Re Nisbet and Potts’ Contract [1905] 1 Ch 391.s 308 See [14.310]–​[14.315] for a discussion of forfeiture clauses in leases. Note that the landlord would also have a right of re-​entry against the adverse possessor if the lease can be determined by notice. Further, Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 296 argue that the adverse possessor may be liable to distress in the event of failure to pay rent in this context. Note that distress has been abolished in the majority of Australian jurisdictions: see [14.425]. 309 The type of periodic tenancy is usually determined by the way in which rent is paid: for example, weekly, monthly, yearly. See [14.60]. [3.335]  173

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not take advantage of the previous tenant’s lease.310 Mere payment of rent does not give rise to any such estoppel.311 The tenant, whose title has been extinguished as against the adverse possessor, remains liable on the covenants of the lease. Privity of contract exists between the landlord and the tenant. Even if the dispossessed tenant is an assignee of the lease rather than the original tenant, it is suggested liability on the covenants remains. Although the tenant’s title is extinguished as against the adverse possessor, privity of estate remains as between the landlord and the tenant.312 [3.340] A tenant whose title has been extinguished by the adverse possession of another

may surrender the leasehold interest to the landlord and thereupon the landlord may recover the land from the adverse possessor.313 In Fairweather v St  Marylebone Property Co Ltd [1963] AC 510 (HL) the owner of the land, A, granted a 99-​year lease to the tenant, B. The neighbouring landowner, S, took adverse possession of a shed at the back of the leased land and in time barred the tenant’s right to bring an action to recover the land. Subsequently, B surrendered the lease to A. The issue to be decided was whether A could resume possession immediately or whether he had to wait until the lease determined by the effluxion of time, that is, until the expiration of the 99-​year term. The House of Lords held that A, the owner of the land, had the right to possession of the land upon surrender of the lease. Although the adverse possession of S barred B’s right of action and extinguished B’s leasehold interest as against S, the landlord and tenant relationship between A  and B continued. As against A, although not S, B had a right to possession.314 When B surrendered the lease, he gave up this right to possession and the leasehold interest merged with the freehold and thus was extinguished.315 As the lease was no longer in existence, A had an immediate right to recover the land.316 The result of the decision in Fairweather’s case is that the landlord and tenant may work together to defeat the interest of the adverse possessor who has extinguished the tenant’s title. The tenant surrenders the term of the lease thereby giving the landlord the right to regain possession from the adverse possessor. After recovering possession, the landlord may grant a new lease to the tenant.317

310

A person who claims the benefits of a deed must accept the burdens: see Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 1279. 311 Tichborne v Weir (1892) 67 LT 735; Perry v Woodfarm Homes Ltd [1975] IR 104. 312 Fairweather v St Marylebone Property Co Ltd [1963] AC 510. 313 Fairweather v St Marylebone Property Co Ltd [1963] AC 510. 314 This right is evidenced by the fact that the tenant would have been able to resume possession under the lease had the adverse possessor vacated the land. 15 A person cannot have rights against her or himself. 3 16 See Fairweather v St Marylebone Property Co Ltd [1963] AC 510, where the House of Lords overruled Walter 3 v Yalden [1902] 2 KB 304 and approved Taylor v Twinberrow [1930] 2 KB 16 on this point. 317 The House of Lords, and in particular Lord Denning, understood that its decision left scope for such collusion and yet did not take the view that this possibility should alter its decision. The decision in Fairweather v St Marylebone Property Co Ltd [1963] AC 510 and its possible unpalatable consequences were discussed by the English Law Reform Committee (Final Report on Limitations of Actions (Cmnd 6923, 1977) at [3.44]–​[3.46]) but, in the final analysis, no change was recommended: see Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Australian Property Law (9th ed, LexisNexis, Sydney, 2013), p 170. 174 [3.340]

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Even before the introduction of the Land Registration Act 2002 (UK), the application of the Fairweather principle in England was limited as it did not appear to apply to registered land. After 12 years’ adverse possession, the squatter was entitled to apply to be the registered proprietor of the leasehold estate.318 Upon such registration, a new leasehold title was opened in the name of the squatter and the dispossessed lessee had no title to surrender.319 The Land Registration Act 2002 (UK), which provides that adverse possession of itself cannot operate to bar the right of action and title of a registered interest holder, creates a whole new regime under which the Fairweather principle has no relevance. In Australia, however, the issue remains extant. It has been argued strongly that Fairweather’s case was incorrectly decided.320 Megarry and Wade argue that the decision infringes the principle of nemo dat quod non habet. They argue that even if it is accepted that the title of the tenant is extinguished only as against the adverse possessor, the tenant in the Fairweather fact situation is still giving the landlord something the tenant has not got –​the right to recover the land from the adverse possessor.321 The logic of this argument appears straightforward and simple. However, if it is accepted that the tenant’s title is lost only as against the adverse possessor, it is suggested that the scenario in the Fairweather fact situation is inevitable. The tenant has an interest to surrender to the landlord and, upon surrender, that interest is extinguished; it merges with the freehold. The landlord, in seeking to recover the land from the adverse possessor, relies upon the immediate right to possession arising from the freehold title and the expiration of the leasehold interest.322 Despite criticism of the decision in Fairweather’s case, it appears to be applicable in Australia,323 although its operation in relation to Torrens land in some jurisdictions is limited by the ability of the adverse possessor to become the holder of a registered interest in the land.324 [3.345]  A tenant, whose title has been extinguished by the adverse possession of another can recover possession of the land if he or she acquires the freehold title from the landlord.325 Upon such an acquisition, the lease merges in the freehold and is extinguished in the same way as the lease is extinguished if the tenant surrenders the leasehold interest to the landlord.

318 Land Registration Act 1925 (UK), s 75. 319 Further, after 12 years adverse possession, but before such registration, the dispossessed tenant holds the leasehold title on trust for the squatter (s 75(2)). Any attempt to surrender the leasehold title would result in the freeholder having the statutory trusteeship impressed on his or her own title: Central London Commercial Estates Ltd v Kato Kagaku Co Ltd [1998] 4 All ER 948. 320 Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 294–​295; Wade, “Landlord, Tenant and Squatter” (1962) 78 LQR 541. See also the judgment of Lord Morris in dissent: [1963] AC 510 at 548. 321 Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 295, concede that it would be different if the landlord had an independent right to recover. Also see Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Australian Property Law (9th ed, LexisNexis, Sydney, 2013), p 170. 322 Fairweather v St Marylebone Property Co Ltd [1963] AC 510 has been applied in Tickner v Buzzacott [1965] Ch 426 and in Jessamine Investment Co v Schwartz [1978] QB 264. Note, however, that in the latter case there was no question of the principle of nemo dat quod non habet being infringed. 323 See Eckford v Stanbroke Pastoral Co Pty Ltd [2012] 2 Qd R 324 at 326 [9]‌. 324 See [3.380]–​[3.405]. 325 Taylor v Twinberrow [1930] 2 KB 16. [3.345]  175

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Proof of title [3.350]  In most cases, a contract for the sale of land provides that the purchaser is entitled to a

title evidenced wholly by proper documentary title.326 Where the contract has such a provision, the vendor cannot force the purchaser to accept a title based on adverse possession.327 Even where the contract of sale does not contain such a provision, a purchaser is not required to accept a title based purely on evidence of possession for the relevant limitation period. The simple fact of possession for the limitation period does not show that the titles of all persons with interests in the land have been barred. For example, the true owner might be a person who has granted a lease for a long period and is entitled to a reversion. In order to be in a position to force the purchaser to accept a possessory title, the vendor must prove the title of the former owner and prove that it has been extinguished in the vendor’s favour.328 This will often be a difficult task for a vendor. In practice, the purchaser may agree to accept an imperfect title.329

METHODS BY WHICH TIME IS STOPPED FROM RUNNING [3.355]  Time stops running if the owner asserts his or her right or if the adverse possessor

admits that the owner has a superior right.

Asserting right [3.360]  Time may be stopped from running if the person with the right of action asserts the

right by instituting an action to recover the land330 or by making a peaceable but effective entry on the land. A mere formal entry is insufficient.331 In order to stop time from running, the entry must amount to a resumption of possession.332 Paper claims are not effective to 326 See, for example, the general conditions of sale in Table A of the Transfer of Land Act 1958 (Vic); note condition No 12. (But now see s 130.) 327 Re Brine and Davies [1935] 1 Ch 388. See Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [10.280]. 328 Re Atkinson and Horsell’s Contract [1912] 2 Ch 1; Ferguson v Registrar of Titles [1919] VLR 509; Allen v Roughley (1955) 94 CLR 98; Maguire v Browne (1913) 17 CLR 363. See generally Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [10.280]. 329 Re Nisbet and Potts’ Contract [1905] 1 Ch 391. 330 It appears that this is so even where the claim is dismissed because of the non-​ appearance of the plaintiff: Shaw v Garbutt (1996) 7 BPR 14,816. Compare the arguably more sensible result in the English Court of Appeal in Markfield Investments Ltd v Evans [2001] 1 WLR 1321, where proceedings, which were dismissed for want of prosecution, did not stop time running. See similarly Bampton v Burchall (1842) 5 Beav 67; Dixon v Gayfere (1853) 17 Beav 421. These English decisions do not appear to have been cited in the Shaw Case. See Butt, “Adverse Possession: Stopping Time Running” (2001) 75 ALJ 727. In Ofulue v Bossert [2009] 1 AC 990 at 1016, Lord Neuberger of Abbotsbury (with whom Lord Hope of Craigshead, Lord Rodger of Earlsferry and Lord Walker of Gestingthorpe expressed agreement) stated that he believed Markfield Investments Ltd v Evans was correctly decided in this respect. 331 Limitation Act 1969 (NSW), s 39(a); Limitation of Actions Act 1958 (Vic), s 16; Limitation of Actions Act 1974 (Qld), s 21; Limitation of Actions Act 1936 (SA), s 18; Limitation Act 2005 (WA), s 84(a); Limitation Act 1974 (Tas), s 19. In jurisdictions where time can run against the Crown, it seems that a grant of the land by the Crown is sufficient to constitute a resumption of possession, even if there is no physical retaking of the land: Simpson v North West County District Council (1978) 4 BPR 9277 at 9292–​9293. 332 Symes v Pitt [1952] VLR 412; Abbatangelo v Whittlesea City Council (2008) V ConvR 54-​750 at [37]; Zarb v Parry [2012] 1 WLR 1240. Arguably stronger evidence is needed of intention to repossess where the true owner knows of the adverse possession: Shaw v Garbutt (1996) 7 BPR 14,816 at 14,825–​14,826. 176 [3.350]

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amount to a resumption of possession.333 Whether there has been a resumption of possession is a question of fact in each case.334 The nature of the land and the types of acts relied upon as constituting repossession must be taken into account. It is clear that it is immaterial how short the resumed possession may be.335 In Robertson v Butler [1915] VLR 31 at 37 Beckett A-​CJ stated: The legal effect of acts relied upon as disturbances of possession must in every case depend upon the character of the possession which they are said to disturb. That which would be an interruption of possession evidenced by continuous acts done upon a small area might be no interruption of possession evidenced by intermittent acts of ownership done at different places over a wide area.

In that case, the titleholder used the farming land no more than four times a year to shoot rabbits and picnic; such use was insufficient to constitute a retaking of the land in question.

Admission Acknowledgment and part payment [3.365]  Where any right of action336 to recover land has accrued and the person in possession

acknowledges337 the title of the person with the right of action, the right of action is deemed to accrue on and not before the date of acknowledgment.338 The acknowledgment need not be of the titleholder’s right to immediate possession, but only of that person’s title.339 The acknowledgment must be in writing and signed by the person making the acknowledgment or by his or her agent.340 There need not be any intention to make the acknowledgment and no special form is required. For example, in Edgington v Clark [1964] 1 QB 367 it was held that an offer to purchase the land in dispute made by the adverse possessor to the true owner would constitute an acknowledgment of the title of the true owner.341 That aspect of the decision was

333

O’Neil v Hart [1905] VLR 107; Robertson v Butler [1915] VLR 31; Symes v Pitt [1952] VLR 412 at 430; Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 3 All ER 129 (CA); Cooke v Dunn (1998) 9 BPR 16,489; KY Enterprises Pty Ltd v Darby [2013] VSC 484 at [207]. The lodgment of a caveat by the person with the right of action, for example, a mortgagee, constitutes neither an entry into possession nor an action to recover land: Sardon Pty Ltd v Registrar of Titles [2004] WASC 56. 334 Randall v Stevens (1853) 2 E & B 641; 118 ER 908; Worssam v Vandenbrande (1858) 17 WR 53, where the true owner took down a fence erected by the adverse possessor and placed a sign claiming the right to let the land (he was only on the land for three quarters of an hour but it was held that he had effectively resumed possession); Scanlon v Campbell (1911) 11 SR (NSW) 239; Phillips v Marrickville Municipal Council (2002) 11 BPR 20,135. 335 Symes v Pitt [1952] VLR 412 at 430; Simpson v North West County District Council (1978) 4 BPR 9277. 336 This includes a foreclosure action. 37 Or “confirms”: see, for example, Limitation Act 1969 (NSW), s 54(1); Limitation Act 2005 (WA), ss 46, 47. 3 38 Limitation Act 1969 (NSW), s 54(1); Limitation of Actions Act 1958 (Vic), s 24(1)(a); Limitation of Actions Act 3 1974 (Qld), s 35(1)(a); Limitation of Actions Act 1936 (SA), s 21; Limitation Act 2005 (WA), s 47; Limitation Act 1974 (Tas), s 29(1). 39 See Ofulue v Bossert [2009] 1 AC 990 at 1017–​1018, where a claim by the adverse possessors that they 3 were in occupation of the land under a lease was held to be an acknowledgment of the owners’ title that re-​started the running of time, even though it was not an acknowledgment of the owners’ present right to immediate possession. 40 Limitation Act 1969 (NSW), ss 54(4), 11(2); Limitation of Actions Act 1958 (Vic), s 25(1), (2); Limitation of 3 Actions Act 1974 (Qld), s 36(1), (2); Limitation of Actions Act 1936 (SA), s 21; Limitation Act 2005 (WA), s 48; Limitation Act 1974 (Tas), s 30(1). See Phillips v Marrickville Municipal Council (2002) 11 BPR 20,135. 341 This depends upon the form of words used. See and cf Cawthorne v Thomas (1993) 6 BPR 13,840. Where the offer to purchase was oral, it did not constitute an acknowledgment of the title of the true owner as [3.365]  177

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approved by the House of Lords in Ofulue v Bossert [2009] 1 AC 990 at 1018. However, the majority of their Lordships held that because the offer to purchase in Ofulue was headed “without prejudice”, and was made with the intention of settling existing legal proceedings, it was not admissible into evidence. Therefore it did not operate as an acknowledgment that would have re-​started the running of time.342 A statement made in pleadings or other court documents can constitute an acknowledgment and, if so, the acknowledgment is regarded as having been made on the date the document is served. Subsequent steps in the proceedings taken by the adverse possessor that rely on or affirm the content of the document do not constitute a republication of the acknowledgment, unless another signed document is brought into existence or the existing document is re-​served.343 The lodgment of a caveat by an adverse possessor based on the adverse possession and, alternatively, on a claim for original entitlement by means of an agreement with a predecessor of the documentary owner does not constitute an acknowledgment of the documentary owner’s title; the claims are not necessarily contradictory and can exist together.344 A request by the adverse possessor to the documentary owner that the latter contribute to the rates may constitute an acknowledgment.345 Where a right to recover land has accrued to a mortgagee, and the person in possession or the person liable for the mortgage debt makes any payment of principal or interest, the right of action is deemed to accrue on, and not before, the date of the payment.346 If a right of action has accrued to recover any debt or other liquidated pecuniary claim, such as rental payments, and the person liable acknowledges the claim or makes a payment in relation to it, the right is deemed to have accrued on the date of the acknowledgment or payment.347 In some jurisdictions payment of part of the rent does not, however, extend the time for claiming the rest of the rent due.348

legislation required acknowledgments to be in writing: Shaw v Garbutt (1996) 7 BPR 14,816. Also see Bridges v Bridges [2010] NSWSC 1287 at [35], where the act of the adverse possessor in obtaining a valuation of the property for the purpose of negotiating its purchase was held not to be an acknowledgement of the documentary owner’s title. No final bargain was reached and the adverse possessor was simply attempting to find a practical solution to the dispute. 342 Lord Neuberger at 1020, with Lords Hope, Rodger and Walker agreeing. Lord Scott of Foscote (at 1002ff) dissented, on the basis that not to admit the offer document into evidence would be an unwarranted extension of the without prejudice rule. 43 Ofulue v Bossert [2009] 1 AC 990 at 1018–​1020. 3 44 See Shaw v Garbutt (1996) 7 BPR 14,816; Urban v Urban (1994) 21 Alta LR (3d) 405. Query the lodgment 3 of a caveat based only on a claim of original entitlement: presumably this could more properly constitute an acknowledgment. 45 Webeck v Foley (1992) NSW ConvR 59,717. 3 346 As to acknowledgments and part payments, see generally Limitation Act 1969 (NSW), s 54; Limitation of Actions Act 1958 (Vic), ss 24–​26; Limitation of Actions Act 1974 (Qld), ss 35–​37; Limitation of Actions Act 1936 (SA), ss 21, 33, 42; Limitation Act 2005 (WA), ss 46–​51; Limitation Act 1974 (Tas), ss 29–​31. 347 As to acknowledgments and part payments, see generally Limitation Act 1969 (NSW), s 54; Limitation of Actions Act 1958 (Vic), ss 24–​26; Limitation of Actions Act 1974 (Qld), ss 35–​37; Limitation of Actions Act 1936 (SA), ss 21, 33, 42; Limitation Act 2005 (WA), ss 46–​51; Limitation Act 1974 (Tas), ss 29–​31. 348 Limitation of Actions Act 1958 (Vic), ss 24(3); Limitation of Actions Act 1974 (Qld), s 35(4); Limitation Act 1974 (Tas), s 29(5). 178 [3.365]

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Persons bound [3.370] An acknowledgment of title to land by any person in possession is binding on all

other persons in possession during the ensuing period of limitation. Thus, a successor-​in-​title to the adverse possessor or, indeed, a person who dispossesses the first adverse possessor would be bound by the acknowledgment.349 Time is deemed to run only from the date of the acknowledgment. An acknowledgment of a debt or other pecuniary claim binds the person making the acknowledgment and his or her successors, but no other person.350 In some jurisdictions payment in respect of a debt or other liquidated pecuniary claim, however, binds all persons liable in respect thereof.351 Acknowledgment or part payment when time has run [3.375]  Once the full period of limitation has run, an acknowledgment or payment has no

effect.352

ADVERSE POSSESSION AND THE TORRENS SYSTEM Background [3.380]  A principal aim of the Torrens system of land registration is that the registration of

an interest provides complete security for that interest. The very basis of the Torrens system is that it is a system of title by registration, with the Register providing certainty of title. The concept of acquisition of title gained by adverse possession rather than by registration militates against the main philosophy behind the Torrens system.353 The computerisation of titles and the advent of electronic conveyancing will result in even greater importance being placed on the Register and its content, and arguably the concept of adverse possession should be very limited in a Torrens system of land registration. Nevertheless, for a long time the accepted view in some jurisdictions, reflected in the statutes, was that adverse possession principles should apply to Torrens system land. The view was that unpalatable and unfair results would ensue if the limitation legislation were to be inapplicable to Torrens system land. For example, if the registered owner abandons the land and another takes possession and remains for a long period of time, perhaps paying the rates and effectively utilising and improving the land, there should be some means by which the status quo can be recognised.354 349 But in South Australia an acknowledgment by an adverse possessor of land is binding only on himself or herself and any person claiming through him or her: Limitation of Actions Act 1936 (SA), s 21(b). 350 Limitation Act 1969 (NSW), s 54(6), (7); Limitation of Actions Act 1958 (Vic), s 26(1), (5); Limitation of Actions Act 1974 (Qld), s 37(1), (5); Limitation Act 2005 (WA), s 50; Limitation Act 1974 (Tas), s 31(1), (5). 351 Limitation of Actions Act 1958 (Vic), ss 26(6); Limitation of Actions Act 1974 (Qld), s 37(6); Limitation Act 1974 (Tas), s 31(7). 352 Re Alison (1879) 11 Ch D 284. See, however, Colchester Borough Council v Smith [1992] Ch 421, where it is suggested that in certain circumstances an acknowledgment given after time has run may raise an estoppel and effectively result in the holder of the documentary title retaining title, discussed in Jourdan, Adverse Possession (London, Butterworths, 2003), pp 328–​329. See generally Ch 19 of Jourdan for a general discussion of the way in which estoppel principles may interact with adverse possession principles. 353 For a detailed discussion of this and related issues and recommendations for reform, see Burns, “Adverse Possession and Title-​by-​Registration Systems in Australia and England” (2011) 35 Melbourne University Law Review 773. 354 Alternatively, where the land was sold many years before, but the formalities of registration were not attended to, there may be a need to recognise the right and title of an adverse possessor. [3.380]  179

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Some law reform agencies which have considered the issue recently have taken the view that the application of adverse possession principles in relation to registered land should be very limited355 and, in those cases, where rights gained through possession are to be permitted, the Register would need to be changed to reflect the position as soon as possible. In a theoretical sense, a system of title by registration should not include possessory titles.356 “The main weakness … is that the principles which determine whether a registered proprietor will lose his or her title by adverse possession were developed for a possession-​based system of title and not one founded on registration”.357 The United Kingdom Law Commission suggested major restrictions in the operation of the possession principle to registered land and it has been suggested that similar restrictions would be appropriate for Torrens title land in Australia.358 The Commission suggested that adverse possession per se should not bar the title of the registered proprietor; in its view the only scope for the operation of the limitation principle would be “to ensure marketability of land or to prevent unfairness”.359 The Commission’s recommendations form the basis of the provisions relating to adverse possession in the Land Registration Act 2002 (UK). The Act provides that adverse possession per se cannot bar the title of the registered proprietor. A  person in possession can apply after 10 years adverse possession to become registered as proprietor. The Registrar must give notice of the application to the registered proprietor of the estate and if he or she objects, the application must be rejected unless very limited conditions apply. In the absence of objection (or if the adverse possessor stays on for a further two years after objection), the adverse possessor would be entitled to registration as proprietor. Only then would the title of the former registered proprietor be extinguished. The legislative scheme: confirms that the title derived from registration has a resilience which equips the proprietor with carapace-​like protection against strangers. Any assault on the registered proprietor’s title can usually be rebutted, albeit after many decades of adverse possession, by an arbitrary repudiation of the squatter’s claim.360

Current law [3.385] The Australian legislatures have taken a number of different approaches when

determining how to integrate the limitation of actions legislation into the Torrens system of land registration. In all States there is some recognition of the concept of acquisition of title by

355

356 357 58 3 359

360

See UK Law Commission, Land Registration for the Twenty-​First Century: A Consultative Document (Law Comm No 254, Cm 4027, 1998); Law Reform Commissioner of Tasmania, Report on Adverse Possession and Other Possessory Claims to Land (1995). Griggs, “Possessory Titles in a System of Titles by Registration” (1999) 21 Adel L Rev 157. See also Williams, “Title by Limitation in a Registered Conveyancing System” (1968) 6 Alberta Law Review 67. UK Law Commission, Law Commission and HM Land Registry, Land Registration for the Twenty-​First Century (UK Law Comm No 254, September 1998), p 206. Griggs, “Possessory Titles in a System of Titles by Registration” (1999) 21 Adel L Rev 157 at 174–​175. UK Law Commission, Law Commission and HM Land Registry, Land Registration for the Twenty-​First Century (UK Law Comm No 254, September 1998) at [10.19]. See Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 1167. Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 1172.

180 [3.385]

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adverse possession.361 Note, however, that even if the effect of particular provisions is that the adverse possessor cannot defeat the interest of the registered proprietor, the adverse possessor does have an interest based on his or her possession.362 Such an interest gives the adverse possessor a better right to the land than any person (other than the registered proprietor) who dispossesses him or her.363 Victoria and Western Australia [3.390]  In Victoria and Western Australia the concept of acquisition of title by adverse

possession applies fully to Torrens land. The Torrens statutes create an express exception to the indefeasibility of the title of the registered proprietor by providing that the registered proprietor holds the land subject to any rights subsisting under any adverse possession of the land.364 Further, there is provision for the adverse possessor to apply to obtain registration of title if the possession has extinguished the registered proprietor’s title.365 Even without such formal registration, however, the interest of a person who by adverse possession has extinguished the title of the registered proprietor prevails against the registered proprietor. There has been some discussion as to the precise meaning of s  42(2)(b) of the Transfer of Land Act 1958 (Vic) and s 68(1) of the Transfer of Land Act 1893 (WA). Arguably, the clause “any rights subsisting under any adverse possession of the land” may not include the inchoate possessory rights an adverse possessor has before the expiration of the full limitation period. Pursuant to this argument, the registered proprietor’s “title” is subject only to the interest of an adverse possessor where the full limitation period has run. The better view is that the legislatures in these two States intended that an adverse possessor of Torrens land should be in the same position as an adverse possessor of general law land. The words “any rights subsisting under any adverse possession of land” should be given their natural meaning and would include, therefore, inchoate possessory rights and possessory rights which have developed with the effluxion of time into the best interests in the world. Thus, a purchaser becoming the registered proprietor of land takes subject to any rights subsisting under adverse possession. For example, if S has been in adverse possession of A’s land (A being the registered

361 Compare the position in the Australian Capital Territory and the Northern Territory where the title of the registered proprietor cannot be extinguished: see Land Titles Act 1925 (ACT), s 69; Land Title Act 2000 (NT), s 198. 362 Compare the possible solution, which has been suggested by the Law Reform Commission in the UK: see [3.380]. Implicit in the Commission’s recommendations is that no title at all would be obtained by adverse possession until registration: see n 298. 363 Spark v Meers [1971] 2 NSWLR 1; Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd [1970] 92 WN (NSW) 1087. See also Refina Pty Ltd v Binnie [2010] NSWCA 192 at [8]‌–​[12]. 364 Transfer of Land Act 1958 (Vic), s 42(2)(b); Transfer of Land Act 1893 (WA), s 68(1). See suggestions in Victorian Law Reform Committee, Report on the Fences Act (1998) concerning adverse possession. Discussed in Park, Ting and Williamson, “Adverse Possession of Torrens Land: Parliamentary Inquiry Stays Out of Bounds” (1998) 72 LIJ 77; Furletti and Trapnell, “Adverse Possession of Torrens Land: Realigning the Boundary” (1999) 73 LIJ 76. 365 Transfer of Land Act 1958 (Vic), ss 60–​62; Transfer of Land Act 1893 (WA), ss 222–​223A. Note also that a person who has been in possession of general law land for the requisite period may apply to have the land brought under the Torrens system: Transfer of Land Act 1958 (Vic), ss 9, 26D, 26O (if a provisional folio is issued for a possible interest, the Registrar deletes the warning after 15 years); Transfer of Land Act 1893 (WA), ss 20, 24. [3.390]  181

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proprietor) for seven years and A sells the land to B, who becomes the registered proprietor, B takes the land subject to S’s possessory rights. If the limitation period is 15  years, this effectively means that B has only eight years in which to bring an action against S to recover possession of the land. If S had been in adverse possession of the land for 15 years, A’s title, and consequently B’s title, would be extinguished. Tasmania [3.395] As in Victoria and Western Australia, the principle of acquisition of title by adverse possession applies to Torrens land in Tasmania. However, the relevant statutory provisions are in a different form and were substantially amended by the Land Titles Amendment (Law Reform) Act 2001 (Tas).366 Section 138W(1) of the Land Titles Act 1980 (Tas) provides that, subject to the other provisions of s 138W, the limitation statute applies to Torrens land in the same way as it does to general law land.367 As a corollary, s 40(3)(h) provides that the registered proprietor’s title is not indefeasible “so far as regards rights acquired, or in the course of being acquired under a statute of limitations”.368 Although the limitation statute in general applies to Torrens land, it is specifically provided that the registered proprietor’s title is not to be extinguished by the limitation legislation.369 Once the limitation period has expired, the registered proprietor holds on trust for the adverse possessor and the adverse possessor may apply to the Recorder for an order vesting the legal estate in him or her.370 In Quarmby v Keating [2008] TASSC 71 the question arose as to whether an adverse possessor, who claimed that the disputed land was held for him on trust by the registered proprietor under s  138(2), could sue the registered proprietor in trespass in respect of the latter’s interference with the disputed land. On appeal, a majority of the Full Court held that he could not. Evans J at [64], with Crawford CJ agreeing, stated that because the registered proprietor had continued to pay the council rates levied to the property (see below), not only was the adverse possessor precluded from applying to the Recorder to become the registered proprietor of the land under s  138W(4), but also the current registered proprietor did not

366

See now Land Titles Act 1980 (Tas), ss 138T–​138ZA. The changes were made in response to a report on adverse possession: Law Reform Commissioner of Tasmania, Report on Adverse Possession and Other Possessory Claims to Land (1995). In part this inquiry was itself in response to the decision in Woodward v Wesley Hazell Pty Ltd (1994) ANZ ConvR 624 at 627. See Griggs, “Possessory Titles in a System of Titles by Registration” (1999) 21 Adel L Rev 157 at 157–​158. 367 Section 138T of the Land Titles Act 1980 (Tas) provides that a person in possession of land owned by another may only acquire title to that land in accordance with Div 5. It may be argued that this provision means that an adverse possessor who has been in possession for less than the limitation period cannot have title at all based on the possession. The better view, however, is that the word “title” in s 138T refers to the acquisition of registered title pursuant to the procedures set out in Div 5. 368 Note s 40(3)(h) of the Land Titles Act 1980 (Tas) states that the provision is “subject to section 117”. The now repealed s 117 was the provision which was the closest equivalent to the current s 138W. Presumably the required change to s 40(3)(h) (replacement of s 117 with s 138W) was inadvertently overlooked by the legislators. See Quarmby v Keating [2008] TASSC 71 at [53]–​[57]. 69 Section 138W(2) of the Land Titles Act 1980 (Tas). 3 70 Land Titles Act 1980 (Tas), ss 138W(2), (4), 138X. It should be noted that the registered proprietor holds 3 the land on trust for the adverse possessor without any prejudice to any interest that would not have been extinguished by adverse possession had the land been unregistered: s 138W(2).

182 [3.395]

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hold the land on trust for the adverse possessor. This meant that the adverse possessor had no rights in the land exercisable against the registered proprietor and therefore could not sue the registered proprietor in trespass.371 By contrast, Slicer J decided the case at [21]–​[24] on the basis that the equitable interest of an adverse possessor under a trust established by s 138W(2) does not allow him or her to sue the registered proprietor in trespass as the registered proprietor has the better title. The rights of the adverse possessor under the trust are protective, rather than active. They operate only to prevent a sale or disposition of the disputed land to a third party before a vesting application can be determined. Accordingly, Slicer J was the only judge to consider the position of a hypothetical adverse possessor who, unlike the actual claimant in Quarmby, is entitled to make a vesting application. On his Honour’s reasoning, such an adverse possessor would have very limited rights against the registered proprietor before the application is made. Such an adverse possessor would, therefore, be advised to make the application with all possible speed. An important component of the new provisions in Tasmania is that the legislation itself sets out the requirements for possession. Instead of simple reliance on the common law interpretation of “possession”, s  138V provides that, in determining an application for title based on possession, the Recorder must consider all the circumstances of the case and in particular the matters listed in paras  (a)–​(f) of s  138V. Most of the matters listed are those which are used by the courts when considering whether the land has been adversely possessed. The Recorder must consider whether the applicant enjoyed possession as of right, by force or secretly or by the licence of the owner. Further, the Recorder should consider the nature and period of the possession, the improvements made on the land (by the applicant or owner), the enclosure or non-​enclosure of the land by the applicant and the issue of whether there had been acknowledgment of ownership by the adverse possessor. An important change has been made in the significance of the payment of rates in claims of adverse possession. There can be no adverse possession of the land while the owner pays the council rates.372 Stringent requirements for the advertising of the claim have been introduced.373 The applicant must produce evidence from at least one other person in support of the claim374 and generally will not be able to acquire title to a “sub-​minimum lot”.375 There are provisions for the lodgment of a caveat by a person claiming an interest in the land over which an application has been made376 and the Recorder has the power to hold an inquiry to determine the matter.

371 This also appears to have been the reasoning of Tennent J at trial: Quarmby v Keating [2007] TASSC 65 at [59]: the legislative regime does not recognise against the registered proprietor adverse possession rights that cannot be elevated into a registered interest. 372 Land Titles Act 1980 (Tas), s 138U. The provision operates retrospectively: Natural Forests Pty Ltd v Turner (2004) 13 Tas R 44; Quarmby v Keating [2008] TASSC 71 at [10], [32] (Full Court). 373 Land Titles Act 1980 (Tas), s 138W(8). 374 Land Titles Act 1980 (Tas), s 138V. 375 Land Titles Act 1980 (Tas), s 138Y. “Sub-​minimum” lot is one that does not have the qualities of a minimum lot as provided by s 109 of the Local Government (Building and Miscellaneous Provisions) Act 1993 (Tas). 376 Land Titles Act 1980 (Tas), ss 138Z, 138ZA. [3.395]  183

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Queensland and South Australia [3.400]  It has been stated that:377 the Queensland and South Australian provisions strike a balance between absolutely securing the title to a person’s estate or interest and the competing principle that public interest demands that if a person chooses to abandon those rights for a long period of time there should be a method of clearing the title to the land so that it can be utilised for public benefit.

In South Australia, title by adverse possession may not be obtained over Torrens land except pursuant to the specific provisions for doing so set out in the statute.378 Under these provisions, a person who would have extinguished the title of the true owner had the land been general law land may apply to the Registrar seeking title to the land.379 The application is advertised. A  person claiming an estate or interest in the land may lodge a caveat. If the Registrar is satisfied that the person lodging the caveat is the registered proprietor, or a person claiming through the registered proprietor, the Registrar must refuse the application of the adverse possessor.380 If the caveator is the holder of an easement, the Registrar may issue a certificate of title to the adverse possessor subject to the easement.381 If there are no caveats or the caveators cannot substantiate their claims, and if the Registrar is satisfied that the claimant has been in adverse possession for the requisite period, the Registrar may cancel the current certificate of title and issue a new one in the name of the claimant.382 Section 69(f) of the Real Property Act 1886 (SA) provides that a certificate of title is void against the title of a person adversely in occupation of, and rightfully entitled to, the land at the time it was brought under the Act and continuing in occupation at the time of issue of any subsequent certificate of title.383 The words “adversely in actual occupation of, and rightfully entitled to” do not carry the same meaning as the term “adverse possession”. The provision is intended to cover the situation where a person has an interest in the land and is in actual occupation but, for some reason, this interest is not reflected in the certificate of title issued. The term “adversely” means adversely to the certificate of title384 and the words “rightfully entitled” connote an occupation which, but for the certificate of title, would have given an interest or ownership in the land.385 For example, A brings her land under the Torrens system. By an error in survey, part of B’s land is included within the certificate of title issued to A. If B is in actual occupation of the land wrongly included in A’s certificate of title, B may rely successfully on s 69(f) to defeat A: B is adversely in occupation (adversely to the certificate of

377

Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 328. Note that Whalan was referring to the Queensland provisions in operation before the introduction of the Land Title Act 1994 (Qld). The new provisions contained in the Land Title Act 1994 provide a similar balance. 378 Real Property Act 1886 (SA), ss 80A–​80I, 251. 379 Real Property Act 1886 (SA), s 80A. 380 Real Property Act 1886 (SA), s 80F(3). 381 Real Property Act 1886 (SA), s 80F(3). 382 Real Property Act 1886 (SA), ss 80G, 80H. 383 Tasmania has a similar provision with respect to the situation where land is first brought under the Act or where a certificate of title is created pursuant to an adverse possession application: Land Titles Act 1980 (Tas), s 46. 84 Franklin v Ind (1883) 17 SALR 133. 3 85 See Zachariah v Morrow and Wilson (1915) 34 NZLR 885; Gallash v Schutz (1882) 16 SALR 129. For a 3 discussion of this point, see Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp  329–​330. 184 [3.400]

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title) and she is rightfully entitled; that is, but for the certificate of title, she would have owned the land. In some circumstances it may be possible for an adverse possessor to use s  69(f). If an adverse possessor has barred the right of action of the true owner and yet, the true owner succeeds in bringing the land under the Torrens system, s  69(f) may apply to render the registered proprietor’s title defeasible against the adverse possessor. At the time the certificate of title was issued, the adverse possessor was adversely in actual occupation and rightfully entitled to the land when it was brought under the Torrens system.386 In Queensland, s 185(1)(d) of the Land Title Act 1994 (Qld) provides that “the interest of a person who, on application, would be entitled to be registered as owner of the lot because the person is an adverse possessor” is an exception to the indefeasibility of the registered proprietor’s title. The exception to indefeasibility of title is narrower than in Victoria and Western Australia as protection appears to be provided only for the adverse possessor who has been in possession for the statutory period (“who … would be entitled to be registered as owner of the lot”). An adverse possessor who has been in adverse possession for the statutory period may apply to the Registrar seeking title to the land.387 The Registrar is required to advertise the application and to inform certain persons of the application.388 A person claiming an interest may lodge a caveat.389 Where the Registrar is satisfied the applicant is an adverse possessor of the lot or part of it, the Registrar may register the adverse possessor as owner (s  108) and, subject to certain expections, create an indefeasible title in the applicant (s 108B). The Registrar may decide that the evidence does not warrant registration in relation to the whole lot, but only part of it. Where this occurs, under s 108A the Registrar may require the applicant to lodge a plan of sub-​division of the lot. If the Registrar is satisfied that the interest of the caveator has not been extinguished, he or she may refuse to register the applicant or may register the applicant as the holder of a lesser interest.390 Although the Registrar may finally decide to grant an application in respect of part only of a lot, applications themselves may only be made in respect of whole lots.391 New South Wales392 [3.405]  Before the Real Property (Possessory Titles) Amendment Act 1979 (NSW)393 came

into operation, the concept of acquisition of title acquired through adverse possession was inapplicable to Torrens land in New South Wales. The amending Act made it possible, within specific and narrow confines, to acquire title through adverse possession. Under the provisions, a person who has been in adverse possession of Torrens land in circumstances where, had the limitation statute applied to Torrens land, the title of the registered proprietor would 386 387 388 389 390

See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 330. Land Title Act 1994 (Qld), s 99. Land Title Act 1994 (Qld), s 103. Land Title Act 1994 (Qld), s 104. Land Title Act 1994 (Qld), s 107. If the caveator objects to registration of such a lesser interest, he or she may commence proceedings in the Supreme Court to recover the lot: s 107(2). 391 Sherrard v Registrar of Titles [2004] 1 Qd R 558. 392 See Edgeworth, Butt’s Land Law (7th ed, Law Book Co., Sydney, 2017), pp 1116–​1121 and Woodman and Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 ALJ 79 for a critiques of the position in New South Wales. 393 This Act inserted Pt 6A into the Real Property Act 1900 (NSW). [3.405]  185

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have been extinguished, may apply to the Registrar-​General to be registered as proprietor of the land.394 In order to prevent applications with respect to small areas of land, such an application may only be made with respect to a “whole parcel of land”.395 However, where the adverse possessor has occupied the land up to an “occupational boundary”,396 but such boundary is inside the true boundary, the adverse possessor may claim the strip of land up to the true boundary even though he or she has not occupied it.397 Conversely, a person who takes adverse possession of a whole parcel of land and at the same time occupies a strip of land beyond the true boundary and up to an occupational boundary cannot apply for title by adverse possession to the extra strip of land.398 It should be noted that no application may be made with respect to Crown land.399 The relevant provisions of the Real Property Act 1900 (NSW) are very specific about the type of Torrens land that may be the subject of an application for title acquired by adverse possession. Further, the Act provides that it is not possible for an applicant to be registered as proprietor of the land unless the whole limitation period of adverse possession has run against the person who is the registered proprietor.400 In order to take advantage of this provision, the registered proprietor must have become registered without fraud and for valuable consideration. Clearly this provision is intended to prevent a registered proprietor, against whom the limitation period has run, from colluding with another person and transferring the property to that person in order to defeat the rights of the adverse possessor.401 “Fraud” in this context carries the same meaning as it does in other parts of the Act; therefore, mere notice by the purchaser that a full period of adverse possession had run against the vendor/​ registered proprietor would not constitute fraud.402 Upon registration such a purchaser could resist a claim for registration by the adverse possessor.403 A person claiming an interest in the

394 395

Real Property Act 1900 (NSW), s 45D(1). Real Property Act 1900 (NSW), s 45B(1). Edgeworth, Butt’s Land Law (7th ed, Law Book Co., Sydney, 2017), p 1118 states that s 45B(1) refers to land which accords with minimum town planning standards. See Re North Sydney Council (1998) NSW ConvR 55-​828. The time at which the relevant land must be a “whole parcel of land” is the time the application to the Registrar-​General is made: Refina Pty Ltd v Binnie [2010] NSWCA 192. Section 45D(2A) now provides that an application can be made in respect of “residue” lots (eg, a service lane) adjacent to land of which the applicant is the registered proprietor. However, where a service lane is a public road, it cannot be the subject of an adverse possession application: Weber v Ankin (2008) BPR 25,231 at 25,249–​25,250. 396 Real Property Act 1900 (NSW), s 45D(6); for example, a fence, a river. See Woodman and Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 ALJ 79 at 85. 397 Real Property Act 1900 (NSW), s 45D(2). 398 Thus claims for small pieces of land along boundaries are prohibited. These may be dealt with under the Encroachment of Buildings Act 1922 (NSW): see Woodman and Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 ALJ 79 at 85. 99 Real Property Act 1900 (NSW), s 45D(3) provides that an application cannot be made where the registered 3 proprietor is the Crown or a Minister of the Crown, a statutory body representing the Crown, particular public corporations or a council or county council. 00 Real Property Act 1900 (NSW), s 45D(4). 4 401 If there is fraud in the new registered proprietor, presumably any period of adverse possession can be “counted against” the new registered proprietor: see Woodman and Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 ALJ 79 at 86. 02 See Webeck v Foley (1992) NSW ConvR 59,717; McGuinness v Registrar-​General (1998) 44 NSWLR 61. 4 403 See Woodman and Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 ALJ 79 for a discussion of this point. 186 [3.405]

Adverse Possession  Chapter  3

land the subject of the application may lodge a caveat against the grant of the application.404 Under s 45E(4), easements and covenants affecting the land continue to have the same force after an adverse possessor has become the registered proprietor. One issue that is not specifically resolved by the legislation is the nature of the rights, if any, that the adverse possessor has, first, before the full limitation period has expired and, secondly, after the full limitation period has expired but before a registered title has been granted. Although it has been suggested that such an adverse possessor is simply a trespasser,405 the better view is that inchoate rights do exist in the adverse possessor. These rights are such that the adverse possessor at the least can maintain the possessory right against all but the true owner406 and, where the limitation period has expired, the right to lodge an application for registered title, provided that the statutory prerequisites are satisfied. But until that application has been granted, the effect of s 46C is that the adverse possessor has no estate or interest in the land adverse to or in derogation of the registered proprietor’s interest. Given this, the New South Wales Court of Appeal in Refina Pty Ltd v Binnie [2010] NSWCA 192 at [19]–​[22] stated that, in the absence of fraud or other conduct by the current registered proprietor that would raise a personal equity in favour of the adverse possessor, the registered proprietor cannot be restrained from acting so as to destroy the adverse possessor’s ability to lodge an application to become the registered proprietor. In that case, the registered proprietor consolidated the disputed land with other land, so that at the time of the application it was no longer a whole parcel of land. This precluded the making of the application under s 45D(1). The provisions of Pt  VIA of the Real Property Act 1900 (NSW) contain a number of inherent problems and inconsistencies, some of which have been referred to above.407 Further amending legislation may be necessary in order to solve these problems.

OTHER RELEVANT LEGISLATION [3.410]  Apart from the limitation statutes, there are other statutory provisions that pertain

to the general issue of use of another’s land. For example, a building or part thereof may be erected or lasting improvements may be made on another’s land. In other cases, there may be small errors in the description of boundaries. Several jurisdictions have legislation dealing with these sorts of matters and the relevant provisions are discussed at [16.275]–​[16.315].

MERGER AND EXTINGUISHMENT [3.415] Merger and extinguishment are the two common law doctrines relating to the

destruction of interests in land. Merger occurs where a greater and lesser estate in land vest in the same person in the same right without any intervening estate. The estates merge. Effectively, the lesser estate ceases to exist.408 For example, if land is granted to A for life and to B in fee 404

Real Property Act 1900 (NSW), s 74F(3). For an outline of the general provisions regarding caveats, see [5.25]–​[5.100]. 405 See the Minister’s speech introducing Pt 6A: New South Wales Parliamentary Debates, Legislative Assembly, 28 February 1979, quoted in Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), p 916. 406 Spark v Whale Three Minute Car Wash (Cremorne Junction) Pty Ltd [1970] 92 WN (NSW) 1087; Newington v Windeyer (1985) 3 NSWLR 555. 407 See Woodman and Butt, “Possessory Title and the Torrens System in New South Wales” (1980) 54 ALJ 79. 08 Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 296: “the lesser estate is sunk or drowned in the 4 greater”. [3.415]  187

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simple remainder and A acquires the remainder from B, the life estate merges in the remainder and A holds a fee simple estate. However, if the grant had been to A for life, remainder to X for life, remainder to B in fee simple and A had acquired the interest of B, no merger would result because of the intermediate estate of X. Although merger originally applied only where the one person held two freehold estates, it applies now to where the one person holds a leasehold and a freehold estate or two leasehold estates.409 Provided the basic criteria are satisfied, there is a merger at common law despite any contrary intention of the parties. On the other hand, equity considers the intention of the parties. A clear and declared intention that the lesser estate be retained prevents merger in equity.410 Further, equity will imply such an intention if merger is disadvantageous to the person who has the two estates.411 It seems that the equitable position now prevails.412 [3.420]  Whereas the doctrine of merger applies to the situation where one person holds two

estates in land, extinguishment applies where one person holds an estate in land and a collateral interest, such as a mortgage, charge, easement, profit à prendre or restrictive covenant over the land.413 In fact, however, the destruction of mortgages and charges has developed and been dealt with under the doctrine of merger. Thus, at common law, a mortgage or charge “merges” in the estate out of which it was created when the estate and the mortgage or charge vest in the one person in the same right. In equity, the issue of whether merger occurs depends upon intention: see [3.415]. In fact, it was in the area of mortgages and charges that equity developed its principle that merger should not occur if such a merger were not intended.414 [3.425]  Collateral rights such as easements and profits à prendre are extinguished when there

is unity of ownership and possession in the one person.415 With respect to restrictive covenants, where one person has both the benefited and burdened land vested in him or her, the covenant is clearly unenforceable. It seems that unity of ownership extinguishes the restrictive covenant unless the covenant forms part of a building scheme: in this case, the restrictive covenant is merely suspended during the period when the burdened and benefited land is in common

409 410

Ingle v Vaughan Jenkins [1900] 2 Ch 368; Lea v Thursby [1904] 2 Ch 57. Ingle v Vaughan Jenkins [1900] 2 Ch 368; Re Fletcher [1917] 1 Ch 339; Golden Lion Hotel (Hunstanton) Ltd v Carter [1965] 1 WLR 1189; Budget Rent-​a-​Car System Pty Ltd v B S Stillwell & Co Pty Ltd (1989) V ConvR 54-​336; Adamstoun Holdings Pty Ltd v Brogue Tableau Pty Ltd [2007] WASCA 43; Hypec Electronics v Registrar-​ General (No 2) [2008] NSWSC 138; Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 296. 411 Re Fletcher [1917] 1 Ch 339; EDF Energy Networks (EPN) plc v BOH Ltd (2010) 2 P & CR 3. 412 See Conveyancing Act 1919 (NSW), s 10; Property Law Act 1958 (Vic), s 185; Property Law Act 1974 (Qld), s 17; Law of Property Act 1936 (SA), s 13; Property Law Act 1969 (WA), s 18; Supreme Court Civil Procedure Act 1932 (Tas), s 11(4); Law of Property Act 2000 (NT), s 16. See Boros, “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 434. 413 See Boros, “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 427. 14 For example, Forbes v Moffatt, Moffatt and Hammond (1811) 18 Ves Jun 384; 34 ER 362. See also Boros, 4 “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 435. 415 See Boros, “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 439ff, where the issue of the circumstances in which there is a suspension of rights, rather than an extinguishment of rights, is discussed. There appears to be no clear differentiation between the common law and equitable requirements for extinguishment. Provided there is unity of ownership and possession (see Boros at 439–​445 for a detailed analysis of the requirements), the easement is extinguished without regard to the intention of the owner. This seems to be a reasonable result while the tenements are held in common ownership: see Boros at 445. Query whether an extinguished easement can be brought back into existence: this may occur by use of the doctrine in Wheeldon v Burrows (1879) 12 Ch D 31. See generally [17.400]–​[17.440].

188 [3.420]

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ownership.416 The very basis of the building scheme is to ensure that the restrictive covenants are enforceable by and against all lot owners in the scheme. It is therefore very important that the restrictive covenant is not extinguished for all time when the benefited and burdened lands are in common ownership for a time.417 [3.430]  A difficult but important issue arises when the application of the doctrines of merger

and extinguishment to Torrens land are considered. The concept of the register being conclusive as to title in Torrens land does not fit easily with the concept of automatic destruction of interests pursuant to the doctrines of merger and extinguishment. For example, if a mortgage of Torrens land is transferred to the registered proprietor of the fee simple, does the mortgage merge and disappear in the fee simple despite the fact that both the registered fee and the registered mortgage remain registered as separate interests on the certificate of title? Any law that is inconsistent with the provisions of the Torrens statutes does not apply to land falling under the operation of the Torrens statutes.418 Thus, the issue to be addressed is whether the doctrines of merger and extinguishment are inconsistent with the relevant provisions of the Torrens statutes.419 Although some early cases lent support to the applicability of the doctrine of merger to Torrens land,420 in more recent decisions it has been concluded that the doctrine of merger is inapplicable to Torrens land. Thus, it has been held that registered mortgages421 and leases422 survive even when vested in the registered proprietor of the estate out of which the lesser interests were created.423 As Jacobs P remarked in Shell Co of Australia Ltd v Zanelli [1973] 1 NSWLR 216 at 221:424 [S]‌o long as the lease remains on the title as a distinct interest, it must be regarded as a separate estate or interest … [I]t could not be assumed from the unity of title that there had been a merger … It is better to give full weight to the Register.

Where a merger is intended, it seems that such a merger must be registered.425 It is unclear whether an easement is extinguished when the same person becomes the registered proprietor

16 4 417 418 419

Boros, “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 447. Boros, “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 447. See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 23–​26. See Boros, “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 483; Francis, The Law and Practice Relating Torrens Title in Australasia (Butterworths, Sydney, 1973), Vol 1, pp 289–​290. 420 Bevan v Dobson (1906) 26 NZLR 69; Lewis v Keene (1936) 36 SR (NSW) 493. 421 The English, Scottish & Australian Bank Ltd v Phillips (1937) 57 CLR 302; see also Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 296. 422 Cooper v Federal Commissioner of Taxation (1958) 100 CLR 131. 423 For the position with easements, see [17.435]. 24 See also Lansen v Olney (1999) 169 ALR 49; Buchanan Borehole Collieries Pty Ltd v NSW Coal Compensation 4 Review Tribunal (1997) 9 BPR 16,253. 25 See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 199; see also Boros, “Merger 4 and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 458–​462, where the author discusses difficulties which may be involved in registering a merger. Probably interested parties can apply to the Registrar to have the Register altered: Buchanan Borehole Collieries Pty Ltd v NSW Coal Compensation Review Tribunal (1997) 9 BPR 16,253. Some jurisdictions have specific provisions giving the Registrar specific power to record in the Register that an interest in land has been extinguished by merger: see, for example, Real Property Act 1900 (NSW), s 12(1)(i); Transfer of Land Act 1893 (WA), s 184; Land Titles Act 1925 (ACT), s 14(1)(f). [3.430]  189

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of both dominant and servient tenements.426 In New South Wales and Tasmania specific legislation ensures that extinguishment of an easement does not occur where ownership of the dominant and servient tenements vests in the same person.427 Perhaps these provisions suggest that extinguishment will occur on a unity of seisin unless statutorily reversed. As restrictive covenants are in most instances only noted on the Register, it is difficult to reach any clear conclusion as to the applicability of the principle of extinguishment to restrictive covenants where the same person holds both benefited and burdened land.428 In New South Wales and Tasmania it is specifically provided that the covenant is not extinguished upon the benefited and burdened land being vested in the same person.429

426 427

Re Standard and the Conveyancing Act 1919 (1967) 92 WN (NSW) 953. Real Property Act 1900 (NSW), s 47(7) (which also applies to profits à prendre and restrictive covenants); Land Titles Act 1980 (Tas), s 109 (which also applies to profits à prendre). See Margil Pty Ltd v Stegul Pastoral Pty Ltd [1984] 2 NSWLR 1. 428 Discussed in Boros, “Merger and Extinguishment of Interests in Land” (1986) 10 Adel L Rev 427 at 467. 29 Conveyancing Act 1919 (NSW), s 88B(3)(c) (which applies to easements, profits à prendre and restrictive 4 covenants created by the registration of a plan, and to both Torrens and non-​Torrens land); Land Titles Act 1980 (Tas), s 103. 190 [3.430]

CHAPTER 4

The Torrens System and Indefeasibility [4.05] INTRODUCTION......................................................................................................... 191 [4.05] Background.................................................................................................. 191 [4.45] The Torrens system in outline........................................................................ 201 [4.100] INDEFEASIBILITY OF TITLE........................................................................................... 211 [4.100] Introduction and statutory provisions............................................................. 211 [4.125] The meaning and extent of indefeasibility...................................................... 214 [4.125] The current position in outline............................................................. 214 [4.135] The deferred versus immediate indefeasibility debate................................ 216 [4.165] [4.175]

[4.180]

[4.420]

Indefeasibility and the protection of individual terms in registered documents......................................................................... 222 Overview........................................................................................ 228

EXCEPTIONS TO INDEFEASIBILITY............................................................................... 228 [4.180] Overview..................................................................................................... 228 [4.190] Express exceptions........................................................................................ 229 [4.190] Overview........................................................................................ 229 [4.200] Fraud............................................................................................. 231 [4.225] Knowledge, further enquiries and fraud.................................................. 234 [4.230] Fraud before or after registration?........................................................ 239 [4.235] Fraud by the agent........................................................................... 240 [4.250] Forgery, insufficient power of attorney or disability................................... 244 [4.255] Prior folio or certificate of title.............................................................. 245 [4.260] Erroneous description of land............................................................... 246 [4.285] Easements....................................................................................... 248 [4.290] Adverse possession............................................................................ 248 [4.295] Tenancies........................................................................................ 248 [4.305] Rates and taxes................................................................................ 250 [4.310] Section 71, South Australian Act.......................................................... 250 [4.315] Other possible exceptions to indefeasibility of title........................................... 251 [4.320] Registered volunteers......................................................................... 251 [4.325] Overriding legislation......................................................................... 253 [4.350] Rights in personam........................................................................... 260 [4.395] Registrar’s power to correct the Register................................................. 270 MISCELLANEOUS IMPORTANT PROVISIONS............................................................... 274 [4.420] State guarantee of title................................................................................. 274 [4.490] Conversion of title......................................................................................... 285 [4.495] Voluntary conversion......................................................................... 286 [4.525] Compulsory extension of Torrens system................................................ 289 [4.545] Interrelationship of general property statutes with Torrens statutes............. 290

INTRODUCTION Background [4.05] The effectiveness of any system concerning the conveyance of and the dealing with

interests in land depends largely upon the provision and promotion of security and certainty of title and the existence of a simple, speedy and inexpensive method for such dealings. The system of private conveyancing, unaffected by statutory modifications, failed to provide a simple system and it failed also to provide a secure, certain title for a purchaser. [4.05]  191

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Once the earliest form of conveyancing, the feoffment and livery of seisin, fell into disuse,1 purchasers had to rely upon the written records of dealings relating to the land in order to satisfy themselves that the vendor in fact had the title proposed to be sold. Thus, a purchaser had to inspect all documents concerning dealings with the land in question in order to verify the vendor’s title. Although in England the custom was to limit the length of the search to 60 years, even before formal statutory limits were introduced,2 in Australia the purchaser’s task required an examination by the purchaser of all documents in the “chain of title” commencing with the Crown grant. It was, and remains, a lengthy and time-​consuming task and a task requiring particular skills in the searcher. Further, it was clear that even an exhaustive and thorough search did not provide the purchaser with an absolute certainty that the vendor had the title purportedly being sold. For example, if a deed creating a legal easement over the land had been removed from the chain of title, the purchaser may have been unaware of the interest affecting the land and yet subject to that interest. A prior legal interest is enforceable against a subsequently created legal interest. The purchaser would be subject despite the fact that discovery of the interest was impossible from a search of the chain of title. Similarly, if the vendor acted fraudulently and conveyed the fee simple interest to a purchaser, but retained or retrieved from the first purchaser the chain of title and then purported to convey to a second purchaser, the second purchaser would usually take no interest at all, for, on the principle of nemo dat quod non habet,3 the legal interest would have already passed to the first purchaser.4 Alternatively, a document in the chain of title may be a void document, for example, through forgery, non est factum or lack of capacity and thus ineffective to pass any interest. In each of these instances described, the most careful, skilled and thorough of searches of the chain of title would fail to reveal the fact that the purchaser would not receive the exact interest promised. Sometimes defects in the title may be very difficult, though not impossible, to detect from a search of the chain. For instance, a failure to use the correct words of limitation to create a fee simple estate may have resulted in a grantee in the chain receiving a life estate instead of the fee simple. The grantee would then only have a life estate to convey: see [2.175]–​[2.205]. Further, interests acquired by means other than documents are not reflected in the chain of title.5 Although some such interests may be discovered by a search of the land, not all will be. Thus, the process of searching a chain of title was complex and lengthy and even a thorough investigation did not ensure that the vendor had the exact title he or she was purporting to sell. Legislative initiatives (see [2.525]–​[2.535]) in most States attempted to reduce the length and complexity of the searches required by the purchaser but these failed to fulfil their purpose. Although the relevant provisions fix the period of commencement of title and provide that

1

2 3 4

5

The feoffment and livery of seisin is described in Megarry and Wade, The Law of Real Property (5th ed, Stevens, London, 1984), p 47. This method of conveyance comprised a ceremony carried out on the land in the presence of witnesses whereby the grantor (the feoffor) passed over the grantee (the feoffee) a sod of earth and then left the feoffee in possession. Gray and Gray, Elements of Land Law (5th ed, OUP, Oxford, 2009), p 1037. “No one gives who does not possess”. See, for example, Pilcher v Rawlins (1872) 7 Ch A 259. In some circumstances, the second purchaser may be successful in acquiring an interest which has priority over the interest of the first purchaser: see Northern Counties of England Fire Insurance Co v Whipp (1884) 26 Ch D 482 and Walker v Linom [1907] 2 Ch 104, discussed at [2.415]–​[2.440]. For example, interests arising through adverse possession and easements by long user.

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a purchaser is not deemed to have notice of interests created before that date, a purchaser is nevertheless subject to any outstanding legal interests affecting the title, whenever they were created. Legal interests are enforceable against the whole world, including any subsequently created legal interests. In order to avoid the possibility of receiving a title subject to such an interest, prudent purchasers search the whole chain of title (when it is available) back to the Crown grant.6 The benefit of statutory provisions limiting the searches required is therefore lost. In short, it was the purchaser’s inability to discover and verify in a certain and simple manner the preceding dealings relating to the land which created the main problem. It was thought that a central, complete and publicly available register containing abstracts or memorials of all dealings relating to the land would simplify the searching procedure. Although the systems of registration of deeds7 introduced in all jurisdictions ameliorated some of the difficulties encountered in the private conveyancing system, the basic and major problems associated with this system of conveyancing remained. The certainty and security of title were not, and could not, be assured under this system because of what Sir Robert Torrens described as “the dependent nature of titles”.8 A purchaser of land could only be assured of receiving the estate bargained for if each document in the chain of title relating to the land was an internally valid document and effectively conveyed the interest which was intended to be conveyed. Further, the doctrine of notice sometimes resulted in a purchaser being subject to interests in the land which were not evidenced in the chain of title and of which the purchaser may have been unaware in fact. [4.10] The impetus for a different method of conveying land was strong. As it needed to

be, the system eventually adopted in all Australian jurisdictions was totally different in its conception, form and operation from that of private conveyancing. It was a system of title by registration and it became known as the “Torrens system”. The Torrens system of land registration is a system pursuant to which a central register is set up. The Register contains records and dealings relating to individual lots of land. Interests in land pass upon registration not upon the execution of any dealing and the state guarantees the correctness of the Register. Until recently, the Registers were paper-​based. Today land titles in Australian jurisdictions are now computerised rather than paper-​based, online searching is available, and an integrated electronic conveyancing system is now operational.9 The doctrine of estates and the types of interests in land that can exist at common law have not been discarded under the Torrens system. Generally, the types of interests which can exist under the Torrens system are the same as those which can exist under the general law system. It is the means by which title passes in such interests which is wholly different under the Torrens system. The new system was named after Sir Robert Richard Torrens. There has been considerable debate, including a recent upsurge in interest,10 surrounding the origins of the Torrens system and the exact nature of Sir  Robert Torrens’ contribution to the overall

6 7 8 9 10

See Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [10.170]. See [2.600]ff. Torrens, The South Australian System of Conveyancing by Registration of Title (1859), p 8. https://​trove.nla. gov.au/​work/​183903882?q&versionId=200301905 Discussed further at [4.40]. Some of this recent debate occurred in response to the 150th anniversary of the introduction of the Torrens system. For recent readings concerning the debate, see Esposito, “Ulrich Hübbe’s Role in the Creation of the ‘Torrens’ System of Land Registration in South Australia” (2004) 24 Adel L Rev 263; Taylor, [4.10]  193

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structure and the detailed provisions of the system. The research of a number of authors demonstrates that the ideas and proposals put forward by Torrens were not totally new and original concepts.11 Indeed, Torrens himself conceded this. [4.15] The system appears to have been derived from a number of sources, including the

Imperial Merchant Shipping Acts dealing with registration of title to ships, the system of registration of title to land in some Hanseatic towns, comments in British Royal Commission Reports of 1829–​1833 concerning real property12 and some suggestions made in the 1857 Report of English Royal Commissioners, a report which proposed the introduction of a system of registration of titles.13 The issue of the relative importance of these sources and influences is probably incapable of authoritative resolution. Robinson, for example, has argued that the legislation enacted showed a strong and clear link with the Hanseatic system of land registration, while others have argued that the system was derived from a number of causes.14 Recently it has been argued strongly that the system owes much to dissenting views expressed in early British Royal Commission Reports.15 [4.20] Likewise, the issue of the input and importance of the role of Sir  Robert Torrens

has drawn widely varying views. In early times, it was suggested that Torrens conceived the idea for the system and worked out the structure and detail of the legislation, putting the scheme into effect with only a little assistance provided by the use of the concepts in the Merchant Shipping Acts.16 This view of Torrens as the originator and author of a new system of registration of title was discredited by a number of authors.17 It seemed clear to them that the ideas emanated from a number of different foundations and that several other individuals played important roles in the formulation of the system.18

1 1 12 3 1 14

15

16 17 18

“A Great and Glorious Reformation –​Six Early South Australian Legal Innovations” (Adelaide, Wakefield Press, 2005), p 22ff; Lucke, “Ulrich Hübbe or Robert R Torrens? The Germans in Early South Australia” (2005) 26 Adel L Rev 211; Esposito, “A New Look at Anthony Forster’s Contribution to the Development of the Torrens System (2006–​2007)” 33 UWAL Rev 251; Taylor, “Is the Torrens System German?” (2008) 29 J Leg Hist 253; Croucher, 150 Years of Torrens –​Too Much, Too Little, Too Soon, Too Late? (Paper presented at Torrens Title Symposium, Adelaide, November 2008). See, for example, Hogg, Australian Torrens System with Statutes (W. Clowes, London, 1905), Chs 1–​4. See Esposito, “A New Look at Anthony Forster’s Contribution to the Development of the Torrens System” (2006–​2007) 33 UWAL Rev 251. See generally Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 6. The relative importance of these sources is discussed by Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), pp 1–​25 and by Whalan, “The Origins of the Torrens System and Its Introduction into New Zealand” in Hinde (ed), The New Zealand Torrens System Centennial Essays (Butterworths, Wellington, 1971), pp  1–​12. Esposito, “A New Look at Anthony Forster’s Contribution to the Development of the Torrens System” (2006–​2007) 33 UWAL Rev 251. Compare the views of Taylor, who has conducted detailed research concerning the origins of the Torrens system and the way in which it spread to other Australian jurisdictions after its introduction in South Australia: Taylor, A Great and Glorious Reformation: Six Early South Australian Legal Innovations (Adelaide, Wakefield Press, 2005), p 22ff and Taylor, “Is the Torrens System German?” (2008) 29 J Leg Hist 253. See Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), pp 11–​12. See, for example, Hogg, Australian Torrens System with Statutes (1905) and Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 5–​6. See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 4–​6 and Whalan, “The Origins of the Torrens System and Its Introduction into New Zealand” in Hinde (ed), The New Zealand Torrens System Centennial Essays (Butterworths, Wellington, 1971), pp 3–​12.

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Robinson has argued that Dr Ulrich Hübbe, a German lawyer, is the person who should receive the greatest credit for the form and content of the legislation introducing the Torrens system.19 Others prefer the view that credit is to be spread more evenly among a number of individuals, including Torrens and Hübbe. Recently Taylor has reignited the debate by arguing that Torrens should be regarded as the author of the system.20 Whatever the original contributions of Sir Robert Torrens to the structure and detail of the legislation, it is conceded by most authors that he was, in the words of Whalan, “the most influential person in the introduction of registration of titles to land in Australasia”.21 [4.25]  Robert Richard Torrens immigrated to South Australia in 1840. From about 1852 he

worked with enormous enthusiasm towards the introduction of a new system of land law, with his passion inspired by what he saw as an egregious wrong committed against a friend who lost title to land on which that friend had made significant improvements. Although there was public support for a new system, the work of Torrens and his supporters was carried out against a barrage of eloquent opposition and criticism from the legal profession. The Torrens legislation in South Australia, the first Torrens legislation in Australian jurisdictions, went through a number of drafts before being enacted in 1858 as the Real Property Act 1858 (SA).22 Despite the care taken in the drafting, there were many problems which required amendments to be made.23 Further amendments were made in 1861 and in 1886 the Real Property Act 1858 was rewritten.24 The introduction of the Torrens system of land registration in most other jurisdictions followed quickly25 and by 1863 all jurisdictions except Western Australia had enacted Torrens legislation.26 In Western Australia, the initial

19

20 21

22

3 2 24 25

26

Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), pp 11–​25. Raff reached the same conclusion: see Raff, German Real Property Law and the Conclusive Land Title Register (PhD thesis, University of Melbourne (Law), 1999). See also Raff, Private Property and Environmental Responsibility: A Comparative Study of German Real Property Law (Kluwer Law International, The Hague, 2004). Taylor, A Great and Glorious Reformation: Six Early South Australian Legal Innovations (Adelaide, Wakefield Press, 2005), p 22ff. Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 5. See also Croucher, “ ‘Delenda Est Carthago!’ Sir Robert Richard Torrens and his Attack on the Evils of Conveyancing and Dependent Land Titles: A Reflection on the Sesquicentenary of the Introduction of his Great Law Reforming Initiative” (2009) 11(2) FJLR 197. Croucher, “ ‘Delenda Est Carthago!’ Sir Robert Richard Torrens and his Attack on the Evils of Conveyancing and Dependent Land Titles: A Reflection on the Sesquicentenary of the Introduction of his Great Law Reforming Initiative” (2009) 11(2) FJLR 197. These amendments were made in 1858. See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 7–​8 for a discussion of various problems faced by the courts in interpreting the Torrens legislation. Vancouver Island was the second Torrens jurisdiction in the world with this closely followed by the then colonies of Australia and New Zealand in 1870. For example, in 1861 in Queensland (Real Property Act 1861); in 1862 in Victoria and Tasmania (Transfer of Land Act 1862 and Real Property Act 1862 respectively) and in 1863 in New South Wales (Real Property Act 1862). See Preece, Late 20th Century Property Law Reform in Queensland (Paper delivered at 2001 Real Property Law Teachers Conference, Australia and New Zealand, February 2001) for a more detailed review of introduction dates. For a comparative discussion, see Arrieta-​ Sevilla, “A Comparative Approach to the Torrens Title System” (2012) 20 APLJ 203. For discussion of the introduction of the Torrens system into various jurisdictions, see Petrow, “Knocking Down the House? The Introduction of the Torrens System to Tasmania” (1992) Uni Tas LR 167; Taylor, “The Torrens System’s Migration to Victoria” (2007) 33 Mon Uni LR 323; Taylor, “Last but Not Least: The Torrens System’s Path to Western Australia” (2009) 17 APLJ 279; Buck, The Making of Australian Property Law (Federation Press, Sydney, 2006), pp 103–​117. [4.25]  195

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Torrens statute came into operation in 1875.27 From these respective dates, all land alienated by the Crown fell under the Torrens system of registration. Torrens’ involvement did not end with the introduction of the legislation in South Australia. He continued to campaign for Torrens statutes in the other jurisdictions and provided practical help and support to the framers of the Torrens statutes in the other jurisdictions.28 [4.30] Although the Torrens statutes have retained the basic tenets of the system first

introduced in the 1860s, many amendments have been made over the years to the original statutes. In New South Wales, the current Act is the Real Property Act 1900 and important amendments have been made to this Act. In Victoria the Transfer of Land Act 1958, as amended, is the present statute. There were major changes to the Victorian Torrens legislation in 1890, 1915, 1928, 1954 and 2004. In Queensland, the legislation has been rewritten and is now contained in the Land Title Act 1994. This Act itself has been the subject of some significant amendments.29 In South Australia the Real Property Act 1886, as amended, is the current legislation and in Western Australia the Transfer of Land Act 1893, as amended, is the current legislation. Substantial amendments were introduced in 1996 in Western Australia. In Tasmania, the Torrens legislation was amended and consolidated in the Land Titles Act 1980. In the Northern Territory, the Torrens legislation is now contained in the Land Title Act enacted in 2000. The former Northern Territory legislation was the Real Property Act, which comprised the Real Property Act 1886 (SA) as amended by the South Australian and Northern Territory statutes referred to in Pts I and II respectively of the table to the Real Property Act (NT). The Land Title Act is modelled on the Queensland Land Title Act 1994. The main objective, however, of the new Northern Territory legislation was “to modernise the form of the legislation rather than change the operation of the Torrens system in the Territory”.30 In the Australian Capital Territory the Land Titles Act 1925 (formerly called the Real Property Act 1925) comprises the Torrens legislation. The legislation in the Australian Capital Territory was amended substantially by the Land Titles (Amendment) Act 1995. [4.35]  Although the essence and the basic features of the Torrens system are contained within

each of the Australian Torrens statutes, there are some quite significant differences that are outlined in this chapter. The lack of uniformity in the Torrens statutes, and indeed in laws generally affecting property transactions, adds significantly to transaction costs, thereby increasing barriers to interstate commerce. There has been a growing impetus and support for an increased level of uniformity of laws relating to real property transactions.31 While it may

27 28 29 30

31

Transfer of Land Act 1874 (WA). See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 9–​12. See Weir, “An Australian View: The Queensland Land Title Act” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 295–​309. Northern Territory Parliamentary Debates, 21 October 1999, Legislative Assembly, Mr Palmer. Note that the general property law statute is the Law of Property Act (NT). The purpose of the Law of Property Act was to modernise and reform the property law of the Northern Territory. See, for example, Butt, Towards a Uniform Torrens Title System in Australia (Paper delivered to Property Group of Law Council of Australia, September 1991); Neave, “Towards a Uniform Torrens System: Principles and Pragmatism” (1993) 1 APLJ 114; MacCallum, “Uniformity of Torrens Legislation” (1993) 1 APLJ 135; Kerr, “Property Law –​Uniformity of Laws: Towards a National Property Practice” (1993) 1 APLJ 145; Hunter, “Uniform Torrens Legislation: Is There a Will and a Way?” (2010) 18 APLJ 201; Property Group, Law Council of Australia, Position Paper: Uniformity of Property Laws and Procedures (1994). The Australian Property Law Group of the Law Council of Australia has continued to support and research the means for

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be unrealistic to expect complete uniformity of property laws in Australia in the near future, any increased uniformity or harmonisation will improve the jurisprudential understanding and development of Australian land law.32 It can only be hoped that the advent of a national property exchange (www.pexa.com.au) could hasten the move to a national Torrens code. [4.40]  Perhaps the most important amendments to the Torrens legislation in the past two

decades concern efforts to introduce computerised automated title systems.33 Although computerisation is being achieved at varying rates, all Torrens statutes now provide for the Register to be kept in a variety of media, including a computerised form. In some jurisdictions all titles are kept in a computer database.34 In New South Wales a system under which all manual Torrens titles are to be converted to a computerised system of titles (known as Automated Land Titles System (ALTS)) was introduced by amendments to the Real Property Act 1900 (NSW) in 1979.35 The first conversions to computer titles were made in 198336 and by March 1995 almost three million titles were held in electronic format.37 In 2004 a further project was commenced with the aim of computerising all outstanding manual titles. In Queensland, a desire to consolidate the various pieces of Torrens legislation into one Act and to provide appropriate legislation for a fully automated title system led to the introduction of the Land Title Act 1994 (Qld).38 The Land Title Act 1994 introduced a system, based on the scheme operating in British Columbia, Canada, under which the freehold register is recorded on a computer database.39 It also made provision for the registration of dealings to be automated by computerisation. Although the original idea was to have a “paperless title system”,40 with the owner of a lot having no paper record of his or her title, concern about such radical change resulted in a system where a certificate of title will be issued, but only if the owner so requests in writing.41 If the lot is subject to a registered mortgage, a certificate of

32

33 34

35 36 37 38

39 40 41

establishing a harmonious system of Torrens title throughout Australia: see, for example, Law Council of Australia, Uniformity of Property Law and Procedures (23 June 2007), accessible at www.lawcouncil.asn.au/​ (7 September 2015). See Newton, “A Uniform Torrens Title Act for Australia: Is it possible?” (2013) Australian Property Law Bulletin 54. The automation of the titles offices has had the effect of creating further uniformity in data entered and generated by the systems. (Information provided by Mr John Barry, Deputy Registrar of Land Titles Office (Vic), 13 February 2002.) The use of computer technology to simplify land registration systems was suggested over 30 years ago: Whalan, “Electronic Computer Technology and the Torrens System” (1967) 40 ALJ 413. Torrens statutes:  Real Property Act 1900 (NSW), s 31B(3); Transfer of Land Act 1958 (Vic), s 27(2), (3); Land Title Act 1994 (Qld), s 8; Real Property Act 1886 (SA), s 51B; Land Titles Act 1980 (Tas), s 33(3); Transfer of Land Act 1893 (WA), s 48; Land Titles Act 1925 (ACT), s 43; Land Title Act (NT), s 6. Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.380]. Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.380]. Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.380]. See QLRC, A Working Paper of the Law Reform Commission on a Bill in Respect of an Act to Reform and Consolidate the Real Property Acts of Queensland (1989 Working Paper No 32) leading to QLRC, Consolidation of Real Property Acts (Report No 40, 1991); Weir, “Land Title Act 1994 (Qld) –​Statute for a New Millennium” (2000) 4 FJLR 185; Christensen and Stickley, “Electronic Title in the New Millenium” (2000) 4 FJLR 209. Land Title Act 1994 (Qld), ss 3(d), 8. Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), p 299. Land Title Act 1994 (Qld), s 42(1). [4.40]  197

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title will only be issued by the Registrar if the mortgagee consents.42 The expectation that few paper titles would be issued43 has been met, with only about 16% of transactions resulting in the issue of paper titles.44 Concern that less use of paper certificates of title would lead to more fraud in the system45 has been allayed, as there is no evidence, as yet, of any increase in fraudulent transactions.46 The process of registration of documents is speedy, taking on average only a day.47 Although there had been very significant developments in the process of computerisation of titles and dealings in them, with the rate of change varying from jurisdiction to jurisdiction, it was clear that there remained considerable scope for available information technology to be used to simplify the system further and create wholly electronic conveyancing systems.48 The idea was to create a paperless conveyancing system, not simply a paperless register of titles. With the introduction of national electronic conveyancing protocols and electronic property exchanges for Australia this idea is slowly coming to fruition. The next step will be to harmonise the substantive law to lead to one legislative framework for the federation of Australia. It is possible that from after the contract of sale until the transaction has been settled and statutory authorities notified, all steps will be completed online by registered subscribers. All dealings and transactions would be entered in the form of electronic data and after examination of the data by the Registrar; the Register will be automatically updated without the need for information to be transposed from paper or electronic documents. Further, payments and transfers of money will be made by electronic funds transfer. Participants in the process who are Australian Prudential Regulation Authority (APRA) regulated financial institutions, Property Exchange Australia (PEXA) subscribers (and perhaps subscribers with other recognised electronic network operators) and who currently hold a registered first mortgage will be able to elect to not hold a paper-​based certificate of title, but an electronic certificate of title, (known as the eCT).49 However, these developments bring their own challenges. Subscribers to the system will now be asked to verify the identity of the clients for whom they act, and ensuring that that client has the right to deal with that interest in the land (most likely this right to deal is restricted by the presence of a mortgage). Perhaps the most critical change is that conveyancing agents and solicitors will now be signing on behalf of their clients, rather than preparing the documents and having the clients sign for themselves. The process may well become simpler and quicker,

42 43 4 4 45 46

47

8 4 49

Land Title Act 1994 (Qld), s 42(2). Wallace and MacDonald, “A New Era in Torrens Title in Queensland –​The Land Title Act 1994” (1994) 68 ALJ 675 at 676. Weir, “Land Title Act 1994 (Qld) –​Statute for a New Millennium” (2000) 4 FJLR 185 at 189–​190. Wallace and MacDonald, “A New Era in Torrens Title in Queensland –​The Land Title Act 1994” (1994) 68 ALJ 675 at 677; see in [4.40] for a discussion of why use of certificates of title may have this effect. Weir, “Land Title Act 1994 (Qld) –​Statute for a New Millennium” (2000) 4 FJLR 185 at 190. There is, however, still considerable concern about the “paperless” system. At first instance, in Young v Hoger (2001) Q ConvR 54-​548 Douglas J, who had to determine the validity of a signature on a mortgage from an electronic copy (all originals being destroyed), stated “the legislature will rue the day it introduced the paperless scheme”. Weir, “Land Title Act 1994 (Qld) –​Statute for a New Millennium” (2000) 4 FJLR 185 at 190. Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), p 282 suggest that registration can be achieved in two to three days. Cocks and Barry, “Electronic Conveyancing: Challenges for the Torrens System” (2002) 8 APLJ 270. For an overview of the current system, see the websites of the Australian Registrations National Electronic Conveyancing Council (www.arnecc.gov.au), and of Property Exchange of Australia (www.pexa.com.au).

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but the increase in responsibility imposed on conveyancing agents and solicitors does have the potential to increase conveyancing fees. While the issue has now been addressed in all jurisdictions, Victoria was the first state to develop a detailed proposed scheme for the introduction of electronic conveyancing. The Transfer of Land (Electronic Transactions) Act 2004 (Vic) introduced amendments to the Transfer of Land Act 1958 (Vic) to enable the e-​conveyancing project to commence. However, it seems clear that the statutory provisions were designed for a less sophisticated e-​lodgement system and that much of the regulatory framework for the pilot would need to be contained within “EC System Rules”, which were intended to form the basis of a contract between Land Exchange (a unit within the Department of Sustainability and Environment, but not set up under the Transfer of Land Act 1958) and subscribers to the system. It was argued that the regulatory and legislative framework for the proposed system was inadequate and that matters concerning registration of subscribers, procedural protections and general requirements for the network should be contained within legislation.50 The Victorian project was overtaken by an agreement to develop an electronic conveyancing system for all jurisdictions. In 2005 a National Steering Committee, with government representatives and representatives of various other interest groups, was set up to supervise the development of a National Electronic Conveyancing System (NECS). The National Electronic Conveyancing Office (NECO) was established. The intention was for a co-​operative development between government and industry to further the aims of ensuring an efficient and cost-​effective way in which to complete transactions in relation to land. In 2008 the Council of Australian Governments (COAG) came on board to further this aim. In 2010, Queensland, New South Wales and Victoria formed a corporation, National E-​Conveyancing Development Ltd (NECDL) to advance and develop e-​ conveyancing in Australia with Landgate (the Western Australia land registry service) joining the company later. With the setting up of this entity, NECO ceased operating but it had undertaken considerable research and developed a detailed model for e-​conveyancing that has formed the basis of current initiatives. These initiatives have seen the introduction, with New South Wales as the lead jurisdiction, of the National Electronic Conveyancing (Adoption of National Law) Act 2012 (NSW). This piece of legislation, to be enacted in the other jurisdictions,51 provides for the establishment of Electronic Lodgement Networks, with the first to operate in Australia being PEXA.52 PEXA began as an unlisted public company owned by a number of the state governments and the larger financial institutions. PEXA will operate the national property exchange, though there is the potential for competing network operators to be built. Should this occur, questions surrounding the interoperability of the two systems will arise –​that is, if there are two or more different network operators in place, will the competing operators be able to communicate with each other. The proposal to introduce electronic conveyancing has, in turn, given rise 50

51

52

See O’Connor, Electronic Conveyancing: Who Benefits?, Lecture presented 6 June 2006, Monash Centre for Regulatory Studies, Monash Law Chambers; Chang, “E-​Conveyancing Model Queried” (2007) 11 LIJ 28. See also, for example, the Conveyancing Legislation Amendment (E-​Plan) Act 2002 (NSW) providing for amendments to the Conveyancing Act 1919 (NSW) and the Real Property Act 1900 (NSW): see, for example, ss 3A, 12AA and 28X. See Electronic Conveyancing (Adoption of National Law) Act 2013 (Vic); Electronic Conveyancing (Adoption of National Law) Act 2013 (Tas); Electronic Conveyancing National Law 2013 (Qld); Electronic Conveyancing National Law 2013 (SA); Electronic Conveyancing Act 2014 (WA); Electronic Conveyancing (National Uniform Legislation) Bill 2013 (NT). See www.pexa.com.au. [4.40]  199

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to much academic commentary on the proposed operation of the system and the various problems that may be encountered.53 Electronic conveyancing systems are in the process of being developed in overseas jurisdictions with British Columbia being the most advanced in implementation at this stage. Legislation for electronic land systems has also been put in place in the United Kingdom, New Zealand and Singapore.54 Electronic conveyancing is intended to harness “the technology of the late 20th century to provide economic efficiencies and greater flexibility in application of fundamental Torrens title principles without jettisoning the positive aspects of the system”.55 Although it has been stated that the introduction of automation and computerisation of the titles system is not intended to change the fundamental principles of the Torrens system,56 it is now recognised that electronic conveyancing has the potential to “redefine the legal rules” and to ameliorate and resolve some entrenched problems with the operation of the Torrens system.57 At a simpler level, inevitably new issues and problems emanating from the operation of an automated system will arise. Some of these may be resolved by a simple application of the existing law, but some may require the extension of existing principles or the development of new rules possibly by legislative amendment in order to provide appropriate solutions.58 A further important development in the area of land administration is the current move to privatise, or perhaps more accurately, commercialise the land registries by the state governments

53

54

5 5 56 57

58

Christensen, “Electronic Land Dealings in Canada New Zealand and the United Kingdom: Lessons for Australia” (2004) 11(4) E LAW Mur UEJL 1–​29; Low, “Opportunities for Fraud in the Proposed Australian National Electronic Conveyancing System: Fact or Fiction?” (2006) 13(2) E LAW Mur UEJL 225–​253; Low, “From Paper to Electronics: Exploring the Fraud Risks Stemming from the Use of Technology to Automate the Australian Torrens System” (2009) 21(2) Bond LR 107; Low and Foo, “The Susceptibility of Digital Signatures to Fraud in the National Electronic Conveyancing System: An Analysis” (2009) 17 APLJ 303; Arrunada, “Leaky Title Syndrome” (2010) NZLJ 115; Griggs and Low, “Identity Fraud and Land Registration Systems: An Australian Perspective” [2011] Conv 284; Thomas, Low and Griggs, “Australasian Torrens Automation, Its Integrity, and the Three Proof Requirements” (2013) 2 NSLR 227; Thomas, Griggs and Low, “Electronic Conveyancing in Australia –​Is Anyone Concerned about Security” (2014) 23 APLJ 1. Low, “Maintaining the Integrity of the Torrens System in a Digital Environment: A Comparative Overview of the Safeguards Used within the Electronic Land Systems in Canada, New Zealand, United Kingdom and Singapore” (2005) 11 APLJ 155. Electronic conveyancing was the subject of a number of papers presented at an international land law conference held in Auckland in 2003. The papers have been published in Grinlinton, Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003): see O’Connor, “Information, Automation and the Conclusive Land Register”, pp 249–​276; Cooke, “E-​Conveyancing in England: Enthusiasms and Reluctance”, pp 277–​294; Weir, “An Australian View: The Queensland Land Title Act 1994”, pp 295–​310; Muir, “Electronic Registration: The Legislative Scheme and Implications for the Torrens System in New Zealand”, pp 311–​322; Greenwood and Jones, “Automation of the Register: Issues Impacting on the Integrity of Title”, pp 323–​348; Thomas, “Fraud, Risk and the Automated Register”, pp 349–​367. See also Capps, “Conveyancing in the 21st Century: An Outline of Electronic Conveyancing and Electronic Signatures” [200] Conv 443–​455. Weir, “Land Title Act 1994 (Qld) –​Statute for a New Millennium” (2000) 4 FJLR 185 at 189. See, for example, QLRC, Consolidation of Real Property Acts (Report No 40, 1991). O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 249–​276 at 250. For example, the problems caused by interests created between lodgement and registration may disappear altogether if lodgement and registration effectively become simultaneous. See Christensen and Stickley, “Electronic Title in the New Millenium” (2000) 4 FJLR 209 at 218–​234. See Imperial Bros Pty Ltd v Ronim Pty Ltd [1999] 2 Qd R 172, a case concerning the problems of making title when there is a shutdown of the computer system, discussed in Duncan and Christensen, “Overcoming the Problems of Showing and Making Cyber Title” (2000) 8 APLJ 38.

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of Australia. With New South Wales, South Australia, and Victoria already committed, the private operators will undoubtedly look to value-​add to the information already contained in the register, and on-​sell that information to interested people (eg, mortgage brokers, land developers). Much will be made of the ownership of the data in the registry, potential privacy issues, as well as whether the performance indicators of the private operator that are agreed to by the government will be sufficiently robust to retain what is largely now a secure and trusted land administration system.59

The Torrens system in outline [4.45]  In all jurisdictions the Registrar60 is directed to keep a Register61 in which he or she

keeps a record of all parcels of land falling under the Torrens system and of the persons holding interests in the parcels.62 In recent times the provisions concerning the Register, its contents and the processes concerning registration have been amended to provide for the Register to be kept in a computerised form. Although the language used varies from jurisdiction to jurisdiction, the following description provides an outline of the way in which the Registers are set up and maintained. The Registrar is required to create a folio in the Register describing the land to which it relates and the estate or interest held in the land by the named proprietor or owner.63 The folios may be maintained in any medium or form.64 The certificate of title is effectively a copy

59 60

61

62

63

64

The New South Wales legislation allowing for the privatisation of land titles in that jurisdiction was the Land and Property Information (Authorised Transactions) Act 2016. In Victoria, Queensland and Western Australia the term is “Registrar”; in New South Wales, South Australia, the Australian Capital Territory and the Northern Territory the term is “Registrar-​General” and in Tasmania the term is “Recorder”. For ease of expression, the term “Registrar” is generally used in this chapter, except where discussion is specifically concerned with one State; in such cases the strictly correct term, such as Registrar-​General in New South Wales, is used. Real Property Act 1900 (NSW), s 31B(1); Transfer of Land Act 1958 (Vic), s 27(1); Land Title Act 1994 (Qld), s 27; Real Property Act 1886 (SA), ss 47, 49; Transfer of Land Act 1893 (WA), s 48(1); Land Titles Act 1980 (Tas), s 33(1); Land Titles Act 1925 (ACT), s 43(1); Land Title Act (NT), ss 6(1), 30. In South Australia and Western Australia the Registrar keeps a “Register Book” and in New South Wales, Victoria, Queensland, Tasmania, the Australian Capital Territory and the Northern Territory the Registrar keeps a “Register”. The terminology differs from jurisdiction to jurisdiction. For example, in Queensland and the Northern Territory the Registrar keeps a Register recording the “lots” of land. Separate particular Registers may also be set up, for example, in South Australia and Western Australia a Register of Crown leases is kept: Real Property Act 1886 (SA), s 93; Transfer of Land Act 1893 (WA), s 81A. See Chapter 6. Real Property Act 1900 (NSW), ss 31B, 32(1); Transfer of Land Act 1958 (Vic), s 27 (the Registrar must not describe the proprietor when an identified folio is created: see s 27(7A) and [4.510]); Land Title Act 1994 (Qld), ss 27, 28 (“records in register”; the term “estate” is not used); Land Title Act (NT), s 30 (“records” “particulars”; the term “estate” is not used); Real Property Act 1886 (SA), ss 49, 51B (“records”). Note that in South Australia the old terminology has also been retained. In the old language “certificates of title” may comprise the Register and shall be issued in duplicate: Real Property Act 1886 (SA), s 48. The original certificate of title constitutes a separate folium in the Register Book (s 49) and the duplicate is delivered to the registered proprietor: s 48. The provisions in s 51B relate to registration of title electronically and ensure that the term “certificate of title” bears its appropriate meaning depending on whether the title is held in a manual form (ss 47–​51A) or in an electronic form (ss 51B–​51D). See also Transfer of Land Act 1893 (WA), ss 48, 48A, 52; Land Titles Act 1980 (Tas), s 33(4), (5); Land Titles Act 1925 (ACT), ss 43(1), (2), 44. Real Property Act 1900 (NSW), s 31B(3); Transfer of Land Act 1958 (Vic), s 27(2), (3); Land Title Act 1994 (Qld), s 8(1); Real Property Act 1886 (SA), s 51B; Transfer of Land Act 1893 (WA), s 48(2); Land Titles Act 1980 (Tas), s 33(3); Land Titles Act 1925 (ACT), ss 43(2)(a), (b), 44; Land Title Act (NT), s 6(3), (4). [4.45]  201

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or extract of the contents of a particular folio. In South Australia, Tasmania and the Australian Capital Territory, upon the creation of a folio or the registration of an instrument, the Registrar must deliver a certificate of title to the person entitled to it65 (usually the registered proprietor). In New South Wales the Registrar-​General may issue a certificate of title for the land and must do so if he or she is requested to by the registered proprietor or a registered mortgagee or chargee.66 In Victoria the Registrar must issue a certificate of title to the person entitled to it, but is not required to produce a certificate of title for a folio if the person entitled to receive the certificate of title requests that no certificate be produced and the Registrar is satisfied that non-​production is appropriate in the circumstances.67 In Queensland and the Northern Territory the Registrar must issue a certificate of title at the written request of the registered owner. If the lot is subject to a registered mortgage, the Registrar may only issue a certificate of title if the mortgagee consents.68 In Western Australia the Registrar must issue a duplicate certificate of title unless the registered proprietor requests that no duplicate be issued.69 Land is subject to the Torrens statute and is considered registered land when the Registrar creates a folio or record relating to the land.70 In order to create a folio, inter alia, the Registrar must allocate to the folio a distinctive identifying reference.71 [4.50]  The terminology used before the amendments were made to allow for computerised

titles requires some consideration. Each Crown grant and certificate of title72 constituted a separate folium of the Register. Grants and certificates of title were issued in duplicate, the original being placed on the Register and the duplicate certificate of title being handed to the registered proprietor. Under the new system, a “certificate of title”, which is handed to the

65 66 67 68 69

70

71

72

Real Property Act 1886 (SA), s 51C; Land Titles Act 1980 (Tas), ss 33(8), (9), (10), 54(1); Land Titles Act 1925 (ACT), s 44(2). Real Property Act 1900 (NSW), s 33(1), (5). Transfer of Land Act 1958 (Vic), s 27B(6), (7), (7A), (7B). Land Title Act 1994 (Qld), s 42(1), (2); Land Title Act (NT), s 44(1), (2). See [5.135]ff for the consequences this may have in priority disputes. Transfer of Land Act 1893 (WA), s 48B(1). The ramifications of this provision are discussed in Hammond, “The Abolition of the Duplicate Certificate of Title and Its Potential Effect on Fraudulent Claims over Torrens Land” (2000) 8 APLJ 115. See now s 48B(3)–​(5) introduced by s 15 of the Transfer of Land Amendment Act 2003 (WA). Section 48B(3) provides that if a registered proprietor requests that no duplicate be issued, the certificate of title must be endorsed to that effect and s 48B(4) provides that a duplicate may be handed back to the Registrar and the Registrar must endorse the certificate of title to that effect. Various other provisions have been inserted to make provision relating to duplicate certificates of title in the case of digital titles: see, for example, ss 57(c), 74B(2), 75(1A). Real Property Act 1900 (NSW), ss 31B, 32(1); Transfer of Land Act 1958 (Vic), s 27; Real Property Act 1886 (SA), ss  47–​49; Land Title Act 1994 (Qld), s 37; Transfer of Land Act 1893 (WA), s 52(1); Land Titles Act 1980 (Tas), s 33(7); Land Titles Act 1925 (ACT), s 47; Land Title Act (NT), s 39. Torrens statutes:  Real Property Act 1900 (NSW), s 32(1); Transfer of Land Act 1958 (Vic), s 27(7); Land Titles Act 1980 (Tas), s 33(5); Transfer of Land Act 1893 (WA), s 52; Land Titles Act 1925 (ACT), s 47. In Queensland and the Northern Territory the Registrar must simply record a set of particulars necessary to identify the lot and those with interests in it: Land Title Act 1994 (Qld), s 28; Land Title Act (NT), s 30. When registering an instrument, the Registrar must give the instrument a “distinguishing reference” and record the reference in the Register: Land Title Act 1994 (Qld), s 32; cf Land Title Act (NT), s 30(1). See Real Property Act 1886 (SA), ss 48, 49 (less specific). A Crown grant is where land is granted directly from the Crown and a certificate of title is issued where, for example, general law land is brought under the Torrens system.

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registered proprietor, is a copy of the contents of a particular folio of the Register and reflects the current contents of the Register –​a new copy is issued after each registration transaction.73 Under the previous system, a certificate of title comprised the contents of the Register for a particular parcel (including its history) and the duplicate certificate of title was handed to the registered proprietor.74 The duplicate certificate of title (now the certificate of title) has occupied an important place in the operation of property transactions, and in particular mortgage transactions, in Australia. Under the general law system, the deposit of the title documents (chain of title) was considered to be prima facie evidence of an agreement to create a mortgage. In the absence of writing complying with the Statute of Frauds, the deposit of the title deeds was sufficient to constitute an act of part performance for the mortgage to be created in equity.75 In relation to Torrens land, the deposit of the duplicate certificate of title has been used in the same manner and to the same effect. Before the introduction of the most recently updated Torrens statutes in Queensland and the Northern Territory, it was suggested that the certificate of title be removed from the system. This would have rendered the mortgage by deposit of title deeds impossible. At present, however, it remains available and the use of the certificate of title to create an equitable mortgage has been upheld by the High Court.76 [4.55] Apart from the Registrar creating a folio or record for a fee simple interest, a folio

may be issued for a life interest.77 In some jurisdictions long-​term lessees of land which is not under the Torrens system may apply to have the leasehold estate registered under the system.78 Further, in some jurisdictions a lessee of Torrens land may apply for the issue of a separate certificate for the leasehold estate.79 This may prove very useful where the lease itself is to be

73

74 75 76 77

78

79

See, for example, Transfer of Land Act 1958 (Vic), s 27B(7). Note also that the Registrar may call in and destroy any subsisting certificate of title (s 27B(9)) and must do so on the production of a new certificate of title for a folio (s 27B(11)), although by s 27BA the Registrar has power in particular circumstances not to destroy certain certificates of title. Various provisions have been enacted to ensure that the operative provisions of the statute apply to manual and computer titles. See, for example, Real Property Act 1900 (NSW), s 3A. Russel v Russel (1783) 1 Bro CC 269; 28 ER 1121. See Theodore v Mistford Pty Ltd (2005) 221 CLR 612, discussed at [7.50] and [7.245]. See Hepburn, “Reconsidering the Scope of the Equitable Mortgage Arising from Deposit of Title Deeds” (2006) 80 ALJ 121. Real Property Act 1900 (NSW), s 100(2); Transfer of Land Act 1958 (Vic), s 11 (lease for life); Land Title Act 1994 (Qld), s 55; Real Property Act 1886 (SA), s 75; Land Titles Act 1980 (Tas), s 33(6)(b), (c); Land Titles Act 1925 (ACT), ss 18(2)(b), 56; Land Title Act (NT), s 56. See [10.105]. See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 85–​86 for a discussion on the issues and difficulties arising when a life interest and a remainder exist. Note that where the legislation so permits (as in New South Wales under s 53(1) of the Real Property Act 1900), a life interest may also be created and registered by a document in the form of a lease: see Borambil Pty Ltd v O’Carroll [1971] 1 NSWLR 1; Australian Maritime Safety Authority v Quirk (1998) NSW ConvR 55-​858. Real Property Act 1900 (NSW), s 14(2)(b); Land Titles Act 1925 (ACT), s 18(2)(b) (a lease for a life or lives or a lease with 25 years to run); Transfer of Land Act 1958 (Vic), s 11; Transfer of Land Act 1893 (WA), s 39 (a lease for a life or lives or a lease with 10 years to run). See Chapter 6 for the position relating to Crown leases. In the Australian Capital Territory, the Territory cannot make a grant of land for a term exceeding 90 years. Thus the Crown cannot grant an estate in freehold or for a life or lives. The definition of “grant” in the dictionary of the Land Titles Act 1925 (s 2) provides that “grant” means the grant by the Crown of land for a term of years. Real Property Act 1900 (NSW), s 32(3); Transfer of Land Act 1958 (Vic), s 11; Transfer of Land Act 1893 (WA), s 39; Land Titles Act 1980 (Tas), ss 33(6)(a), (8), 71.

[4.55]  203

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the subject of a number of dealings.80 Separate certificates of title may be issued for tenants in common.81 [4.60]  Once a folio or record has been created, the person named as the holder of the estate

or interest, the registered proprietor, may deal with the estate or interest.82 The Torrens statutes set out the types of dealings that may be entered into by the registered proprietor. The relevant provisions in the Victorian statute provide an example and are similar to the provisions in the other jurisdictions. The registered proprietor may transfer,83 lease,84 sublease a registered lease,85 mortgage86 and create an easement over87 his or her interest in the land. Any such dealing must be effected by the use of the appropriate form as set out in the Torrens statutes88 and it is only upon registration of the appropriate form or memorandum by the Registrar on the Crown grant, title or folio that title passes and the benefits of registration are obtained by the transferee.89 There are specific forms for each of the possible dealings, such as transfers, mortgages and leases, which may be registered. In some jurisdictions there is specific provision for the registration of a profit à prendre.90 Even where there is no specific provision or form for the registration of a particular interest, the decision in Ellison v Vukicevic (1986) 7 NSWLR 104 at 119 suggests registration may be achieved by the registration of an appropriately worded transfer. It is also important to note that the categories of proprietary interests in land are not closed. For example, the carbon sequestration right is a new interest developed in recent years. Trees take up carbon from the atmosphere and the carbon right, an incorporeal benefit, confers on its holder the right to take the benefit of the sequestration of carbon by trees. All States have introduced legislation in a variety of forms to confirm the nature and validity of carbon sequestration rights.91 In New South Wales, for example, the right comes within 80 81

2 8 83 84 85 86 87 88 89 90

91

See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 87. Real Property Act 1900 (NSW), s 100(2); Transfer of Land Act 1958 (Vic), ss 30(2), 98D; Land Title Act 1994 (Qld), s 57(1); Real Property Act 1886 (SA), s 74; Transfer of Land Act 1893 (WA), s 60; Land Titles Act 1980 (Tas), s 33(6)(d); Land Titles Act 1925 (ACT), s 54(3) (joint tenants), s 54(4) (tenants in common); Land Title Act (NT), s 58. Query the position of joint tenants. It seems that separate certificates may only be issued in Tasmania and the Australian Capital Territory: Land Titles Act 1980 (Tas), s 33(6)(d), (8); Land Titles Act 1925 (ACT), s 54(3), (4). (Query Transfer of Land Act 1958 (Vic), s 98D.) As to Crown leases in the Australian Capital Territory and the Northern Territory, see Land Titles Act 1925 (ACT), ss 17, 70–​72C; Land Title Act (NT), s 4 (a registered owner includes a person who holds a Crown lease), ss 48–​49. A more detailed examination of the nature of interests pursuant to which grants or certificates may issue can be found in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 12. In Queensland and the Northern Territory the term “estate” is not used. Transfer of Land Act 1958 (Vic), s 45. Transfer of Land Act 1958 (Vic), s 66 (for a term not less than three years). Transfer of Land Act 1958 (Vic), s 71 (for a term not less than three years). Transfer of Land Act 1958 (Vic), s 74. Transfer of Land Act 1958 (Vic), ss 45, 72. Even in jurisdictions where permissive terminology is used, the use of the prescribed form has been held to be mandatory: see Crowley v Templeton (1914) 17 CLR 457 at 463 per Griffith CJ. There is now limited provision in some jurisdictions for the registration of covenants: see Land Title Act 1994 (Qld), ss 97A–​97DA (only where the State is the covenantee); Land Title Act (NT), ss 106–​117. Consider Real Property Act 1900 (NSW), s 46(1) (providing for a transfer of a profit) (see also s 46A providing for creation of easements, profits and restrictions over own land); Land Title Act 1994 (Qld), ss 97E–​97L; Land Titles Act 1980 (Tas), s 107; Land Titles Act 1925 (ACT), s 103G; Land Title Act (NT), ss 118–​124. As to registration of incorporeal hereditaments, see [17.515]–​[17.520]. For a detailed discussion of the legislation and suggestions for reform see Hepburn, “Carbon Rights as New Property: The Benefits of Statutory Verification” (2009) 31 Syd L Rev 239.

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the definition of a forestry right, is equated with a profit à prendre and can be registered on Torrens land.92 Similarly, in Tasmania a carbon sequestration right is included in the definition of a forestry right and constitutes a profit à prendre, which is registrable.93 In Queensland a “natural resource product agreement” under s 61J of the Forestry Act 1959 (Qld) (introduced by the Forestry and Land Title Amendment Act 2001 (Qld)) can be registered as a profit à prendre under the Land Title Act 1994 (Qld). In Western Australia there is provision for registration of carbon rights, carbon covenants and tree plantation agreements under Pt IV, Divs 2A and 2B of the Transfer of Land Act 1893 (WA).94 The right is not deemed to be a profit à prendre; rather a separate statutory property interest is created.95 Once a carbon right is registered,96 it is deemed to be an interest in land.97 It has been argued that the Western Australian approach, which is uncomplicated by the need to conform to the common law requirements for the profit à prendre, is preferable.98 In contrast to the use of established proprietary interest categories to deal with a new set of circumstances, proprietary interests that have fallen into disuse, such as the profit à prendre, may be revived to deal with particular modern fact situations.99 Some interests, although not registrable, may be noted or recorded on the Register. For example, in some jurisdictions restrictive covenants may be noted on the folio of the burdened land: see [18.250]. Effectively, such notification ensures that a purchaser of the burdened land is bound by the restrictive covenant: see [4.190]–​[4.195] and [18.250]. However, indefeasibility of title does not attach to the interest so noted:  see [4.100]–​[4.175] and [18.250]. In the Northern Territory such covenants can actually be registered as legal interests on the benefited and burdened land,100 while in Queensland restrictive covenants entered into between private landowners cannot even be notified on the Register.101

92

Conveyancing Act 1919 (NSW), ss 87A, 88AB. See Butt, “Carbon Sequestration Rights –​A New Interest in Land?” (1999) 73 ALJ 235. 93 Forestry Rights Registration Act 1990 (Tas), ss 3, 5. 94 Carbon Rights Act 2003 (WA); Tree Plantation Agreements Act 2003 (WA). 95 The Victorian position is different again: see Forestry Rights Act 1996 (Vic), ss 3–​12. The carbon right is not recognised as a separate independent statutory interest, but, upon registration, both positive and negative burdens are enforceable against successors in title to the land, as restrictive covenants: s 9. Note, however, that the Climate Change Act 2010 (Vic) (not in operation as of 21 March 2011) sets up a regime for the creation of forest carbon rights (which include carbon sequestration rights). These rights are interests in land (s 25(1)) and the Act will repeal the current Forestry Rights Act 1996. 96 Carbon Rights Act 2003 (WA), s 6(1). 97 The South Australian provisions are similar, although the separate carbon right under a forest property agreement is defined as a chose in action: see Forest Property Act 2000 (SA) ss 3A, 5, 6, 7, discussed in Hepburn, “Carbon Rights as New Property: The Benefits of Statutory Verification” (2009) 31 Syd L Rev 239 at 251–​253. 98 Hepburn argues that there are inherent difficulties in defining carbon sequestration rights as profits à prendre which will ultimately lead to practical problems. She suggests that the carbon right should be recognised as a new statutory proprietary interest, much as in Western Australia: see Hepburn, “Carbon Rights as New Property: The Benefits of Statutory Verification” (2009) 31 Syd L Rev 239. 99 Discussed in Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605 and commented on in Edgeworth, “Profit à rendre: A Reincarnation?’ (2006) 12 APLJ 200 at 208. 100 See Land Title Act (NT), ss 106–​114. 101 It has been suggested that the differing and piecemeal treatment of restrictive covenants in the various jurisdictions reflects a more general need for uniformity and harmonisation of Torrens statutes. See Christensen and Duncan, “Is it Time for a National Review of Torrens’s System? –​The Eccentric Position of Private Restrictive Covenants” (2005) 12 APLJ 104 at 125. [4.60]  205

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The usual situation is that the certificate of title (or duplicate certificate in some jurisdictions) must be produced to the Registrar before a dealing is registered. If the title is computerised, the Registrar issues a new certificate of title reflecting the contents of the folio after the dealing.102 Where the title is not computerised, the duplicate would be altered to mirror the alterations made to the Register. [4.65] Apart from instruments of dealing, a person may be entitled to obtain a registered

interest pursuant to a transmission. The law in each jurisdiction sets out particular events pursuant to which title may be acquired by transmission. Events which operate to pass title from a registered proprietor include the death or bankruptcy of the proprietor.103 In some jurisdictions, where a person who is registered as a joint proprietor dies, the surviving joint proprietor may apply to the Registrar to be registered as proprietor and, upon proof of the death, the Registrar so registers the survivor.104 [4.70]  The Registrar’s powers are set out in the provisions defining the particular duties and

functions of the Registrar. Further, the Registrar has general powers, including the power to call for documents105 and to require persons to appear before her or him.106 Many powers of the Registrar are discretionary, but the Registrar cannot refuse to register an instrument produced in proper form.107 The statutes contain appeal provisions and the decisions of the Registrar may be appealed. [4.75] An issue arises as to the terminology to be used in relation to registered interests.

Does the registered proprietor hold a “registered” interest or a “legal” interest? If a mortgage is registered, does the mortgagee hold under a “registered” mortgage or a “legal” mortgage? Although the legal and equitable interest distinction in the Torrens system was eschewed in the early days (see [5.10]), the dichotomy is now clearly established and it seems to be accepted that “the statutory form of transfer … when registered … is effective to pass the legal title”.108 102 See, for example, s 154(1) of the Land Title Act 1994 (Qld) which provides that an instrument may be registered for a lot only if any certificate of title for the lot is returned for cancellation. 103 See generally Real Property Act 1900 (NSW), s 3(1)(a), Pt 11; Transfer of Land Act 1958 (Vic), ss 4(1), 49, 51; Land Title Act 1994 (Qld), Pt 6 Div 6; Real Property Act 1886 (SA), ss 3, 175–​187; Transfer of Land Act 1893 (WA), ss 4(1), 187, 203, 221, 234; Land Titles Act 1980 (Tas), ss 3(1), 98, 99, 100; Land Titles Act 1925 (ACT), Pt 14; Land Title Act (NT), Pt 6 Div 7. For a detailed discussion of the operation of these provisions, see Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), Ch 18. 104 Real Property Act 1900 (NSW), s 101(1); Transfer of Land Act 1958 (Vic), s 50; Real Property Act 1886 (SA), s 188; Transfer of Land Act 1893 (WA), s 227; Land Titles Act 1980 (Tas), s 100; Land Titles Act 1925 (ACT), s 55. In Queensland, see s 114 of the Land Title Act 1994 (Qld) (a joint tenant may apply to the Supreme Court for a vesting order). 105 Real Property Act 1900 (NSW), s 12(1)(a); Transfer of Land Act 1958 (Vic), ss 104, 105; Land Title Act 1994 (Qld), Pt 2 Div 4 (probably by implication); Real Property Act 1886 (SA), s 220(a), (d); Transfer of Land Act 1893 (WA), s 180; Land Titles Act 1980 (Tas), s 160(1); Land Titles Act 1925 (ACT), s 14(1)(a); Land Title Act (NT), s 24 (on an inquiry). 106 Real Property Act 1900 (NSW), s 12(1)(b); Transfer of Land Act 1958 (Vic), ss 104(3), 116A; Land Title Act 1994 (Qld), ss 19–​24 (on an inquiry); Real Property Act 1886 (SA), s 220(b), (c); Transfer of Land Act 1893 (WA), s 180; Land Titles Act 1980 (Tas), s 160(2), (6); Land Titles Act 1925 (ACT), s 14(1)(b); Land Title Act (NT), s 24. 107 Perpetual Executors & Trustees Association of Australia v Hosken (1912) 14 CLR 286; Registrar-​General (NSW) v Lee (1990) 19 NSWLR 240. 108 Abigail v Lapin [1934] AC 491 at 500; cf Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 229 CLR 545 at [35], where the High Court warned against wholly equating unregistered interests with equitable interests and the adoption of the legal and equitable dichotomy into the Torrens system. 206 [4.65]

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It is important to note, however, that the registered or legal interest under the Torrens system differs from the legal interest under the general law. Their respective spheres of enforceability are quite different. Although the term “registered interest” may be used more often, the terms “registered” and “legal” interest may generally be used interchangeably. It is arguable that they cannot always be so used because some interests may be “legal” in character although not registered. An example of such an interest may be the short-​term tenancy. In Victoria, for example, only a lease for a term exceeding three years may be registered.109 Despite the lack of registration, a lease for three years or less may however, be “legal” rather than “equitable” in nature. The contention is that if there is a means provided in the Torrens legislation by which an interest can be registered pursuant to a registrable instrument, the interest can only be, at best, an equitable interest if it is not registered. However, where there is no means of registering, such as the case of the short-​term tenancy in Victoria, it is suggested that the interest is of the same type as it would have been under the general law.110 Alternatively, the view may be taken that all unregistered interests, whether registrable or not, are equitable in character.111 In most instances, the nature of unregisterable interests would be equitable under the general law. In most cases the nature of the interest (ie, whether it is legal or equitable) does not affect the outcome of any dispute.112 The interest of a tenant in possession in Victoria, for example, is specifically protected whether it is termed a legal or equitable interest:  see [4.295]–​[4.300] and [14.440]–​[14.480].113 In some situations, however, the designation of an interest as legal or equitable may affect the outcome of a dispute and, for the purposes of a priorities dispute between unregistered interests, the interests should be classified as they would be under the general law.114 In Queensland a short-​term lease is given express protection from the indefeasibility of the registered proprietor’s title,115 although it is still possible to register a short term lease.116 Section 71 of the Land Title Act 1994 (Qld) provides that an unregistered lease is not invalid

109 110

Transfer of Land Act 1958 (Vic), s 66(1). See Josephson v Mason (1912) 12 SR (NSW) 249; Munro v Stuart (1924) 41 SR (NSW) 203. The sphere of enforceability of a legal but not registered interest is presumably the same as the enforceability of a legal interest under the general law. It would not survive against a registered interest. However, if the competition were between a prior equitable interest and a legal (but unregistered) interest, the later interest holder may win the dispute if a bona fide purchaser of the legal estate for value without notice: see [4.295]–​[4.300] and [14.440]–​[14.480]. See also Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.990], who argues that s 74F(1) of the Real Property Act 1900 (NSW) which provides that a caveat may be lodged to protect a “legal or equitable” interest, lends support to the view that some unregistered interests may be legal in character. 111 See Troncone v Aliperti (1994) 6 BPR 13,291. This view has less support. 112 See, for example, Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566. 13 Note, however, that although the new registered proprietor does not acquire an indefeasible title in relation 1 to the interest of a tenant in possession, the tenant coming under the exception has no greater right than he or she would have under the general law: Burke v Dawes (1938) 59 CLR 1; Barba v Gas & Fuel Corporation of Victoria (1976) 136 CLR 120; Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566. The dispute must be decided by the application of common law principles: see [2.455], [2.590] and [5.210]. In Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566 the court held that on the facts it made no difference whether the interest of the registered mortgagee was considered legal or equitable –​the mortgagee had notice of the prior interest of the tenant and so lost the dispute whether its interest was legal or equitable: see [2.590] and [5.205]–​[5.210]. 114 See n 113. 15 Land Title Act 1994 (Qld), s 185(1)(b). 1 16 Land Title Act 1994 (Qld), ss 64, 65. 1 [4.75]  207

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merely because it is unregistered, but s 181 provides that an instrument does not create an interest at law until it is registered. In Ashton v Hunt [1999] 1 Qd R 571 the Court of Appeal held that, in light of s 181, s 71 did not mean that an unregistered lease for a term longer than three years was a valid lease at law. A valid equitable lease or common law tenancy could exist. This construction resulted in the guarantors of the lessee not being liable, as they had only agreed to guarantee the lessee’s obligations under a lease at law.117 The Northern Territory Land Title Act appears to have avoided the problem exposed in Ashton v Hunt: s 73 provides that despite s 184 (the equivalent of s 181 of the Queensland Act), an unregistered lease operates as a lease at law as between the parties to it.118 [4.80]  It is clear, then, that the starting point of the Torrens system of registration is to provide

a record relating to each piece of land. “The unit of land [is] the basis of record”.119 If this is so, the unit of land must be accurately defined. Although precise definition is possible now, in the early days surveys were often inaccurate and this caused, and still causes, some problems. Claims for adverse possession often concern situations where the boundaries identified on the title do not coincide with the actual physical boundaries. Although computerisation of titles is proceeding apace, the resulting Register in electronic form only automates what is there and in most States this is a record of the registered interests, and is, in the main, not concerned with boundary definition.120 Once a folio or record has been created with respect to any piece of land, the Registrar registers all dealings in the land if such dealings are presented in registrable form.121 In relation to any one piece of land, the Register is thereby intended to provide a record of the state of the title so that intending purchasers have only to search the one folio or record in order to determine the nature of any interests existing over the land and the identity of the holders of these interests. As some overseas jurisdictions guarantee land boundaries, it is highly likely that future work in the area of indefeasibility will consider whether it is possible to extend this notion to the boundaries of land. The difficulties connecting land boundaries, the cadastre, Torrens title, and indefeasibility can be demonstrated by the difficulties facing people in Christchurch, New Zealand, following the earthquake of February 2011 (for a possible solution to what occurred there see Canterbury Property Boundaries and Related Matters Act 2016 (NZ)). [4.85] In reality, the position is more complicated. First, various statutes, which give rise

to interests in land, may override the relevant State Torrens legislation and permit the

117

Applying Chan v Cresdon Pty Ltd (1989) 168 CLR 242, despite the differences in the statutory provisions. It seems the reasoning of the court could also apply to the short term leases, but see Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), pp 628–629. 118 Section 73 is specifically subject to ss 188 and 189, the indefeasibility provisions. 19 Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 18; cf the system of private 1 conveyancing discussed in Chapter 2. 120 A decision which shows the problems of indefeasibility not extending to boundaries can be seen in Nightingale v Recorder of Titles [2018] TASSC 56. 121 The Registrar’s discretion in registering dealings which contain errors is discussed in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 147–​148. This discretion varies from jurisdiction to jurisdiction. The most recent Torrens statutes (Queensland and the Northern Territory) give specific discretions to the Registrar. For example, s 10(3) of the Land Title Act 1994 (Qld) permits the Registrar to register documents not in registrable form if the Registrar is satisfied that it was not reasonable for it to have been in appropriate form. 208 [4.80]

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enforceability of interests not disclosed on the Register as against the registered proprietor: see [4.325]–​[4.345]. Secondly, all of the Torrens statutes provide, to a greater or lesser degree, for particular interests to prevail over the title of a registered interest holder: see [4.200]–​[4.310]. Although the discussion of these paramount exceptions demonstrates that there is a need for such provisions, their presence inevitably means that the Register itself will not contain a record of all interests binding the registered proprietor. Thirdly, it is clear that interests in the land may exist outside the Register and, although this factor does not directly interfere with the integrity of the Register, it can complicate the simple picture of a registered proprietor being subject only to prior registered interests. Various provisions of the Torrens statutes themselves, by providing for caveats to protect unregistered interests (see [5.25]–​[5.45]) and by referring to declarations of trust,122 or by providing for the registration of a person as a trustee,123 reveal that it was envisaged that interests in the land, which might be termed unregistered or equitable interests,124 could exist in Torrens land.125 Such interests may arise, for example, through the previous registered proprietor having made a declaration of trust or having entered into a specifically enforceable contract. The adequacy and correctness of the Register, at least from the point of view of providing a record of interests in the land that will bind any person subsequently taking a registered interest, is not threatened by the presence of unregistered interests in the same way as it is in the first two examples. This is because the bona fide purchaser who becomes a registered proprietor is not subject to any such equitable unregistered interests that would have bound the previous registered proprietor in personam; he or she takes subject only to interests on the Register. Nevertheless, this protection is generally only afforded upon registration and, in most current systems, there is a time gap between lodgement for registration and registration when inconsistent interests which are capable of affecting the interest of a person attempting to register may be created.126 It has been suggested that the introduction of electronic conveyancing provides the opportunity, and contains the capacity and potential, to deal with some of these problems and to create a system where the Register more accurately reflects all interests and rights over the land.127 It should also significantly reduce the potential 122

123 24 1 125

126 127

In New South Wales, Victoria, South Australia, Western Australia and the Australian Capital Territory, subject to limited exceptions, the Registrar cannot make any entry of any notice of any type of trust. It is expressly provided, however, that trusts of Torrens land can be created and in many cases lodged with the Registrar for safe custody: Real Property Act 1900 (NSW), s 82(1), (2); Transfer of Land Act 1958 (Vic), s 37; Real Property Act 1886 (SA), s 162; Transfer of Land Act 1893 (WA), s 55; Land Titles Act 1980 (Tas), s 132; Land Titles Act 1925 (ACT), s 124. Under s 132(3) of the Land Titles Act 1980 (Tas), the Recorder in his discretion may describe the registered proprietor as a trustee where the proprietor was so described in the dealing by which he became registered or the Recorder deems it convenient for the administration of the Act for him to be so described. By s 132(1), however, the Recorder cannot record particulars of the trust in the Register. Note that s 37(2) of the Transfer of Land Act 1958 (Vic) now provides that, from the commencement of the Land Legislation Amendment Act 2009 (Vic), a trust may not be lodged with the Registrar. In Queensland, Tasmania and the Northern Territory: Land Title Act 1994 (Qld), ss 109–​111; Land Titles Act 1980 (Tas), s 132(3) (see n 122); Land Title Act (NT), ss 125–​127. See generally Chapters 8 and 9 for a discussion of the nature of these interests. The High Court in Barry v Heider (1914) 19 CLR 197 removed any doubt as to the recognition of unregistered or equitable interests in Torrens land. See November and Rendell, “The ‘Mirror’ Principle and the Position of Unregistered Interests in the Torrens System” (2010) NZLR 151. See O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 249–​276 at 260–​263. See O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 249–​276. Problems may ensue, however, [4.85]  209

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for disputes between competing equitable, or unregistered, interests in land. In the past the cost of recording all interests and the limitations of information processing systems meant that a complete and conclusive register was not a realistic possibility.128 The rapid development of sophisticated systems for information processing and cross-​referencing to land information databases has led to the development of electronic conveyancing and to the possibility of “achieving the ideal of the conclusive register”.129 Although their existence has seemed inevitable, the very presence of interests existing off the Register necessarily means that the Register may not reflect all interests existing in the land. Further, although a purchaser with notice of a prior, unregistered interest is not bound by it once registered, difficult factual issues may arise when a court is asked to consider whether the “notice” actually amounted to “fraud” within the meaning of the Torrens statute. A  registered proprietor who registers with fraud will effectively be subject to the prior unregistered interest: see at [4.200]–​[4.220]. [4.90] The caveat is designed to provide some protection for unregistered interests. The

provision for lodgement of caveats was one of the clearest indicators that unregistered interests in land can exist. It is the caveat against dealings that is a means of providing some protection for the unregistered interest. Generally, the caveat prevents registration of a purchaser’s interest until the caveator has had the chance to enforce his or her claim against the purchaser. The provisions relating to caveats are discussed at [5.25]–​[5.100]. It has been argued that the caveat, or some similar system of noting, could be utilised to provide automatic priority for the interest holder against subsequent unregistered interests.130 [4.95]  In order to protect an unregistered or equitable interest by caveat, the holder of the

interest must be aware that he or she does hold such an interest. As is discussed in Chapters 8 and 9, equitable interests may arise from a variety of informal transactions. Very often the holder of an equitable interest arising pursuant to an informal transaction may be unaware of the possibility that her or his actions have given rise to a proprietary interest in land and will fail to use the means available to protect the interest; that is, he or she will fail to lodge a caveat. In a system where the emphasis is on the registration and recording of interests, the holder of such an equitable interest is often in an invidious position. Not only might there be difficulty in establishing the existence of the interest, but the lack of protection of the interest at a time when the holder was unaware of her or his rights may result in loss of the interest

if all interests and rights affecting a lot were expected to be recorded on the land register itself; the state guarantee of title may be extended too far and there is a danger of the Register becoming “cluttered”: see Bell, “Greening the Land Title Register –​How Can the Land Title Register Assist with Sustainable Decision-​ making?” (2010) 18 APLJ 263 at 271–​273. 128 See O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), p 274; Coase, “The New Institutional Economics” (1998) 88 American Economic Review 72 at 73. 29 O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the 1 Twenty-​first Century (LexisNexis, Wellington, 2003), p 275. 130 Robinson, “Caveatable Interests –​Their Nature and Priority” (1970) 44 ALJ 351; Sackville, “The Torrens System –​Some Thoughts on Indefeasibility and Priorities” (1973) 47 ALJ 526; Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict between Purchasers and Prior Interest Holders” (1997) 21 MULR 460. In Singapore such a system is in place: see Chapter 157, Land Titles Act 2004 (Rev ed) (Sing). 210 [4.90]

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if a bona fide transferee becomes registered. Effectively, a person holding such an equitable interest may be in a worse position than if he or she held such an interest under the general law system. Any amendment (as suggested at [4.90]) providing automatic priority for an unregistered interest holder who lodges a caveat, as against the holder of a subsequent unregistered interest, would further weaken the position of persons holding interest under informal transactions. In England the matter is partially dealt with by providing for an overriding interest in relation to the rights of any person in occupation of the land: see [2.515].

INDEFEASIBILITY OF TITLE Introduction and statutory provisions [4.100] The term “indefeasibility of title” is one that is so well entrenched in the Torrens

system language that any reader in the area would expect to find a clear and simple definition of it in each of the Torrens statutes. The reverse is the case. In fact, the word “indefeasible” is used in only four of the eight jurisdictions131 and is specifically defined only in the Queensland, Tasmanian and Northern Territory statutes. In the other jurisdictions, the concept of indefeasibility is to be gleaned from a composite of provisions in the statutes. These sets of provisions have been categorised by a number of authors as the “paramountcy”, the “ejectment”, the “notice” and the “protection” (or “protection of purchasers”) provisions.132 [4.105]  The “paramountcy” sections are the provisions that set out the most positive statement

of indefeasibility. In New South Wales, Victoria, Western Australia and the Australian Capital Territory the paramountcy section provides that, notwithstanding the existence in any other person of any estate or interest which, but for this Act may be held to have priority, the registered proprietor of any estate or interest in the land shall, except in the case of fraud and subject to other various exceptions which differ from jurisdiction to jurisdiction, hold the land, estate or interest subject only to the encumbrances, estates or interests recorded in the folio of the Register.133 Although differently set out, the paramountcy provisions in Queensland, South Australia, Tasmania and the Northern Territory have a similar effect. Section 38 of the Land Title Act 1994 (Qld) and s 39 of the Land Title Act (NT) provide that the indefeasible title for a lot is the current particulars in the Register about the lot. Thus, the registered proprietor has an indefeasible title to the lot. However, the nature and extent of the indefeasibility is set out

131

Land Title Act 1994 (Qld), ss 37, 38; Real Property Act 1886 (SA), s 69; Land Titles Act 1980 (Tas), s 40; Land Title Act (NT), ss 39, 40. 132 See, for example, Harrison, “Indefeasibility of Torrens Title” (1952) 2 UQLJ 206; Sykes and Walker, The Law of Securities (5th ed, Law Book, Sydney, 1993), pp 446–​448; Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 293ff. Note that Harrison and Sykes also refer to the “priority” provision, which sets out that instruments registered in respect of the same estate or interest are entitled to priority according to the date of registration and not according to the date of each instrument. See also Babie, “The Troubled Borders of Torrens Indefeasibility: Lessons from the Australia and the United States” (2018) 7 PLR 33; McKay, “Indefeasibility” (2017) 26 APLJ 207. 33 Real Property Act 1900 (NSW), s 42(1); Transfer of Land Act 1958 (Vic), s 42(1); Transfer of Land Act 1893 1 (WA), s 68; Land Titles Act 1925 (ACT), s 58. The precise wording differs. For example, in New South Wales the registered proprietor holds subject to “such other estates and interests and such entries” recorded. [4.105]  211

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in ss 184 and 185 of the Queensland Act and ss 188 and 189 of the Northern Territory Act. Except where he or she has been fraudulent, the registered proprietor holds the interest in the lot subject only to the registered interests affecting the lot.134 Other exceptions to the registered proprietor’s interest are listed in s  185 of the Queensland Act and s  189 of the Northern Territory Act. In South Australia it is provided that the title of the registered proprietor is absolute and indefeasible, subject only to encumbrances, liens, estates or interests noted on the Register and other particular listed exceptions, one of which is fraud.135 In all other cases the registered proprietor’s title prevails over the estate or interest of any other person which, but for the Act, might have been held to have priority.136 In Tasmania it is provided that, subject to the listed exceptions, the title of the registered proprietor is indefeasible.137 “Indefeasible” is defined as “subject only to such estates and interests as are recorded on the folio of the Register or registered dealing evidencing title to the land”. The title of the registered proprietor prevails, notwithstanding the existence of any other estate or interest in any person which, but for the Torrens statute, might have been held to have priority.138 Thus the basic theme of the Register accurately reflecting title is reinforced by the corollary that the person named as a registered interest holder does so hold the estate and, apart from stated exceptions, is not subject to the estate or interest of any other person which, in the absence of the Torrens legislation, may have been held to be paramount. Common law principles relating to the relevance of validity of documents and priority rules are displaced. In several jurisdictions the paramountcy sections are reinforced by the “ejectment” provisions that effectively provide that no person can maintain an action to recover the land against the registered proprietor except in particular named circumstances.139 [4.110] The paramountcy provisions state the principle of indefeasibility of title most

positively. The “notice” and the “protection” provisions set out in more detail and explain more fully the consequences of having a concept of indefeasibility of title. Arguably, these provisions do not expand the meaning of indefeasibility: it may have been possible to assume their content from the paramountcy provisions. For example, if the registered proprietor’s title is subject only to estates or interests noted on the Register, the inevitable conclusion is that the registered proprietor is not subject to an unregistered interest, even if he or she had notice of it. What the notice and protection provisions direct attention to is the position of a person who intends to take a registered interest and who is for this purpose dealing with the registered proprietor. Pursuant to the notice provisions, a transferee is not affected by actual or constructive notice of any unregistered interests and is not required to enquire into the circumstances under or the consideration for which the transferor or any previous proprietor

134 135 136 137 138 139

Land Title Act 1994 (Qld), s 184; Land Title Act (NT), s 188. Real Property Act 1886 (SA), s 69(a). Real Property Act 1886 (SA), s 70. Land Titles Act 1980 (Tas), s 40(1), (2). Land Titles Act 1980 (Tas), s 40(5). Real Property Act 1900 (NSW), s 118; Transfer of Land Act 1958 (Vic), s 44(2); Transfer of Land Act 1893 (WA), s 199; Land Titles Act 1980 (Tas), s 149; Land Titles Act 1925 (ACT), s 152. It should be noted that the particular named circumstances in which ejectment can be maintained do not always coincide with the exceptions in the paramountcy provisions. As Whalan states “the ‘ejectment provision’ is thus more of a corollary to the ‘paramountcy provision’ than the converse of it”: Whalan, The Torrens System in Australia (Law Book, Sydney, 1982), p 295.

212 [4.110]

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was registered.140 The relevant provisions have been interpreted so that protection against notice is provided only upon registration by the transferee.141 The protection provisions have some differences in wording but have similar meanings.142 They provide that nothing in the Act is to be interpreted so as to leave subject to an action for recovery of damages, or to an action for possession or ejectment or to deprivation of the estate in respect of which he or she is registered as proprietor, any purchaser or mortgagee bona fide for valuable consideration on the ground that his or her vendor or mortgagor may have been registered through fraud or error or may have derived through or from a person registered as proprietor through fraud or error.143 This is the case whether the fraud or error consists of wrong description of the boundaries or the parcels of land or otherwise.144 As in the case of the notice provision, it may be argued that the protection provision is simply explanatory of the general principle expounded in the paramountcy provision. By providing that the registered proprietor, if not fraudulent, takes free of any other claims or interests not noted on the Register, the paramountcy provision is indirectly providing, for example, that any fraud by a previous registered proprietor cannot affect the validity of the current registered proprietor’s title. The protection provisions specifically make it clear any such fraud or error, one step away from the registered proprietor, does not affect the registered proprietor’s title. [4.115]  As Whalan has argued, the term “indefeasibility” where its meaning is taken to be

that the interest recorded or registered is incapable of being annulled, defeated or abrogated is an inappropriate term to describe the protection afforded to a Torrens title.145 Indefeasibility of title under the Torrens system means that the title, if considered at a given time, cannot be defeated. It does not mean that the title is incapable of defeat at any time in the future. A registered proprietor with an indefeasible title may lose that title if another person becomes the registered proprietor without fraud. Indefeasibility attaches to the second proprietor, the person currently registered. A number of the cases discussed at [4.125]–​[4.160] are examples of such a scenario which is most often caused by the intervention of a fraudulent third party. [4.120] Despite the possible inappropriateness of the term “indefeasibility” it is suggested

that it is too embedded in the Torrens language for any change to be made. The use of the term in the recently revised legislation in Queensland and the Northern Territory has further ensured its continuing presence in the Torrens “language”. The exact extent of protection given by indefeasibility has been the subject of much dispute and has been examined in numerous 140

Real Property Act 1900 (NSW), s 43(1); Transfer of Land Act 1958 (Vic), s 43; Land Title Act 1994 (Qld), s 184(2); Real Property Act 1886 (SA), ss 186, 187; Transfer of Land Act 1893 (WA), s 134; Land Titles Act 1980 (Tas), s 41(1), (2); Land Titles Act 1925 (ACT), ss 59, 60(2); Land Title Act (NT), ss 188(2). 141 Templeton v The Leviathan Pty Ltd (1921) 30 CLR 34. 142 Real Property Act 1900 (NSW), s 45(1), (2); Transfer of Land Act 1958 (Vic), s 44(2); Real Property Act 1886 (SA), s 207; Transfer of Land Act 1893 (WA), s 202; Land Titles Act 1980 (Tas), s 42; Land Titles Act 1925 (ACT), s 159. Compare Land Title Act (NT), s 188(2)(c) and Land Title Act 1994 (Qld), s 184(2)(b). These provisions state that a registered proprietor is liable to a proceeding for possession of the lot only if the proceeding is brought by the registered proprietor of an interest affecting the lot. 143 Victoria and Western Australia “purchaser”; South Australia “transferee”, “mortgagee”, “encumbrancee” and “lessee”. 44 Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), p 209 comments on the inapt wording 1 of the “protection” provision. 45 Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 296. 1 [4.120]  213

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cases. The precise limits of the in personam rule and the nature of the rights protected under the umbrella of indefeasibility, both examined in a number of recent cases, have given rise to detailed analysis of the concept of indefeasibility.146

The meaning and extent of indefeasibility The current position in outline [4.125]  The Torrens system sets up a regime pursuant to which title is acquired by registration.

Registration is a process separate from the process of transfer: see [4.45]–​[4.80]. The process of transfer involves the parties to the transaction executing registrable documents: the process of registration involves the Registrar actually registering the documents. While for a time it was held that particular invalidities in the process of transfer could prevent title passing even after the completion of registration, it is now clear that if a document is registered, title passes to the registered transferee whatever the invalidity in the process of transfer.147 If the invalidity in the process of transfer did not amount to fraud on the part of the registered transferee and he or she was not fraudulent in any other way, the title will be indefeasible. Where the invalidity in the process of transfer involves fraud on the part of the registered transferee, or there is otherwise fraud by that party, title still vests in the transferee, but it is a defeasible title.148 A previous registered proprietor who has been defrauded is able to bring an action to recover the title. [4.130] The High Court decision in Breskvar v Wall (1971) 126 CLR 376 demonstrates

clearly the dichotomy between the processes of transfer and registration, and highlights the fact that registration is the means by which title passes. The Breskvars were the registered proprietors of land. As security for a loan provided by Petrie, they handed the duplicate certificate of title to Petrie and they also executed a transfer of the land. The name of the transferee was left out. Pursuant to the Stamp Act 1894 (Qld), a transfer executed in such a way was a void document. The intention of the parties was that the transfer should only be completed and registered if the Breskvars defaulted in repayment. Despite no such default, the name of Petrie’s grandson, Wall, was inserted into the transfer and Wall became the registered proprietor. Wall was a party to the fraud aimed at depriving the Breskvars of their land. Before the Breskvars had discovered the fraud, Wall had contracted to sell the land to Alban Pty Ltd and had executed a transfer. It was argued on behalf of the Breskvars that they had retained title because registration of a void instrument (the transfer being void because of the Stamp Act 1894) was ineffective to pass any interest or title to Wall.149 All members of the High Court rejected this submission

146

See, for example, O’Connor, “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edin LR 194; Low, “The Nature of Torrens Indefeasibility: Understanding of the Limits of Personal Equities” (2009) 33 MULR 205. 147 Breskvar v Wall (1971) 126 CLR 376; Elroa Nominees Pty Ltd v Registrar of Titles [2003] QCA 165 per Muir J at [40]. Note that registration of a discharge of an interest, for example, a discharge of mortgage, results in indefeasibility in the same way as the registration of, for example, the mortgage itself: see Schultz v Corwill Properties Pty Ltd (1969) 90 WN (Pt I) (NSW) 529; [1969] 2 NSWR 576. 148 Compare O’Connor, “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edin LR 194 at 199. 49 Reliance was placed on the decisions in Gibbs v Messer [1891] AC 248 and Clements v Ellis (1934) 51 CLR 1 217, discussed at [4.140]. 214 [4.125]

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and took the view that invalidity in the process of transfer did not have the effect of preventing the passing of title upon registration.150 The fact that Wall had been fraudulent resulted in his title being defeasible, but, while remaining on the title, Wall was the registered proprietor and could create valid interests in third parties. The dispute between the two innocent parties, the Breskvars and Alban Pty Ltd was thus a dispute between holders of unregistered interests; the Breskvars having a right to sue to recover the land and have the Register rectified as against Wall, and Alban Pty Ltd having an equitable interest under the contract of sale.151 This dispute was resolved in favour of Alban Pty Ltd.152 Breskvar v Wall is an example of registration conferring title despite a void instrument of transfer where the voidness was the result of a specific statutory provision.153 An instrument may be void in many ways. The most commonly found void instrument in the case law is that of the forged instrument.154 An instrument may also be void as a result of non est factum or lack of capacity and registration will cure the defect.155 Where a person acting pursuant to a power of attorney executes an instrument he or she is not authorised to execute, registration of the instrument confers indefeasibility of title, provided the transferee is not fraudulent.156 Similarly, an instrument such as a mortgage, void because of unauthorised alterations, gains indefeasibility through registration.157 However, registration does not cure the defect where the instrument itself is not effective because, for instance, it is purporting to create a proprietary interest not recognised by the law158 or is purporting to create a “lease” which is void because 50 1 151 152 153

The High Court followed the reasoning of the Privy Council in Frazer v Walker [1967] 1 AC 569. Barry v Heider (1914) 19 CLR 197. Discussed further at [4.155], [5.165] and [5.185]. See also Palais Parking Station Pty Ltd v Shea (1980) 24 SASR 452; Tyre Marketers (Australia) Ltd v Martin Alstergren Pty Ltd (1989) V ConvR 54-​335; City of Canada Bay Council v Bonaccorso Pty Ltd (2007) 71 NSWLR 424; Koompahtoo Local Aboriginal Land Council v KLALC Property Investment Pty Ltd [2008] NSWCA 6. But see [4.325]–​[4.345] on overriding legislation. 154 See, for example, Gibbs v Messer [1891] AC 248 and Frazer v Walker [1967] 1 AC 569. Other examples include Mayer v Coe (1968) 88 WN (Pt 1) NSW 549; Ratcliffe v Watters (1969) 89 WN (Pt 1) NSW 497; Garafano v Reliance Finance Corporation Pty Ltd (1992) NSW ConvR 55-​640; Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407; Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202. 55 PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643; Horvath v Commonwealth Bank of Australia [1999] 1 1 VR 643. 56 Spina v Conran Associates Pty Ltd (2008) NSW Conv R 56-​218. See “Can Registration of Torrens Title Dealing 1 Cure Excessive Exercise of Power of Attorney?” –​Case Note; Spina v Conran Associates Pty Ltd (2008) 82(10) ALJ 675. Note, however, on the facts of the case, the grantor of the power was held to have a personal equity, enforceable against the registered mortgagee, which arose out of the unconscionable conduct of the mortgagee’s agent (mortgagee’s solicitor). 57 Morton v Black (1986) 4 BPR 9164; Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 1 238; Upton v Baron (2000) 9 Tas R 178 (unilateral alteration of a mortgage increasing the amount of the principal sum from $100,000 to $130,000 where the extra $30,000 had been advanced: indefeasible title in mortgagee. Note that in this case the alteration took place after registration and query how registration can cure a defect arising after registration); Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235; Paradise Constructors & Co Pty Ltd v Poyser (2007) 20 VR 294. All cases held that indefeasibility of title overrode the principle in Pigot’s Case (1614) 11 Co Rep 26b. Pigot’s Case discussed in MacCallum, “A New Approach to the Unilateral Alteration of Instruments” (1980) 7 Adel L Rev 274; see also NSWLRC, The Rule in Pigot’s Case, Report 97 (2001), recommending abolition of the rule. See now s 184 of the Conveyancing Act 1919 (NSW) providing that the rule in Pigot’s Case is abolished. For other examples, see Corinne Court (Owners of) 290 Stirling Street Perth Strata Plan 12821 v Shean Pty Ltd (2000) 23 WAR 1 (registered easement indefeasible despite failure to satisfy requirements for a company to grant the easement); Rock v Todeschino [1983] Qd R 356 (registered easement indefeasible even though no grant made at all). 158 Re Ridgeway and Smith’s Contract [1930] VLR 111. [4.130]  215

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of uncertain duration.159 Further, where native title is involved, it seems that registration of an invalid “previous exclusive possession act” does not confer “an indefeasible title on the registered proprietor in relation to native title”.160 Registration does not cure the invalidity so as to make it effective to extinguish native title. Indefeasibility will also prevent a court making an order for cancellation of an entry in the title where the land has been mortgaged to a bona fide purchaser for value.161 It is clear that the concept of indefeasibility applies whatever the form of the register; indeed, in systems where there is electronic title and electronic lodgement of documents, the speed and efficiency of the system ensures the benefits of indefeasibility are achieved earlier.162 The deferred versus immediate indefeasibility debate [4.135]  The material at [4.125]–​[4.130] suggests that, in the absence of fraud, indefeasibility

of title occurs immediately upon registration. For many years the most elusive question in the debate about the nature of indefeasibility concerned the time at which indefeasibility attaches to the registered title. Does a registered proprietor gain indefeasibility of title immediately upon registration or is the indefeasibility deferred to one transaction away from the flawed transaction? The debate may be termed the “deferred” versus “immediate” indefeasibility clash. By the late 20th century immediate indefeasibility held sway in Australia163 and, although it continues to do so, there has been an increasing unease and intensified discussion on the relative merits of the application of immediate indefeasibility to all fact situations.164 For example, it is very hard to see the fairness in a bank as mortgagee gaining an indefeasible title with the defrauded true owner reliant on compensation from the assurance fund. Most people would intuitively suggest that the mortgagee’s interests can be protected by financial compensation with the true owner restored to possession of the land. An example is the clearest means of demonstrating the distinction between these concepts and of illustrating why and how it can become important. Assume A, the registered proprietor of Blackacre, leaves her certificate of title165 with her solicitor, S, for safekeeping and that S forges A’s name to a transfer of the land in favour of B. Subsequently, the transfer is registered and B becomes the registered proprietor. A and B are both innocent parties. Does B, who is now the registered proprietor, have an indefeasible title or can A successfully maintain an action to recover “her” land? On the theory of immediate indefeasibility, B’s title is indefeasible.166 On the theory of deferred indefeasibility, B’s title is not indefeasible: indefeasibility is “deferred” to one transaction away from the problem dealing.167 Thus, if B subsequently transferred 159 160

Re Lehrer and other Real Property Act [1961] SR (NSW) 365; Pemberton v Dimitrijevic [2001] NSWSC 54. Secher, “Native Title –​An Exception to Indefeasibility and a Ground for Invoking the Deferred Indefeasibility Theory” (2000) 7 JCULR 17 at 17, relying on Hayes v Northern Territory [1999] FCA 1248. 161 Hemer Pty Ltd v Benni (No 2) (2011) 111 SASR 309. 162 Christensen and Stickley, “Electronic Title in the New Millenium” (2000) 4 FJLR 209 at 217. 63 Compare Chasfild Pty Ltd v Taranto [1991] 1 VR 225. 1 164 See, for example, O’Connor, “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edin LR 194, where the author refers to recent developments in other jurisdictions; Low, “The Nature of Torrens Indefeasibility: Understanding of the Limits of Personal Equities” (2009) 33 MULR 205. 165 That is, the certified copy of the computer title. Alternatively, A may have left her duplicate certificate of title with S. 166 The “paramountcy” provisions support this result. 167 The “protection” provisions support this result. 216 [4.135]

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the land to C and C became the registered proprietor, C’s title would be indefeasible and not subject to any attack by A.168 For many years, the Australian courts following the Privy Council decision in Gibbs v Messer [1891] AC 248 adopted deferred indefeasibility as the test.169 However, since the decision of the Privy Council in 1967 in Frazer v Walker [1967] 1 AC 569170 the theory of immediate indefeasibility has been accepted by the courts.171 Nevertheless, it has been argued, that in choosing between two innocent parties –​the prior owner and the purchaser in good faith  –​deferred indefeasibility, at least in some fact situations, would more appropriately balance the aims of the system of security of title and of a simple, certain and inexpensive conveyancing process.172 Further, possible developments in human rights laws in Australia have the potential to interact with various land doctrines (including immediate indefeasibility of title) in a manner which may result in inconsistencies between the laws.173 Several overseas jurisdictions with Torrens systems of land registration do endorse deferred indefeasibility,174 but immediate indefeasibility remains the applicable principle in Australian jurisdictions. [4.140] In Gibbs v Messer [1891] AC 248 Mrs Messer, the registered proprietor of land, left her duplicate certificate of title with her solicitor, Cresswell. Cresswell forged Mrs Messer’s name to a transfer of the land in favour of “Cameron”, a non-​existent person, and “Cameron” became the registered proprietor. Cresswell then prepared a mortgage from “Cameron” to the McIntyres, other clients of his, as security for a loan of money from the McIntyres to “Cameron”. The mortgage in favour of the McIntyres was registered and Cresswell absconded with the money. Mrs  Messer discovered what had happened and she brought an action to cancel the certificate of title and to have issued to her a new certificate of title in her name, subject to no encumbrance.175 The Privy Council held in favour of Mrs Messer and ordered

68 The “protection” provisions support this result. 1 169 See, for example, Clements v Ellis (1934) 51 CLR 217 (cf the dissenting judgments of Rich J at 229 and Evatt J at 260) though note in Clements v Ellis the High Court was evenly split as to whether immediate or deferred indefeasibility should prevail. This meant that the decision of the appellate court in Victoria stood, with this in favour of deferred indefeasibility. See also Coras v Webb [1942] QSR 66; Davies v Ryan [1951] VLR 283. 170 The issue of indefeasibility in light of Frazer v Walker [1967] 1 AC 569 is discussed by Sackville, “The Torrens System –​Some Thoughts on Indefeasibility and Priorities” (1973) 47 ALJ 526. 171 See, for example, Breskvar v Wall (1971) 126 CLR 376; Vassos v State Bank of South Australia [1993] 2 VR 316. 172 See, for example, Taylor, “Scotching Frazer v Walker” (1970) 44 ALJ 248; Mason, “Indefeasibility –​Logic or Legend?” in Grinlinton (ed), Torrens in the Twentieth-​first Century (LexisNexis, Wellington, 2003), pp 3–​26; O’Connor, “Registration of Invalid Dispositions: Who Gets the Property?” in Cooke (ed), Modern Studies in Property Law (Hart, Oxford, Vol 3, 2005), Ch 3, pp 45–​64; O’Connor, Security of Property Rights and Land Title Registration Systems (PhD thesis, Monash University, 2004), Chs 5–​6; Low, “The Nature of Torrens Indefeasibility: Understanding of the Limits of Personal Equities” (2009) 33 MULR 205; Griggs, “Resolving the Debate Surrounding Indefeasibility through the Eyes of the Consumer” (2009) 17 APLJ 260; O’Connor, “Immediate Indefeasibility for Mortgagees: A Moral Hazard?” (2009) 21 Bond LR 133, where the author argues that there are sound reasons for applying different rules to registered mortgagees and registered transferees (deferred or “conditional” immediate indefeasibility for mortgagees to encourage proper identity checking). 173 The potential problems are discussed in the context of adverse possession and human rights at [3.25]–​[3.30]. 174 See O’Connor, “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edin LR 194. 175 Alternatively, if the mortgage were held to be valid, the plaintiff sought that she be at liberty to redeem the mortgage with moneys paid out of the assurance fund. [4.140]  217

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that her name be restored to the Register. The mortgage of the McIntyres was held not to constitute an encumbrance on her title.176 A number of possible reasons for the decision have been advanced. First, the decision may have stood for the proposition that a person registering any void instrument does not obtain an indefeasible title. This interpretation means that if a document is void for any reason on ordinary principles of law, it cannot be validated by registration. Forgery, lack of capacity and non est factum in the making of a document all render the document null and void. The validity of this possible ratio requires an acceptance that this vital part of the Torrens legislation cannot be read alone, but must be read in light of general principles relating to the voidness of documents. Secondly, and more narrowly, it can be argued that the decision was based upon a holding that a person registering an instrument void, specifically because of forgery, cannot obtain an indefeasible title. This possible ratio was based upon that part of s 43 of the Transfer of Land Act 1958 (Vic), the notice provision, which requires that a person must deal with the registered proprietor on the faith of the Register in order to gain an indefeasible title. Where there is a forgery, the innocent person becoming registered has not dealt with the registered proprietor, but a forger.177 Finally, it has been said that the decision in Gibbs v Messer was based on the registration of a non-​existent person as registered proprietor.178 Whatever the reason for the decision, the Privy Council clearly accepted that a bona fide purchaser from the McIntyres would have obtained an indefeasible title.179 Indefeasibility was to be “deferred” to one step away from the void document. If, for example, Cresswell had perpetrated the fraud by transferring the fee simple to himself instead of “Cameron”, the McIntyres’ mortgage would then have been indefeasible. The document of mortgage from Cresswell to the McIntyres would have been an internally valid one and they would have been bona fide purchasers.180 [4.145]  Some 15 years after Gibbs v Messer [1891] AC 248, the Privy Council in Assets Co

Ltd v Mere Roihi [1905] AC 176 had the opportunity to look again at the nature and extent of indefeasibility of title. Although it is strongly arguable that the Privy Council favoured a theory of immediate indefeasibility, various factors resulted in its actual decision not reflecting this unambiguously.181 In New Zealand the view was taken that the Assets case did support immediate indefeasibility. For example, in Boyd v Mayor of Wellington [1924] NZLR 1174 a proclamation vesting part of the plaintiff’s land in the Wellington Corporation was registered. The plaintiff argued that the proclamation was void as it was ultra vires. It was held that,

76 Thus the McIntyres lost their mortgage and had no claim against the assurance fund. 1 177 See Clements v Ellis (1934) 51 CLR 217 and the rather strained interpretations by Dixon J at 236–​237 and McTiernan J at 272–​275 of the phrase “dealing with the registered proprietor”. 178 The Privy Council in Frazer v Walker [1967] 1 AC 569 distinguished Gibbs v Messer [1891] AC 248 on this basis. Note, however, that Lord Watson in Gibbs v Messer specifically denied that the decision was based on the non-​existence of “Cameron”. 179 The “protection” provisions, such as s 44(2) of the Transfer of Land Act 1958 (Vic), would ensure this result. 180 Bona fide purchasers of the mortgage. 181 Two of the three appeals could clearly have been decided on the basis of deferred indefeasibility. See the discussion by Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 300. 218 [4.145]

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even if the proclamation were void, registration of it conferred an indefeasible title on the Corporation. The majority relied upon Assets Co Ltd v Mere Roihi.182 In Australia, the courts took a different course and initially followed a theory of deferred indefeasibility.183 Compliance with the provision requiring that there had been a dealing with the registered proprietor was insisted upon and registration of a forged document did not confer indefeasibility. The acceptance of deferred indefeasibility continued until 1967 when the Privy Council decided the case of Frazer v Walker [1967] 1 AC 569. The Privy Council firmly endorsed the concept of immediate indefeasibility. [4.150] The facts in Frazer v Walker [1967] 1 AC 569 were as follows. The Frazers were

registered proprietors of the land in question and Mrs Frazer forged her husband’s signature to a mortgage of the property in favour of Edward and Nellie Radomski. As she failed to meet the mortgage payments, the Radomskis, the registered mortgagees, exercised their power of sale and sold to Walker, who became the registered proprietor. When Walker attempted to obtain possession of the land, Mr Frazer claimed that the mortgage to the Radomskis was a nullity because of the forgery and asked for the entries on the Register of the mortgage to the Radomskis and that the interest of Walker be cancelled. It was strictly unnecessary for the Privy Council to consider the immediate and deferred indefeasibility clash. The essential dispute was between the Frazers and Walker. Walker was one transaction removed from the invalid document (the forged mortgage from the Frazers to the Radomskis) and thus, as a bona fide purchaser, would have defeated the Frazers even on the concept of deferred indefeasibility.184 The Privy Council took the opportunity, however, to express its views on the debate. The court held in favour of the theory of immediate indefeasibility. It held that the title of the Radomskis, while on foot, was an indefeasible title from the time of registration. The Radomskis had taken without fraud on their part and the fact that the mortgage document was a void document at common law did not affect the indefeasibility of their title. The Privy Council relied upon its earlier decision in Assets Co Ltd v Mere Roihi [1905] AC 176 and on the case of Boyd v Mayor of Wellington Corporation [1924] NZLR 1174. The decision in Gibbs v Messer [1891] AC 248 was not overruled but distinguished on the basis that it involved a fictitious person, though arguably this reasoning was flawed: a reading of the Privy Council decision in Gibbs v Messer could lead to a conclusion that the result would have been the same even if “Cameron” had been a real person. It is clear that the basis of the decision in Gibbs v Messer, that is, support for deferred indefeasibility, is no longer good law. Nevertheless, the fact that the decision has not been overruled and the method by which it was distinguished in Frazer v Walker leaves open the possibility that, if a set of facts arose identical to those in Gibbs v Messer, the decision in Gibbs v Messer may be applicable.185 Such a result would be inappropriate for it would be 182 183 84 1 185

The New Zealand courts followed the decision in Boyd v Mayor of Wellington [1924] NZLR 1174 and accepted immediate indefeasibility. See, for example, Pearson v Aotea District Maori Land Board [1945] NZLR 542. See, for example, Clements v Ellis (1934) 51 CLR 217, though as previously noted, the High Court was in fact evenly split on the question of whether immediate or deferred indefeasibility applied. This was the manner in which the case was decided by the New Zealand Court of Appeal: [1966] NZLR 331. See, for example, ANZ Banking Group Ltd v Barns (1994) 13 ACSR 592. A company had been dissolved when it entered into a registered mortgage. On the basis of Gibbs v Messer [1891] AC 248, it was held that the “non-​existent” company was unable to give such a mortgage. Discussed in Butt, “Fictitious Proprietors” (1994) 68 ALJ 753. See also Garafano v Reliance Finance Corp (1992) NSW ConvR 55-​640 at 59,660 and cf Auto Panel Beaters & Radiators Pty Ltd (in liq) v Barclays Services Pty Ltd [2009] NSWSC 1165. [4.150]  219

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an unnecessary and an anomalous exception to immediate indefeasibility.186 In New South Wales the legislature intervened in 2000 and the term “fraud” is now defined to include “fraud involving a fictitious person”.187 [4.155] The Privy Council in Frazer v Walker [1967] 1 AC 569 stated clearly that

indefeasibility of title was subject to the exceptions of fraud and to any rights in personam. These exceptions are discussed at [4.200]–​[4.245] and [4.350]–​[4.390]. The principle of immediate indefeasibility was rapidly accepted and applied in several state Supreme Court decisions188 and, in 1971, the High Court in Breskvar v Wall (1971) 126 CLR 376189 accepted the applicability of the principle. The Breskvar case is considered in more detail at [4.130], [5.165] and [5.185].190 [4.160]  Despite the general acceptance of the concept of immediate indefeasibility, a particular

provision unique191 to s 44(1) of the Transfer of Land Act 1958 (Vic), was the catalyst for a number of cases192 and considerable academic comment193 on the issue as to whether the provision results in deferred indefeasibility in Victoria. Although the provision has been in the Victorian Torrens statute since 1954 and was not even a wholly new provision at that time,194 it was not until the decision of Gray J in Chasfild Pty Ltd v Taranto [1991] 1 VR 225 that its meaning was considered.

186 See generally Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 308 and Brookfield, “The Land Transfer System Problems and Developments Since Frazer v Walker” [1975] NZLJ 473, discussed in Whalan, where a possible extension to the fictitious person category is discussed. See also Wicklow Enterprises Pty Ltd v Doysal Pty Ltd (1986) 45 SASR 247, where the plaintiff sought to rely on Gibbs v Messer [1891] AC 248. The court held that the intention to defraud is an essential element of forgery and, as there was no such intention on the facts, the principle of Gibbs v Messer [1891] AC 248 (whatever it might be) was inapplicable. For a discussion of this case, see Moore, “Interpretation of the Real Property Act” (1988) 11 Adel L Rev 405. 187 The effect of this provision (s 3 of the Real Property Act 1900 (NSW), definition of fraud), together with s 118(1)(d), appears to be a statutory overruling of the decision in Gibbs v Messer [1891] AC 248. 188 See Mayer v Coe (1968) 88 WN (Pt 1) NSW 549; Ratcliffe v Watters (1969) 89 WN (Pt 1) NSW 497; Schultz v Corwill Properties Pty Ltd (1969) WN (Pt I) NSW 529. 189 See also Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407. For a recent example, see Conlan v Registrar of Titles (2001) 24 WAR 299. 190 See also Tyre Marketers (Australia) Ltd v Martin Alstergren Pty Ltd (1989) V ConvR 54-​335. 191 Section 47 of the Land Titles Act 1980 (Tas) provides that if any person fraudulently procures any certificate, title or recording in the Register, the certificate of title or recording so procured or made by fraud is void as between all parties or privies to the fraud. The provision is to similar effect as s 44(1) of the Transfer of Land Act 1958 (Vic), but the provision makes it clearer that its ambit is confined to the situation as between the defrauded and fraudulent parties. 192 Chasfild Pty Ltd v Taranto [1991] 1 VR 225; Vassos v State Bank of South Australia [1993] 2 VR 316 (Hayne J); Eade v Vogiazopoulos (No 2) (1993) V ConvR 54-​458; [1999] 3 VR 889 (Smith J); Coomber v Curry (1993) V ConvR 54-​464 (Hayne J); Beatty v ANZ Banking Group Ltd [1995] 2 VR 292 (Mandie J). See also Rasmussen v Rasmussen [1995] 1 VR 613 (Coldrey J); National Australia Bank Ltd v Maher [1995] 1 VR 318; Sixty-​Fourth Throne Pty Ltd v Macquarie Bank (1996) 130 FLR 411 (reversed on appeal) where s 44(1) of the Transfer of Land Act 1958 (Vic) was discussed. 193 See, for example, Schultz, “Judicial Acceptance of Immediate Indefeasibility in Victoria” (1993) 19 Mon Uni LR 326; Tooher, “National Australia Bank Ltd v Maher and Section 44(1) of the Transfer of Land Act 1958 (Vic)” (1996) 22 Mon Uni LR 174. 194 The history of the provision is discussed in Bradbrook, MacCallum and Moore, Australian Real Property Law (3rd ed, Law Book Co, Sydney, 2002) at [4.32], fn 151. 220 [4.155]

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Section 44(1) provides: “Any folio of the Register or amendment to the Register procured or made by fraud shall be void as against any person defrauded or sought to be defrauded thereby and no party or privy to the fraud shall take any benefit therefrom”. In the Chasfild case Gray J took the view (at 235) that the term “fraud” in s 44(1) was to be accorded a wider meaning than “fraud” as used in s 42 and that it was not limited to fraud in the person seeking to rely on a registered interest.195 While it is the case that s 44(1) is capable of the interpretation given it in the Chasfild case, it is submitted that it was not intended to have the far-​reaching effect suggested. Its terms lend support to the view that s 44(1) is directed simply to the position as between the defrauded party and the fraudulent party. The concluding words of s 44(1) “and no party or privy to the fraud shall take any benefit therefrom” reiterate this.196 Most subsequent decisions of the Victorian Supreme Court did not follow the interpretation of Gray J.197 Despite a 1995 Victorian Full Court decision198 which suggested some support for Chasfild, in 1997 the Victorian Court of Appeal in Pyramid Building Society (in liq) v Scorpion Hotels Ltd [1998] 1 VR 188199 made the position clear by refusing to follow Chasfild and strongly endorsing the concept of immediate indefeasibility for Victoria. As noted, although immediate indefeasibility remains the accepted interpretation, there has been increasing disquiet about its operation.200 Various cases in overseas jurisdictions have led to vociferous debate about the necessity for its acceptance as the basis for a properly functioning Torrens system.201 The popular argument turns on the fairness of preferring the purchaser over the original landowner when both have been duped by a fraudulent third party. This argument was recently summarised by Griggs: Why should the homeowner with an emotional connection and a financial investment be forced to accept monetary compensation when the new purchaser’s only commitment so far has been financial?202

195 The details of his reasons for judgment and the subsequent cases on the point are discussed in Bradbrook, MacCallum and Moore, Australian Real Property Law (3rd ed, Law Book Co, Sydney, 2002) at [4.32]. 196 It is important to note that, even if s 44(1) of the Transfer of Land Act 1958 (Vic) were interpreted so as to give rise to deferred indefeasibility, as was the case in Chasfild Pty Ltd v Taranto [1991] 1 VR 225, indefeasibility of title can only be affected within the parameters of s 44(1). Thus, for example, if a dealing document was void as a result of circumstances not arising out of fraud, the registration would confer indefeasibility of title on the transferee. 197 See, for example, Vassos v State Bank of South Australia [1993] 2 VR 316; Eade v Vogiazopoulos (No 2) (1993) V ConvR 54-​458; [1999] 3 VR 889; Coomber v Curry (1993) V ConvR 54-​464; Beatty v ANZ Banking Group [1995] 2 VR 292; Rasmussen v Rasmussen [1995] 1 VR 613; Sixty-​Fourth Throne Pty Ltd v Macquarie Bank (1996) 130 FLR 411, on appeal Macquarie Bank v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133. 198 National Australia Bank Ltd v Maher [1995] 1 VR 318, discussed in Tooher, “National Australia Bank v Maher and Section 44(1) of the Transfer of Land Act 1958 (Vic)” (1996) 22 Mon Uni LR 174. 199 See also Koorootang Nominees Pty Ltd v ANZ Banking Group Ltd [1998] 3 VR 16. 200 See the references in n 164. Compare the recent comments of the New South Wales Supreme Court in Perpetual Ltd v Barghachoun [2010] NSWSC 108 at [25] where the court reiterated the central importance of immediate indefeasibility to the operation of a certain, secure conveyancing system in Australia. 201 See O’Connor, “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edin LR 194 at 211–​213. 202 Griggs, “Resolving the Debate Surrounding Indefeasibility through the Eyes of the Consumer” (2009) 17 APLJ 260 at 277. Note, however, Griggs ultimately concludes that immediate indefeasibility should remain the accepted interpretation. Individuals should be educated to protect their identity and the costs associated with this are less than those associated with the purchaser investigating the vendor’s identity. [4.160]  221

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The insistence upon immediate indefeasibility has led to other strains on the system: many cases concern attempts to extend the definition of fraud and in personam rights in an effort to avoid the strict ramifications of immediate indefeasibility.203 Despite the current acceptance of immediate indefeasibility, there are indications that its unreserved application may be reduced in particular areas. In Queensland, for instance, amendments to provisions relating to identification requirements, while not directly altering the concept of immediate indefeasibility, result in the umbrella of indefeasibility not extending to mortgagees who fail to satisfy the statutory obligation to check the identity of the mortgagor.204 Similarly, in New South Wales, a mortgagee must take reasonable steps to ensure that the person who has executed a mortgage over the land is indeed the same person as the registered proprietor. A  failure to do this could lead to the Registrar-​General cancelling the entry.205 All jurisdictions are progressively imposing further and additional requirements around verification of identity as part of the introduction and development of electronic conveyancing protocols.206 These protocols require subscribers to electronic conveyancing to undertake the necessary steps to verify the identity of the people with whom they deal; be they borrower’s vis-​à-​vis a mortgagee, or a client of a conveyancing agent or solicitor. These mandate a face-​to-​face interview, and at the highest standard required, the person must produce an original passport and drivers licence. If these are not an option, other original documents can be provided with the required that an identifier declaration be completed by someone who has known the person, is not a party to the conveyancing transaction, and is not a relative.207 While these do not infringe or weaken the adoption of immediate indefeasibility as the guiding principle, they do make it harder to attain, particularly for mortgagees, and will go some way to addressing the belief that mortgagees and subscribers, who have the capacity to check identity, should bear a stronger burden in ensuring that levels of land fraud are minimised. The New Zealand Law Commission has also suggested another approach, with this allowing immediate indefeasibility to be overridden where manifest injustice can be shown.208 Indefeasibility and the protection of individual terms in registered documents [4.165]  A further issue relating to indefeasibility of title concerns the extent of the protection

accorded to individual terms in registered documents. Does indefeasibility attach to all covenants in a registered document? In Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326209 the High Court (at 342 per Gibbs J) held that the registration of an

203 O’Connor, “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edin LR 194 at 204ff. 204 See [4.225] and Weir, “Indefeasibility: Queensland Style” (2007) 15 APLJ 79. Note the similar New South Wales provisions: Real Property Act 1900 (NSW), s 56C. 205 See Real Property Act 1900 (NSW), s 56C. 206 See Australian Registrars National Electronic Conveyancing Council (www.arnecc.gov.au) where the latest versions of the model operating rules and model participation rules for the electronic conveyancing framework can be seen. For example under the model participation rules, see clause 6.5 where the verification of identity standard is set out. For a discussion of the complexities surrounding verification of identity requirements, see Harding, “Verification of Identity: As Simple as It Seems?” (2017) 6 PLR 195. 207 See Sch 8 Model Participation Rules, available at www.arnecc.gov.au. 208 Land Transfer Act 2017 (NZ). 209 Discussed at [14.430]. 222 [4.165]

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instrument does not necessarily “give priority or the quality of indefeasibility to every right which the instrument creates”.210 Only those covenants which are effectively part of the estate or interest in the land or are “intimately connected with” the interest,211 attract the quality of indefeasibility. Personal covenants that do not affect the estate or interest in the land are not “indefeasible” simply because they are contained within a registered document.212 [4.170] Although the Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR

326 principle appears uncomplicated, a number of issues pertaining to it have given rise to difficulties in relation to registered leases and registered mortgages. It has been generally accepted that a right of renewal in a registered lease is a covenant which delineates the estate of the lessee and thus attracts the quality of indefeasibility.213 In the Mercantile Credits case, Barwick CJ also held that the validity of a covenant to renew depended on its enforceability under the general law; only if it was specifically enforceable would registration of the lease confer indefeasibility on the option to renew.214 In Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 the High Court considered the effect of an option to renew contained in a lease for the purpose of carrying out hairdressing work. Pursuant to statute, the lease was illegal as appropriate approvals had not been obtained. The majority of the High Court held that the option did not gain the protection of indefeasibility by registration of the lease. Barwick CJ (with whom McTiernan and Stephen JJ agreed) held that the option was incapable of specific performance because of the illegality and the fact that the option was contained in a registered lease did not alter that result.215 Where the option to renew attracts indefeasibility, it seems the option is enforceable against a registered proprietor who obtained registration after the lease was registered, notwithstanding that the original lease had expired and the lease created by the exercise of the option to renew had not been registered. In Re Eastdoro Pty Ltd (No 2) [1990] 1 Qd R 424 the lessee held under a registered lease for three years with options for renewal of two further leases of two years each. The issue arose as to whether the purchasers were bound by the second option to renew. At first instance, it was held that the purchasers were not bound by the second option as the lessee must still be holding under the registered lease containing the option to 210

Compare protection given to covenants in an unregistered lease: see [14.440]ff. See Bradbrook, “The Scope of Protection for Leases under the Victorian Transfer of Land Act” (1988) 16 MULR 837. 211 Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 424 at 434. 212 Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 424 at 434. 213 Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326; Medical Benefits Fund of Australia Ltd v Fisher [1984] 1 Qd R 606; Re Eastdoro Pty Ltd (No 2) [1990] 1 Qd R 424. Compare Amber (Eastern Suburbs) Pty Ltd v Herman (1986) 5 BPR 97,355. For discussion of the problems surrounding leases and rights to renew and purchase, see Carruthers and Skead, “Rights to Renew and Purchase in Registered Leases Part 1” (2016) 25 APLJ 1; “Part II” (2016) 25 APLJ 115. 214 This reasoning of Barwick CJ has been queried on the basis that the indefeasibility provisions are intended only to protect the title or interest registered (eg, the lease) and not additional equitable interests arising under the document: see Rossiter, “Options to Acquire Interests in Land –​Freehold and Leasehold” (1982) 56 ALJ 576 at 626; Duncan, Commercial Leases in Australia (5th ed, Law Book Co, Sydney, 2008), pp 347–​ 348. Duncan concludes that the result can probably be explained on the basis that the right of renewal is a particular type of covenant which can be seen as “part of the estate or interest specified in the lease” and thus should gain indefeasibility (if the right of renewal is specifically enforceable). 15 Apart from the matters raised in n 215, it is open to question whether incapability of specific performance 2 should necessarily deny validity procured by registration. Gibbs and Menzies JJ decided the case on the basis of overriding statutes –​the invalidating statute, being later in time, overrode the Real Property Act 1900 (NSW) and this seems a preferable conclusion. [4.170]  223

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renew in order for indefeasibility to attach to the option. The first option was exercised but no new lease was executed and at the time, the respondent purchased the land, the lessee held only under an equitable lease. On appeal, the Full Court reversed the decision and held in favour of the tenant on the basis that as the option was contained in the original registered lease, it gained protection. Protection is thus afforded even where the original registered lease containing the option has expired.216 In contrast, an option to purchase contained in a registered lease may be viewed as a separate and independent covenant and not one concerning the tenancy or its terms. Thus, it would not attract the quality of indefeasibility by virtue simply of being included in a registered lease.217 In New South Wales, South Australia and the Australian Capital Territory, however, it is provided specifically that an option to purchase may be included in a registered lease.218 Where it is so included and the option to purchase is exercised, the land must be transferred to the lessee/​purchaser. In this way, the option to purchase acquires indefeasibility in the same way as the lease itself.219 The operation of the principle in Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 in the context of a registered mortgage has been considered directly and indirectly in a number of cases recently and has given rise to a significant amount of academic commentary.220 These cases arise most often where the mortgagor’s signature to the mortgage has been forged. Several distinct issues have arisen in the cases. First, does the personal covenant to pay in a mortgage attract indefeasibility of title on registration? It is clear that the mortgagee’s charge over the land attracts indefeasibility and a number of cases have held that it extends also to the personal covenant to pay. It has been stated that the personal covenant in a mortgage to pay a specific sum owing to the mortgagee is a covenant which delineates and describes the nature and extent of the interest of the mortgagee and thus, pursuant to the principle in the Mercantile Credits case, attracts indefeasibility of title on registration.221 The morgagee’s rights are “rendered secure by registration, being necessary

216 See (1990) 4 APLB 58. Re Eastdoro Pty Ltd (No 2) [1990] 1 Qd R 424 was applied in Tenstat Pty Ltd v Permanent Trustee Aust Ltd (1992) 28 NSWLR 625 and Re Malsons Pty Ltd [1991] 2 Qd R 61. See also Tessari v Bais Pty Ltd (1993) 60 SASR 59; [14.430]; cf Amber (Eastern Suburbs) Pty Ltd v Herman (1986) 5 BPR 97,355. See Duncan, Commercial Leases in Australia (5th ed, Law Book Co, Sydney, 2008), p 349, where the correctness of the Eastdoro decision is questioned on the basis that it may require extensive searching of expired leases to ensure the property is free of enforceable options. 217 Compare Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 114–​119. 218 Real Property Act 1900 (NSW), s 53(3); Real Property Act 1886 (SA), s 117; Land Titles Act 1925 (ACT), s 83. 219 See, for example, Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 at 341; Thirsty Mack’s Pty Ltd v Hasbeen Pty Ltd [2008] FCA 32. 220 See, for example, Vaughan, “What Do Forged ‘All Moneys’ Mortgages Secure?” (2008) 82 ALJ 671; Stoljar, “Mortgages, Indefeasibility and Personal Covenants to Pay” (2008) 82 ALJ 23; Grattan, “Recent Developments Regarding Forged Mortgages: The Interrelationship Between Indefeasibility and the Personal Covenant to Pay” (2009) 21 Bond LR 43; Edgeworth, “The Rights and Liabilities of Assignees of Leases, Reversions and Mortgages under the Real Property Acts: Recent Developments” (2009) 21 Bond LR 26; Note, “How Extensive is an ‘All Moneys’ Clause under a Mortgage?” (2009) 83 ALJ 11; Schroeder and Lewis, “Indefeasibility of Title and Invalid All Moneys Mortgages: Determining Whether Invalid Personal Covenants to Pay Are Protected under the Indefeasibility Umbrella” (2010) 18 APLJ 185; Harding, “Property, Contract and the Forged Registered Mortgage” (2010) 24(1) NZULR 21. 221 See, for example, PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643; Eade v Vogiazopolous (No 2) (1994) V ConvR 54-​497; Karakominakis v Big Country Developments Ltd (2000) 10 BPR 18,235 at [55]; Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281 (NSWSC) (the personal covenant to pay in the mortgage “maps out or may map out the extent of the quantum of the interest”); Pyramid Building Society v Scorpion 224 [4.170]

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to assure to the mortgagee his interest in the land since without the debt his security would be nugatory”.222 However, in Grgic v Australian & New Zealand Banking Group Ltd (1994) 33 NSWLR 202, where the value of the mortgaged land was insufficient to cover the mortgagor’s liability under a forged but indefeasible mortgage, the court held that the mortgagor was not liable under the personal covenant. A number of other cases have now also adopted the view that registration of a forged mortgage does not validate the personal covenant to pay.223 It has been convincingly argued that the latter view is preferable: the Torrens legislation is intended to protect interests in land, not personal rights.224 Rights in registered documents should only be protected insofar as they constitute an incident of the registered interest holder’s property interest. The position remains uncertain. If the personal covenant to pay does attract indefeasibility, an issue arises concerning the situation where the debt owing exceeds the value of the land. Does the indefeasibility of the personal covenant to pay in the mortgage result in the mortgagee being able to claim the shortfall from the mortgagor personally in circumstances where the debt may not otherwise be recoverable (eg, a void mortgage)? Although the implication in PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 was that the mortgagee could recover the whole amount in these circumstances,225 the New Zealand Court of Appeal in Duncan v McDonald [1997] 3 NZLR 669 held the mortgagee’s covenant to pay was valid, but only to the extent necessary to enable enforcement of the charge. The covenants “are not enforceable against the mortgagor separately … by means of a proceeding for the recovery of debt”. That is, any shortfall from the amount gained from the sale of the land is not recoverable by separate action.226

222

223

224

225 226

Hotels Pty Ltd [1998] 1 VR 188 at 196 (note that although Hayne JA took this view in dicta, the matter does not seem to have been the subject of detailed argument); Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275; Small v Gray [2004] NSWSC 97 at [75]–​[76], [80]; Atlantic 3-​Financial (Aust) Pty Ltd v Deskhurst Pty Ltd [2005] 1 Qd R 1 at 9 [22]; Hilton v Gray (2008) Q Conv R 54-​686 at [49]; Hypec Electronics v Registrar-​General [2008] NSWSC 18 at [37]–​[39], [42]. Seemingly, any covenant defining the amounts comprising the principal sum would similarly gain indefeasibility of title: see Eade v Vogiazopoulos (No 2) (1994) V ConvR 54-​497. Karacominakis v Big Country Developments Pty Ltd (2000) 10 BPR 18,235 (NSWCA) at [55], relying on PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 and Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 424. See also Eade v Vogiazopoulos (No 2) (1994) V ConvR 54-​497, where legal costs were held to form part of the principal sum to be repaid and therefore attracted indefeasibility. Grgic v Australian & New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 224; Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675 at [30]; Provident Capital Ltd v Printy (2008) 13 BPR 25,199; Yazgi v Permanent Custodians Ltd (2007) NSW Conv R 56-​195 at [13]; Perpetual Trustees Victoria Ltd v Cipri [2008] NSWSC 1128 at [65]; Permanent Custodians Ltd v El Ali [2008] NSWSC 1264 at [59]; Australian Regional Credit v Mula [2009] NSWSC 325 at [26]. Further, by implication the High Court decisions in Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81 and Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 support this view: see Grattan, “Recent Developments Regarding Forged Mortgages: The Interrelationship Between Indefeasibility and the Personal Covenant to Pay” (2009) 21 Bond LR 43 at 52–​54. See Stoljar, “Mortgagors, Indefeasibility and Personal Covenants to Pay” (2008) 82 ALJ 28; Grattan, “Recent Developments Regarding Forged Mortgages: The Interrelationship Between Indefeasibility and the Personal Covenant to Pay” (2009) 21 Bond LR 43. The High Court decision in Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81, although concerning a transfer of mortgage and a collateral loan agreement, lends some support to this view. The mortgage and the collateral (personal) loan agreement were considered as quite separate documents giving rise to separate rights and obligations. See also Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188 at 196, where a similar implication, without detailed discussion, was made. Duncan v McDonald [1997] 3 NZLR 669. See Grattan, “Recent Developments Regarding Forged Mortgages: The Interrelationship Between Indefeasibility and the Personal Covenant to Pay” (2009) [4.170]  225

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Another area of difficulty arises in relation to the form of mortgage used. Where a “traditional” form of mortgage is used, with a statement of principal sum lent and acknowledgment by the mortgagor that the money has been lent, an indefeasible charge over the land is created upon registration, even if the mortgagor’s signature was forged.227 Where, however, the mortgage is an “all moneys mortgage”, with the registered mortgage itself not acknowledging the loan or a specific sum owing to the mortgagee and the loan agreement is contained in a document or documents extrinsic to the mortgage, difficulties can arise. It seems the fact that the debt is not created by the mortgage itself does not affect the indefeasibility of the registered mortgagee’s title.228 However, where the mortgage and the loan agreement are void (eg, as a result of the forgery of the mortgagor’s signature in both documents), the “indefeasibility” attaching to the mortgage is worthless.229 The extrinsic document, the loan agreement, is void because of the forgery and there is no registration of it to “cure” the defect. Unless the mortgagee can prove a debt owing from mortgagor to mortgagee in some other way, the covenant to pay to the registered mortgagee secures nothing.230 In Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281 no debt could be proved. There was no acknowledgment in the mortgage of the money being advanced to the mortgagor (a plain English mortgage document) and the separate loan document was void because the debtor’s name was forged and a fraudster, not the debtor, received the loan moneys. No money was owed to the mortgagee. As Young CJ explained, the old-​style mortgage, with a statement of principal sum lent and acknowledgment that the money had been lent, provided prima facie evidence of the debt and the security was itself therefore sufficient evidence of payment. In a facility mortgage requiring later drawdowns, the position is different.231 It may be possible for the loan agreement to be incorporated into the mortgage in such a way that the

21 Bond LR 43 at 49, who argues that the Duncan v McDonald formulation does not have to be used in order to limit the amount to be repaid to the value of the security. “This is because a mortgage as a charge on land can exist quite comfortably without the presence of any covenant to pay by the mortgagor. Under such a mortgage, the mortgagor has no personal liability to make up any shortfall if the mortgaged assets prove inadequate to discharge the debt: the mortgagee has ‘no recourse’ to the mortgagor”. Further, query the situation where the obligation to pay arises under a collateral obligation of guarantee and the guarantee is void. See Davies v Laughton (1996) 3 NZ ConvC 192,356 referred to in n 232. See Toomey, “Certainty of the Title in the Torrens System: Shifting Sands” (2000) 4 FJLR 235 at 242 and 246. 227 Small v Tomasetti (2001) 12 BPR 22,253; Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281; Provident Capital Ltd v Printy (2008) 13 BPR 25,199 at [47]; Royalene Pty Ltd v Registrar of Titles (2008) Q Conv R 54-​689; J Wright Enterprises Pty Ltd (in liq) v Port Ballidu Pty Ltd (2010) QSC 213. Note, however, that the mortgagor can adduce evidence to show that no money was in fact lent or that it has been repaid: see Atlantic 3-​Financial (Aust) Pty Ltd v Deskhurst Pty Ltd [2005] 1 Qd R 1 at [22]–​[24] and Perpetual Trustees Victoria Ltd v Tsai (2004) 12 BPR 22,281. 228 PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643; Julong Pty Ltd v Fenn (2003) Q Conv R54-​586. 229 Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675; Provident Capital v Printy (2008) 13 BPR 25,199; Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343; MDN Mortgages Pty Ltd v Caradonna [2010] NSWSC 1298 at [208]. 230 It may be possible to show a debt from mortgagor to mortgagee, even in the absence of an advance of money from the mortgagee, if the moneys are used to discharge an existing mortgage binding on the mortgagor: Perpetual Trustees Australia v Richards [2008] NSWSC 658. The mortgagee “is subrogated to the rights of the outgoing mortgagee, and the incoming (forged) mortgage secures the amount owing by the mortgagor to the incoming mortgagee by virtue of the subrogation”. See Grattan, “Forged but Indefeasible Mortgages: Remedial Options” in Bennett, Edgeworth and Sherry (ed), Property and Security: Selected Essays (Thomson Reuters, Sydney, 2010), pp 171–​172. 31 See also Davies v Laughton (1996) 3 NZ ConvC 192,356; (1997) 3 NZLR 705 at 192,362 (NZ ConvC), 2 where the obligation to pay arose under a collateral obligation of a void guarantee and Blanchard J in the 226 [4.170]

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covenant to pay can be found in the mortgage itself.232 This is a question of construction of the document, but the cases suggest such valid incorporation may be difficult to achieve.233 Another fact situation which has given rise to considerable uncertainty is where there are two mortgagors and co-​owners (often wife and husband), one of whom signs her or his own signature and forges the signature of the other mortgagor usually to both loan documentation and the mortgage itself. Whether the mortgagee gains indefeasibility depends on the construction of the relevant documents;234 the question to be answered is whether the mortgage effectively secures the specified sum of money. If the mortgage is over the whole property, and the mortgagor’s liability is joint and several, the charge may operate against the whole.235 However, the wording of the documentation in individual cases is vital to the result. In Perpetual Trustees Victoria Ltd v English (2010) 14 BPR 27,339 the loan offer provided it could only be accepted if all persons to whom the offer was made signed the agreement. The forgery of the wife’s signature in the loan agreement resulted in the New South Wales Court of Appeal holding that there was no money payable under the “secured agreement” and thus no “secured moneys” payable under the mortgage. The mortgage, although indefeasible, secured nothing.236 In Van Den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 the documentation was similar to that in English, but contained subtle differences. “Secured money” in the mortgage was defined to mean all monies payable under a “secured agreement” which in turn was defined broadly to include “any … agreement between me or us, or any one of us, and You”. It was held that an agreement could include an implied agreement between

High Court suggested that in such a case there may be no underlying obligation in respect of which the security can operate. 232 This has been considered in a number of cases: see Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675; Provident Capital Pty Ltd v Printy (2008) 13 BPR 25,199 (NSWCA); Perpetual Trustees Victoria Ltd v English (2010) 14 BPR 27,339 (NSWCA); J Wright Enterprises Pty Ltd (in liq) v Port Ballidu Pty Ltd [2010] QSC 213; MDN Mortgages Pty Ltd v Caradonna [2010] NSWSC 1298. In Solak v Bank of Western Australia Ltd [2009] VSC 82 Pagone J held that the registered mortgage did incorporate a memorandum filed at the Land Titles Office: see Schroeder and Lewis, “Indefeasibility of Title and Invalid All Moneys Mortgages: Determining Whether Invalid Personal Covenants to Pay Are Protected under the Indefeasibility Umbrella” (2010) 18 APLJ 185 at 195–​197, where the reasoning in the case is criticised. Perpetual Trustees Victoria Ltd v Xiao Hui Ying [2015] VSC 21 also considered the decision of Solak as “plainly wrong” [99]. 33 See n 230. 2 34 Perpetual Trustees Victoria Ltd v Cipri [2008] NSWSC 1128; Yazgi v Permanent Custodians Ltd (2007) NSW 2 Conv R 56-​195. See Grattan, “Recent Developments Regarding Forged Mortgages: The Interrelationship Between Indefeasibility and the Personal Covenant to Pay” (2009) 21 Bond LR 43 at 62–​64. 35 Perpetual Trustees Victoria Ltd v Cipri [2008] NSWSC 1128, discussed in Grattan, “Recent Developments 2 Regarding Forged Mortgages: The Interrelationship Between Indefeasibility and the Personal Covenant to Pay” (2009) 21 Bond LR 43 at 62–​63 and Grattan “Forged but Indefeasible Mortgages: Remedial Options” in Bennett Moses, Edgeworth and Sherry (eds), Property and Security: Selected Essays (Thomson Reuters, Sydney, 2010), pp 171–​172. 236 Note, however, the court held that the absence of a concluded agreement did not mean the mortgagee was without remedies. Sackville AJA (Allsop P and Campbell JA agreeing) held the mortgage to which Ms English’s signature had been forged could take effect as an equitable mortgage to Perpetual (the mortgagee) of Mr English’s interest, relying on Sansom v Westpac Banking Corporation (1996) 7 BPR 14,615 at 14,634 and National Commercial Banking Corporation of Australia Ltd v Hedley (1984) 3 BPR 9477 at 9483. Although the issue was not addressed, it seems the implied agreement could not have been an agreement within the definition in the mortgage, as such “implied agreement was not acknowledged in writing to be secured by the Mortgage”: per Hodgson JA in Van den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 at [8]‌, commenting on the English case. [4.170]  227

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the husband and Perpetual. On the facts there was “an implied agreement giving effect to the intentions manifested by the conduct of Perpetual and the husband in signing the Loan Agreement document … and advancing and accepting money conformably with the terms of the agreement”.237 Overview [4.175]  In general, the acceptance by the courts of the theory of immediate indefeasibility

was welcomed.238 It involved a straightforward reading of the statutes, unimpeded as far as possible by general law principles. The central core of the Torrens system, title by registration, seemed to have been firmly established. Even if recent suggestions for adoption of deferred indefeasibility in some circumstances were taken up by the legislatures or courts,239 the system would remain basically one of title by registration. Indefeasibility of title is not, however, as “indefeasible” as it may appear to be from decisions such as Breskvar v Wall (1971) 126 CLR 376. The threat to indefeasibility of title may come in the future from all the possible exceptions to it. Some of the exceptions are extremely open-​ ended and, in some instances, the courts have not been averse to giving a wide, rather than a strict, interpretation to them.240 Further, there are a number of situations where a registered proprietor cannot use the concept of indefeasibility to avoid obligations imposed on the land. For instance, the registered proprietor of land subject to a registered easement, which does not set out all rights attached to the easement, cannot use the principle of indefeasibility to avoid those rights.241 Neither can a registered proprietor deny the obligations flowing from “natural rights”, even though the rights are not recorded on the Register.242

EXCEPTIONS TO INDEFEASIBILITY Overview [4.180]  The Torrens statutes specifically set out a number of exceptions to the indefeasibility

of title, which are detailed at [4.190]ff. Apart from these express exceptions, a number of other exceptions to the indefeasibility of title exist and these are considered at [4.315]ff. [4.185] The express exceptions vary markedly from jurisdiction to jurisdiction. In many

instances, it is unlikely that clear reasons exist for these variations. In order to ensure the smooth passage of the Torrens statutes, a number of provisions were inserted in response to objections from various groups and it seems that this may account for the number of exceptions and for the variations which exist. Further, in some jurisdictions changing economic and social conditions have led to the introduction of new exceptions. For example, in Queensland

237

Van Den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171 at [5]‌. Compare the dissenting judgment of Basten JA at [61]–​[65]. 238 See, for example, Sackville, “The Torrens System –​Some Thoughts on Indefeasibility and Priorities” (1973) 47 ALJ 526 at 528–​532; cf Taylor, “Scotching Frazer v Walker” (1970) 44 ALJ 248. 39 See [4.135]. 2 240 See, for example, the judgment of Mason CJ and Dawson J in Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 610. 41 Hemmes Hermitage Pty Ltd v Abdurahman (1991) 22 NSWLR 343. 2 42 Jennings v Sylvania Waters Pty Ltd [1972] 2 NSWLR 4. 2

228 [4.175]

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the interest of a Greenhouse Gas authority holder under the Greenhouse Gas Storage Act 2009 (Qld) under an access agreement is an exception to the indefeasibility of the registered proprietor’s title, provided it was made before the registered proprietor became the registered proprietor and binds the registered proprietor under the Greenhouse Gas Storage Act 2009.243 The non-​uniform and ad hoc treatment of the area of exceptions to indefeasibility has played a significant role in the interpretation of the Torrens system by the courts. In a number of instances the narrowness of an express exception or the lack of an express exception that should arguably have been included, or at least expressly addressed, has resulted in the courts interpreting an alternative exception in a strained manner. The courts have sometimes adopted the role of filling gaps or inadequacies in the legislation. Inevitably, the balances adopted have varied from time to time and from jurisdiction to jurisdiction and have led to further uncertainty and lack of uniformity. A number of examples may be cited. In South Australia the exception relating to tenancies is very narrow and tenants who do not fall within the express exception have attempted to use another express exception, that of fraud, in order to gain protection for their interests. Thus, the courts have been required to interpret the fraud exception in order to determine if an inadequacy in the express exception can be corrected. In all jurisdictions except South Australia there is no express exception to indefeasibility where the dealing document is forged. Neither is there an express provision stating that a forged document, once registered, is effective to pass title. If the transferee were fraudulent, the fraud exception applies to make the transferee’s registered title defeasible. If, however, the transferee was not involved in the forgery, a question arises as to the indefeasibility of her or his title. Effectively, the courts have been required to determine whether to fill a possible gap and create a further exception to indefeasibility of title. The attitude of the courts on this issue has varied over the years and is the basis of the deferred versus immediate indefeasibility clash. This debate is discussed at [4.135]–​[4.160]. The changing perception of the courts on this issue has led to periods of considerable uncertainty. A further area of uncertainty exists with respect to volunteers. Most of the Torrens statutes do not contain a specific provision setting out the position of volunteers. Is a volunteer who becomes a registered proprietor intended to obtain an indefeasible title? Again, the courts have been required to consider the issue and fill the gap. The law on this point differs from jurisdiction to jurisdiction.244

Express exceptions Overview [4.190]  In all jurisdictions the title of the registered proprietor of an estate or interest is subject

to all estates, interests or encumbrances notified on the Register.245 Any person intending to take an interest in Torrens land can check the Register to determine the state of title. It seems reasonable that such a person, on obtaining a registered interest, is subject to the interests and estates already noted on the Register. 243 Land Title Act 1994 (Qld), s 185(1)(i). 244 The conflicting law in this area is summarised by Owen J in Conlan v Registrar of Titles (2001) 24 WAR 299 at [177]–​[200]. His honour’s preference was for indefeasibility to extend to volunteers. 245 Real Property Act 1900 (NSW), s 42(1); Transfer of Land Act 1958 (Vic), s 42(1); Land Title Act 1994 (Qld), s 184(1); Real Property Act 1886 (SA), s 69; Transfer of Land Act 1893 (WA), s 68(1)(2); Land Titles Act 1980 (Tas), s 40; Land Titles Act 1925 (ACT), s 58(1); Land Title Act (NT), s 188(1). [4.190]  229

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[4.195]  The decision in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971)

124 CLR 73 demonstrates that even this seemingly simple area of exception is not free from difficulty. A registered proprietor of land granted to a neighbouring registered proprietor an extension of an existing right of way over his land. This was, in effect, a transfer of part of his land comprising a horizontal stratum of airspace (“together with all buildings on the road and the right to pull down the buildings and rebuild others at a height of not less than 12’ from the ground over the road”). The certificate of title relating to the grantor’s land had a notification that there was an encumbrance over the land referring to it as “right of way created by and more fully set out in Transfer No 7922”. A dispute arose between the successors-​in-​title to the original registered proprietors, Bursill being the successor of the grantor and Berger being the successor of the grantee. The question was whether the title of Bursill was subject to Berger’s claimed right to a fee simple interest in the horizontal stratum of airspace. In turn, the answer to this dispute depended upon whether this interest had been “notified” on the Register. A person who becomes the registered proprietor takes subject to any interests noted on the Register. Thus, if the interest had been noted on the Register, Bursill would hold subject to it. The High Court held that the transfer of the airspace had been “noted” on the Register. Such a finding is predicated on an acceptance that, in order to protect itself, Bursill should have looked further than the folio relating to the land it was purchasing. Bursill should have searched the relevant document, Transfer No 7922, to determine the nature and extent of the “right of way”. As Windeyer J remarked (at 93): [A]‌prudent conveyancer acting for a purchaser of the land that is now Bursill’s would have ascertained what it was that Transfer 7922 … effected … [S]urely no prudent person, seeing the reference to a right of way, would neglect to ascertain what exactly was the nature of the right of way.246

The majority of the High Court in the Bursill case thus took the view that if an interest is noted on the Register,247 even if it is noted under the wrong name, the registered proprietor is bound by it if by some further searching he or she could have discovered the exact nature of the interest.248 246 Compare the judgment of Menzies J in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 at 84. 247 See also The Owners of East Fremantle Shopping Centre West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498, where the court in the context of determining if there was a reasonably arguable case as to whether a particular registered document created an easement, lease or licence held that it was not significant that the Registrar had registered the agreement as an easement. The rights created were to be determined on a proper construction of the agreement. Comapre Siemenski v Brooks Nominees Pty Ltd [1990] Tas R 236 (contents of particular covenants referred to in folio not discoverable by searching through particular documents referred to, thus outside the Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 principle). See similarly Town and Country Marketing Ltd v McCallum (1998) 3 NZ ConvC 192,698, discussed in McMorland, “Notice, Knowledge and Fraud” in Grinlinton (ed), Torrens in the Twenty-​ first Century (LexisNexis, Wellington, 2003), pp 67–​100 (covenant noted on earlier certificate of title, but by error of Registrar omitted from current certificate of title). 248 See also Ex parte Property Unit Nominees (No 2) Pty Ltd [1981] Qd R 178. Although the wording of the paramountcy provision concerned ( Real Property Act 1900 (NSW), s 42(1)) has changed since the decision in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73, there seems no reason why the principle set out would be inapplicable to the differently worded provision: see Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2010) at [12.710] for a discussion of this case. Similar reasoning applies to other jurisdictions where the wording of the paramountcy provision has been altered to take account of computerised titles. Further, in New South Wales, s 40(1B) provides that the whole of an instrument referred to as creating an interest is deemed to be set out in the Register. 230 [4.195]

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A requirement necessitating such searches goes against one of the aims of the Torrens system; that in order to keep searches simple, the Register should accurately reflect the state of the title. Nevertheless, the additional search that could have been undertaken by Bursill was not a particularly onerous or difficult one. In relation to this matter, it is important to note that in Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 the High Court has recently reiterated that the scheme of the Torrens system is that the Register is to “provide third parties with the information necessary to comprehend the extent or state of the registered title to the land in question” (at [5]‌).249 A third party inspecting the Register should not have to look further for extrinsic material that might establish facts existing at the time of the interest’s creation. The High Court referred in passing to Bursill and did not express disagreement with the result. Nevertheless, the High Court’s comments are a reminder that the nature and extent of interests and encumbrances noted on the Register should be gleaned only from a search of the Register. Fraud [4.200]  It is clear that the exception of fraud relates only to fraud by the current registered

proprietor or his or her agent.250 Fraud in transactions occurring before the transaction pursuant to which the registered proprietor took her or his interest is of no importance and cannot affect the indefeasibility of the registered proprietor’s title. Fraud by the current registered proprietor may be perpetrated against the prior registered proprietor or the holder of a prior unregistered interest. Many of the reported decisions on the fraud exception have concerned fraud against a prior unregistered interest holder.251 Further, it has been held that if the registered proprietor lodges a dealing which he or she knows has not complied with the necessary formalities (and the document would not have been accepted without them), the conduct of the registered proprietor may constitute fraud. In this case the fraud is really against the Registrar, not the person who claims he or she has been deprived of an interest.252 [4.205]  How then is “fraud” defined for the purpose of the Torrens legislation? The statutes

do not contain positive definitions of fraud253 and, to a large degree, the interpretation of the term “fraud” has been left to the courts. The statutes provide some guidance in that they provide that knowledge of an unregistered interest or trust is not of itself to be imputed as fraud.254 In itself such a provision suggests that a tight, narrow definition of fraud is intended 49 2 250 251 252

Weir, “Westfield, 5 Years on” (2012) 21 APLJ 166. See, for example, Assets Co Ltd v Mere Roihi [1905] AC 176 at 210. As to the agency point, see [4.235]–​[4.245]. Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 312. Australian Guarantee Corporation Ltd v De Jager [1984] VR 483; National Commercial Banking Corporation of Australia Ltd v Hedley (1984) NSW ConvR 55-​211; Westpac Banking Corporation v Sansom (1995) NSW ConvR 55-​733; Beatty v ANZ Banking Group Ltd [1995] 2 VR 292; National Australia Bank Ltd v Maher [1995] 1 VR 318. Compare Peddie v Stein (1988) NSW ConvR 55-​379 and Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202. The High Court has held that someone must be defrauded: Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248, discussed at [4.225]. For a discussion of this category of fraud, see Skead and Carruthers, “Fraud Against the Registrar –​An Unnecessary, Unhelpful and Perhaps, No Longer Relevant Complication in the Law on Fraud under the Torrens System” (2014) 40 Mon LR 821. 253 New Zealand has recently attempted to provide a statutory definition of fraud. It is difficult to see that this will clarify the law. For cogent criticism of this definition, see Thomas, “Reduced Torrens Protection: The New Zealand Law Commission Proposal for a New Land Transfer Act” [2011] New Zealand Law Review 715. 54 See the “notice” provisions discussed at [4.110]. Compare Queensland and the Northern Territory, which 2 do not include this proviso. [4.205]  231

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and that concepts of constructive or equitable fraud are to be inapplicable. Until recently, the courts have taken this view and excluded from the definition of fraud any conduct that might be considered equitable fraud. In Wicks v Bennett (1921) 30 CLR 80 Knox  CJ and Rich J stated (at 91) that fraud as interpreted under the Torrens system was “something more than mere disregard of rights of which the person sought to be affected had notice. It imports something in the nature of ‘personal dishonesty’ or ‘moral turpitude’ ”. In Assets Co Ltd v Mere Roihi [1905] AC 176 the Privy Council stated (at 210) that: “[Fraud means] actual fraud, that is, dishonesty of some sort, not what is called constructive or equitable fraud”.255 In Bahr v Nicolay (No 2) (1988) 164 CLR 604, however, a broader view of fraud began to emerge. Mason CJ and Dawson J specifically stated (at 606) that “not … all species of equitable fraud stand outside the statutory concept of fraud”.256 Nevertheless, it seems clear that even under a broader view, which may include some species of equitable fraud, “fraud” still requires some personal dishonesty by the registered proprietor.257 The New South Wales Supreme Court has stated that the elements of statutory fraud are “dishonesty, moral turpitude, a want of probity, and a wilful and conscious seeking to defeat or disregard another’s rights”.258 The plaintiff bears the onus of proof in establishing fraud, and there must be clear, cogent or strict proof that fraud has in fact occurred.259 In s 6 of the Land Titles Act 2017 (NZ), fraud is defined as follows: (1) …fraud means forgery or other dishonest conduct by the registered owner or the registered owner’s agent in acquiring a registered estate or interest in land.

(2) For the purposes of subsection (1), the fraud must be against—​



(a) the registered owner of an estate or interest in land; or



(b) the owner of an unregistered interest, if the registered owner or registered owner’s agent,—​

(i) in acquiring the estate or interest had actual knowledge of, or was wilfully blind to, the existence of the unregistered interest; and



(ii) intended at the time of registration of the estate or interest that the registration would defeat the unregistered interest.



(3) For the purpose of subpart 3 of Part 2, fraud means forgery or other dishonest conduct by any person.



(4) The equitable doctrine of constructive notice does not apply for the purposes of deciding whether conduct is fraudulent.

255

In House of Peace Pty Ltd v Bangladesh Islamic Centre of New South Wales Inc (2009) 231 FLR 362 moral turpitude and dishonesty were again held to be essential components of fraud under the Torrens system. An agent for the registered transferee had arranged for the transfer from a deregistered company: the agent believed he had the authority to do this and that he was acting properly. The court held there was no fraud. See also Australian Regional Credit v Mula (2009) 14 BPR 26,779. 256 See similarly Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248 at 255. 257 This has been confirmed in a number of State appeal court decisions: see, for example, Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188; Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133; Young v Hoger (2001) Q ConvR 54-​557; F & F Holdings Pty Ltd v Ridge Lane Pty Ltd [1998] VSCA 72. See Toomey, “Certainty of the Title in the Torrens System: Shifting Sands” (2000) 4 FJLR 235 at 236–​239, where the author argues that decisions such as these demonstrate an attempt to reassert a strict definition of fraud in order “to preserve the Torrens concept”. 58 Anderson v Anderson [2016] NSWSC 1204 at [371]. 2 59 Lam v Lam [2016] VSC 298. 2 232 [4.205]

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[4.210]  Although it is simple to state that, on one hand, fraud connotes dishonesty and that,

on the other, knowledge of a prior unregistered interest is not of itself fraud, the dividing line is much more difficult to draw in individual cases. In Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491 the rubber company purchased a large area of land from the registered proprietor, Eusope. Although not registered as such, Loke Yew was the owner of part of this land and Eusope only agreed to sell the whole of the land to the rubber company when he was given an assurance by the company that it would not disturb Loke Yew’s possession. Upon becoming the registered proprietor, the rubber company asserted that it was entitled to the whole of the land and Loke Yew sought relief. On the evidence, the court was satisfied that the rubber company had been fraudulent and it ordered the rubber company to execute a transfer of the land in dispute. The court took the view that the rubber company had more than mere knowledge of Loke Yew’s prior unregistered interest. The statement by Glass (the representative of the company), that the rights of Loke Yew would be protected, had been falsely and fraudulently made to induce Eusope to sign the transfer. In effect, the court was satisfied that there had been a deliberate plan to deprive Loke Yew of his land.260 [4.215]  The decision in Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491 is to

be contrasted with decisions such as RM Hosking Properties Pty Ltd v Barnes [1971] SASR 100261 and Friedman v Barrett; Ex parte Friedman [1962] Qd R 498.262 Here the person becoming the registered proprietor knew of an earlier unregistered interest and yet, in the absence of proof of a deliberate fraudulent scheme, was held to have an indefeasible title. In the RM Hosking case the defendants held possession under a two-​year unregistered lease with an option to renew for a further two years. During the term of the lease, the lessor sold the land to the plaintiff, who knew of the terms of the lease and agreed to accept title subject to the occupation of the defendants. Subsequently the defendants sought to exercise the option to renew and the plaintiff gave notice to quit,263 stating that it was not bound by the terms of the unregistered lease. Unlike the situation in the Loke Yew case, there was no proven plan of dishonesty or fraud, no evidence that the lessor had been induced to sign the transfer by the plaintiff’s statement. Although there was knowledge of the prior unregistered interest, this was not sufficient to constitute fraud. Thus, a person who purchases with notice of a prior unregistered interest is not fraudulent just because he or she becomes the registered proprietor and claims the benefit of indefeasibility.264

260 261

262

263 264

See also Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198. See also Oertel v Hordern (1902) 2 SR (NSW) (Eq) 37; Munro v Stuart (1924) 41 SR (NSW) 203. Compare RM Hosking Properties Pty Ltd v Barnes [1971] SASR 100 with Charmar Electrical Pty Ltd v Minda Incorporated (1990) 55 SASR 112. In Queensland there was no provision in the “notice” section that knowledge of a trust does not constitute fraud. Thus the decision in Friedman v Barrett; Ex parte Friedman [1962] Qd R 498 supports strongly the notion of a strict definition of fraud. It has been argued that the in personam exception should have been applied in the Friedman case: see Robinson, “Friedman v Barrett –​Wrongly Decided” (1984) QLSJ 259. The new Queensland Torrens statute, the Land Title Act 1994 (Qld), does not contain such a provision either. Payment of rent from the defendant to the plaintiff had been made on a weekly basis. Thus the defendants were weekly tenants of the plaintiff, but this tenancy was determinable by appropriate notice. See Oertel v Hordern (1902) 2 SR (NSW) (Eq) 37; Corporate Affairs Commission v ASC Timber Pty Ltd (1989) 18 NSWLR 577; Hinds v Uellendahl (1992) 107 FLR 254; Hinds v Uellendahl (No 2) (1992) 112 FLR 222; Kiely v Beneficial Finance Corporation Ltd (1992) 6 WAR 521; Newcastle City Council v Kern Land Pty Ltd (1997) 42 NSWLR 273; Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2007] WASC 88 (decision [4.215]  233

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Further, it seems that the knowledge that the prior unregistered interest will be defeated by registration is insufficient per se to constitute fraud by the person becoming the registered proprietor.265 Nor is it fraud to register an instrument expeditiously in the knowledge that such registration would defeat the claim of a person who is attempting to establish that claim in litigation.266 If, however, the facts show “the designed object of a transfer be to cheat a man of a known existing right”,267 then registration of the transfer or mortgage is fraudulent.268 [4.220]  Cases such as RM Hosking Properties Pty Ltd v Barnes [1971] SASR 100 illustrate

clearly the sharp contrast between the general law system and the Torrens system in the area of notice. Under the general law system, the holder of a subsequent legal interest is subject to all prior equitable interests of which he or she has notice:  see [2.450]–​[2.560]. Under the Torrens system, notice per se does not render the holder of the legal (registered) interest subject to the interest of the holder of a prior equitable (unregistered) interest. However, it is clear that where there is notice plus the existence of other factors which reveal, in one way or another, a plan or scheme to deprive another of an interest, fraud may be attributed to the registered proprietor. Knowledge, further enquiries and fraud [4.225] Although notice of a prior unregistered interest does not in itself constitute fraud,

knowledge of a fraud by which a previous proprietor has been deprived of an interest may affect the title of the registered proprietor. In Assets Co Ltd v Mere Roihi [1905] AC 176 the Privy Council (at 210) defined fraud as follows: Fraud by persons from whom he claims does not affect him unless knowledge of it is brought home to him or his agents. The mere fact that he might have found out fraud if he had been more vigilant, and had made further inquiries which he omitted to make does not of itself prove fraud on his part. But if it be shown that his suspicions were aroused, and that he abstained from making inquiries for fear of learning the truth, the case is very different, and fraud may be properly ascribed to him.269

In Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1923] NZLR 1137 Salmond J in dicta suggested that the true test of fraud in this context was not “whether the person actually knew for a certainty of the existence of an adverse claim, but whether he

overturned by the Court of Appeal but on a different point: Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd (2008) 35 WAR 520). 265 See also Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 653 per Brennan J; Mills v Stokman (1967) 116 CLR 61 at 78 per Kitto J. 266 Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1926] AC 101. 267 Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1926] AC 101 at 106. 268 See Grieve v Enge (2006) Q Conv R 54-​644 (Queensland Court of Appeal affirmed the decision on other grounds: (2006) Q Conv R 54-​651). See also Khan v Hadid (No 2) (2008) NSW Conv R 56-​210, where the mortgagee lent money, not knowing the mortgagor’s signature had been forged and where the agreement was that the mortgage would not be registered, but protected by caveat unless there was a default. Subsequently, the mortgagee’s agent became aware that there may have been a forgery and quickly registered the mortgage, even though there had been no default. In these circumstances fraud was attributed to the mortgagee. Fraud will also be attributed if the registered proprietor knows of the interest and undertakes to abide by it: Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (2007) 13 BPR 24,969 (no fraud on the facts). 269 Expressly approved by the Supreme Court of Victoria in Australian Guarantee Corporation v De Jager [1984] VR 483. 234 [4.220]

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knew enough to make it his duty as an honest man to hold his hand” (at 1175). His Honour continued, “if, knowing as much as this, he proceeds without further enquiry … he is guilty of that wilful blindness or voluntary ignorance which according to the authorities, is equivalent to actual knowledge and therefore amounts to fraud” (at 1175).270 The dictum of Salmond  J suggests that in some cases “the constructive knowledge of conduct pursuant to which a person may have been deprived of an interest” is sufficient to constitute fraud. However, in the Assets case the court seemed to require dishonesty of some sort and recent Australian cases have confirmed that “personal dishonesty” or “moral turpitude” is necessary.271 The issue of the interrelationship between fraud and the need to make further inquiries has been considered in a number of recent decisions.272 In Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188 the mortgagor argued that the registered mortgage had not been validly executed as it had been attested by a person who was not a director of the mortgagor company. It was further argued that the mortgagee’s “wilful blindness” to the correctness of the attestation and as to whether the mortgage had been properly authorised by the mortgagor constituted fraud and rendered the mortgage defeasible. The Victorian Court of Appeal held that fraud within s 42 meant actual dishonesty or moral turpitude. In the court’s view, there was no knowledge of fraud as there was no evidence that the mortgagee knew that the attestation was improper or that the mortgage may not have been properly authorised. Importantly, neither was there evidence that the mortgagee had its suspicions aroused and “abstained from making inquiries for fear of learning the truth”.273 The Victorian Court of Appeal took the view that Pyramid would have discovered the improper execution of the mortgage had it made further inquiries and said these should have been made. Such a failure did not, however, in the court’s view, amount to fraud, as it was not a case where the failure to make inquiries was because suspicions were aroused and it feared learning the truth.274 A similar finding was made in Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133, where it was held (at 146 per Tadgell  JA) that in order for a failure to make relevant inquiries to constitute fraud, there must be “wilful blindness” and this connotes “a form of designed or calculated ignorance”. In Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202 a bank officer witnessed the signature of the registered proprietor attesting that the mortgage document had been signed in his presence and that he knew the registered 270

See also Efstratiou v Glantschnig [1972] NZLR 594. See generally Whalan, “The Meaning of Fraud under the Torrens System” (1975) 6 NZULR 207 and Butt, “Fraud in the Torrens System: A Comparative Analysis” (1977) 13 UWALR 354. 271 Grgic v ANZ Banking Group (1994) 33 NSWLR 202; Russo v Bendigo Bank Ltd [1999] 3 VR 376; Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188; Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133; Young v Hoger (2001) Q ConvR 54-​557; Anderson v Anderson [2016] NSWSC 1204 at [371]. For a discussion of these matters, see Hepburn, “Concepts of Equity and Indefeasibility in the Torrens System of Land Registration” (1995) 3 APLJ 41 and Toomey, “Certainty of the Title in the Torrens System: Shifting Sands” (2000) 4 FJLR 235 at 236–​239. The High Court in Farah Constructions Pty Ltd v Say-​ Dee Pty Ltd (2007) 230 CLR 89 at [192] affirmed that the fraud exception to Indefeasibility under s 42(1) of the Real Property Act 1900 (NSW) required “actual fraud, moral turpitude”. 272 See, for example, Australian Guarantee Corporation Ltd v De Jager [1984] VR 483; Beatty v ANZ Banking Group Ltd [1995] 2 VR 292; Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188; Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133; Koorootang Nominees Pty Ltd v ANZ Banking Group Ltd [1998] 3 VR 16; Russo v Bendigo Bank Ltd [1999] 3 VR 376. 273 In the language of the Privy Council in Assets Co Ltd v Mere Roihi [1905] AC 176. 74 Following Assets Co Ltd v Mere Roihi [1905] AC 176. 2 [4.225]  235

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proprietor/​mortgagor personally. In fact, the signature was forged by an impostor. The New South Wales Court of Appeal held that the conduct of the bank officer did not constitute fraud-​ there was no fraudulent intent, moral turpitude or even “reckless indifference”. In Young v Hoger (2001) Q ConvR 54-​557 the Queensland Court of Appeal applied a similar test but overturned the decision of the judge at first instance by interpreting the facts differently. It was held there was no evidence of dishonesty in the agent of the registered proprietor, the solicitor. There was no evidence that the solicitor’s suspicions had been aroused in relation to the forging of the mortgage and that he had then abstained from making further inquiries for fear of learning the truth.275 The situations described in the cases above must be distinguished from cases where there is actual knowledge in (or perhaps reckless indifference by) the person registering that the document presented for registration was improperly executed or attested. In these latter instances, it seems that fraud may properly be ascribed to the person presenting the document for registration. In Australian Guarantee Corporation v De Jager [1984] VR 483 employees of the mortgagee knew that the attesting witness had not, in fact, been present when one of the mortgagors executed the mortgage. In such circumstances, the presentation of the document to the Registrar constituted a deliberate misrepresentation to the Registrar that the document had been properly executed and was thereby fraud within the meaning of s 42 of the Transfer of Land Act 1958 (Vic).276 For fraud to be ascribed in these circumstances it is imperative to show that there was knowledge either that a person would be deprived of an interest or that the Registrar would be misled.277 False attestation and subsequent registration does not, per se, result in the mortgage being defeasible for fraud.278 In a case where the employee who had “knowledge”279 of an improper execution of a mortgage was a young, inexperienced clerk of the solicitor for the mortgagee and was found to be unaware of the significance of a proper execution, it was held there was no fraud for the purposes of s 42 of the Transfer of Land Act 1958.280 In such circumstances, the court took the view there was no intention to deprive another person of

275

See also J Wright Enterprises Pty Ltd (in liq) v Port Ballidu Pty Ltd (2010) QSC 213, where the solicitor for the registered mortagee altered the mortgage three days after its execution to make it appear it had been signed by the mortgagor consistently with particular statutory requirements, being aware that without the alteration, the Registrar would not register the document. It was held that the conduct, although constituting a false representation, was not fraud for the purposes of the fraud exception to indefeasibility. (It was emphasised by the court that there were no other rights of priority which were disregarded.) See also Hilton v Gray (2008) Q Conv R 54-​686. 276 See similarly National Commercial Banking Corporation of Australia Ltd v Hedley (1984) NSW ConvR 55-​211; 3 BPR 9477. Compare Paradise Constructors & Co Pty Ltd v Poyser (2007) 20 VR 294, where an alteration made after execution in order to ensure registration was considered immaterial and authorised and J Wright Enterprises Pty Ltd (in liq) v Port Ballidu Pty Ltd (2010) QSC 213 discussed in n 278. 277 HG & R Nominees Pty Ltd v Fava [1997] 2 VR 368 at 390. 278 See generally O’Connor, “Immediate Indefeasibility for Mortgagees: A Moral Hazard?” (2009) 21 Bond LR 133 at 147. 79 Witnessed the signature of a person not present. 2 80 Russo v Bendigo Bank Ltd [1999] 3 VR 376. The clerk had had three years’ experience handling conveyancing 2 matters –​the finding of the court that that the clerk did not understand that by falsely attesting, she was setting the document on its path to registration, has been criticised: see Rodrick, “Forgeries, False Attestations and Impostors: Torrens System Mortgages and the Fraud Exception to Indefeasibility” (2002) 7 Deakin LR 97 at 109–​110.

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an interest in the land or to mislead the Registrar.281 Similarly, where a registration clerk gratuitously changed the executed transfer in order to save a small amount of government tax, and there was no evidence that she understood the alteration to be a material one which would induce the Registrar to act in a way materially different to the way he would otherwise have done, it was held by the New South Wales Court of Appeal that there was no fraud.282 If she thought the alteration was “merely a convenient fiction of no consequence”, fraud within the statutory regime could not be ascribed to her.283 Another illustration can be seen where a power of attorney is back-​dated and an instrument to sever a joint tenancy is done without, arguably, notice being given to a joint tenant: in the absence of a lack of probity there is no fraud.284 In Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248 the mortgagor’s signature had been forged by an employee of the mortgagee on an internal document the mortgagee used in considering whether to approve the loan. The document did not have the effect of harming or cheating the mortgagor. In a claim by the mortgagor that the mortgage was defeasible on the basis of fraud by the mortgagee, the High Court held (at 258)  that for the fraud to be operative “it must operate on the mind of the person said to have been defrauded and to have induced detrimental action by that person”.285 In some instances different elements of knowledge, which together would constitute fraud, may exist in a number of employees and officers of the entity becoming the registered proprietor. In Macquarie Bank v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133 at 145286 the Victorian Court of Appeal was not prepared to add together the different elements of knowledge of the various officers and agents of the corporate registered proprietor to infer a dishonest state of mind in the corporation stating that “no principle justifies the simple aggregation of the knowledge of a number of persons individually unaware of fraud, or facts which ought to disclose it, to create a notional person with a dishonest intent”.287

281

See also Hickey v Powershift Tractors Pty Ltd (1998) NSW ConvR 55-​889, where a director of the mortgagee company did know that the mortgagor’s signature had not been property attested and the court held the mortgagee had been fraudulent. Note, however, although this meant the mortgage was not indefeasible, there was still an effective mortgage agreement between the parties: the mortgage monies had been paid to the mortgagor and the document signed by the mortgagee. The mortgage could take effect in equity. 282 Davis v Williams (2003) 11 BPR 21,313; [2003] NSWCA 371 (NSWCA). If, however, the registration clerk had made the representation to the Registrar-​General, knowing it was false in a material respect and intending the Registrar-​General would then act in a way materially different than otherwise he or she would have done, this in itself would have constituted sufficient dishonesty or moral turpitude to amount to fraud –​ dishonesty or moral turpitude is not a separate, distinct requirement. See Hodgson JA at [26] and Gzell J at [229], [245]. 283 Davis v Williams [2003] NSWCA 371 at [27] per Hodgson JA. 284 Anderson v Anderson [2017] NSWCA 131. 285 Per Brennan CJ, Gaudron, McHugh, Gummow and Kirby JJ. Discussed in Spry, “Indefeasibility of Title and the Fraud Exception: Bank of South Australia v Ferguson” (1998) 18 QL 193 and Toomey, “Certainty of Title in the Torrens System: Shifting Sands” (2000) 4 FJLR 235. See similarly Unic SA v Quartermain Holdings Pty Ltd [2002] 2 Qd R 660, where Wilson J held that there must be a link between the fraud and the defrauded party’s loss of an interest. 86 See also Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188, discussed in Dodds-​ 2 Streeton, Mind/​Knowledge of Company and What Outsiders Are Entitled to Assume (Paper delivered to Leo Cussen Institute, Corporate Conference, May 1996). 87 See also Russo v Bendigo Bank Ltd [1999] 3 VR 376, where the court refused to impute fraud by aggregating 2 the solicitor’s knowledge of the consequences of registration of an improperly attested mortgage with the law clerk’s knowledge of the false attestation. Compare Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563

[4.225]  237

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Many of the recent cases discussed above concern the issue of the indefeasibility of a registered mortgagee’s title. There has been increasing concern that, in relation to mortgagees, the definition of fraud as outlined above has led to inappropriate results in particular cases and encouraged a system of irresponsible identity checking.288 It has been argued that the “era of easy credit” and dramatically different mortgage and lending practices, coupled with this strict definition of fraud, have resulted in mortgagees being able to relieve themselves of undertaking the most basic, reasonable precautions to ensure that the borrower is in fact the registered proprietor.289 The use of securitised mortgages and mortgage brokers means there are often numbers of different organisations, and different people within those organisations, involved in the various steps of the transaction resulting in a registered mortgage. As a consequence, a finding of fraud requiring “personal dishonesty” is often difficult to substantiate in relation to the registered mortgagee. In some jurisdictions there has now been an attempt to resolve the problem. In Queensland ss 11A and 11B of the Land Title Act 1994 (Qld) are designed to ensure that the mortgagee adopts particular practices in making certain that the mortgagor is identical with the person who is the registered proprietor.290 The clear aim is to prevent problems such as those which arose in Young v Hoger from occurring at all. By s  9A, a Land Title Practice Manual is established and practices as to reasonable steps to be taken in relation to these matters, are set out. Under s 185(1A), a registered mortgagee who fails to comply with the requirements of identity checking in ss 11A and 11B does not obtain the benefit of indefeasibility.291 Further encouragement to comply is provided in s 189(1)(ab), which sets out that there is no entitlement to compensation from the assurance fund if the deprivation, loss or damage can be attributed to the person’s failure as mortgagee to take the steps required under s 11A or s 11B.292 In

288

289 290

291

292

(where, in the context of the Trade Practices Act 1974 (Cth) (see now Competition and Consumer Act 2010 (Cth)), the High Court was prepared to accumulate knowledge to infer a dishonest state of mind in a corporation), Re Chisum Services Pty Ltd (1982) 7 ACLR 641 and Brambles Holdings Ltd v Carey (1976) 15 SASR 270, distinguished by the Court of Appeal in the Macquarie Bank case on the basis that none of these authorities supported the view that particular facts known to different employees could be aggregated to give rise to a corporate dishonest intent which none of the employees individually held: [1998] 3 VR 133 at 160–​161 per Ashley AJA. Query whether the distinction made from the High Court decision in the Eurolynx case was well made: the High Court stated that “a division of functions among officers of a corporation responsible for different aspects of the one transaction does not relieve the corporation from responsibility determined by reference to the knowledge possessed by each of them”: (1995) 183 CLR 563 at 583. It is arguable that the aggregation of knowledge to determine a fraudulent corporate state of mind may well have been envisaged by the High Court. O’Connor, “Immediate Indefeasibility for Mortgagees: A Moral Hazard?” (2009) 21 Bond LR 133. See also Toomey, “Fraud and Forgery in the 1990s: Can Our Adherence to Frazer v Walker Survive the Strain?” (1994) 5 Canterbury LR 424 and Rodrick, “Forgeries, False Attestation and Imposters: Torrens System Mortgages and the Fraud Exception to Indefeasibility” (2002) 7 Deakin LR 97. O’Connor, “Immediate Indefeasibility for Mortgagees: A Moral Hazard?” (2009) 21 Bond LR 133 at 135–​ 142 and 157–​159. The provisions as to verification now also apply to the amendment of a mortgage: see Land Title Act 1994 (Qld), s 11A(1)(b) and (2). The provisions have also been aligned with the requirements of electronic conveyancing –​see Land Title Act 1994 (Qld), ss 11A(2A), (2B). See Natural Resources and Other Legislation Amendment Act 2010 (Qld), ss 182–​183. As the verification provisions now extend to the situation where there is an amendment of a mortgage, indefeasibility is also denied the mortgagee where there is a failure to comply on an amendment: Land Title Act 1994 (Qld), s 185(1A)(a), (b). Provisions introduced in 2006 by the Natural Resources and Other Legislation Amendment Act 2005 (Qld). See s 189A, where limits are placed on the amount recoverable from the Assurance Fund where the execution of

238 [4.225]

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New South Wales s 56C of the Real Property Act 1900 (NSW) provides that the Registrar-​ General may cancel a fraudulently executed mortgage where the mortgagee did not take reasonable steps to verify the mortgagor’s identity and had actual or constructive notice of the identity fraud. In Victoria, the Registrar is not required to register a document if that person is not satisfied as to the identity of the person who executed the document (Transfer of Land Act 1958, s 27AB). As previously noted, the advent of national electronic conveyancing protocols has also imposed further requirements on subscribers to Property Exchange Australia to verify the identity of the person with whom they deal.293 These changes may well have the benefit of reducing fraud, particularly identity fraud, but with the increased obligations imposed on the stakeholders within the conveyancing process, higher conveyancing fees may also be expected. In South Australia, for example, imprisonment can be the consequence if a person falsely verifies that someone’s identity has been verified in line with the protocols for verification (s 232 and following Real Property Act 1886). Fraud before or after registration? [4.230]  Another issue which has arisen in relation to fraud is whether the fraud must occur

in the period of time leading up to the registration or whether fraud can be established by the actions of the registered proprietor after registration.294 In the past, the accepted view has been that it is only fraud prior to registration (ie, circumstances leading to acquisition) which is sufficient to render the registered proprietor’s title defeasible.295 However, at least two judges in the High Court decision of Bahr v Nicolay (No 2) (1988) 164 CLR 604296 suggested that fraud can occur after registration by the dishonest repudiation of a prior interest which the registered proprietor has agreed to recognise as a basis for acquiring title. In that case, the Bahrs were the registered proprietors of the land in dispute and they agreed to sell to Nicolay. The contract of sale included an agreement by Nicolay to lease the property back to the Bahrs for three years and upon the expiration of the lease to enter into a contract to resell the land to the Bahrs. Nicolay became the registered proprietor and then sold the property to the Thompsons. The Thompsons knew of the agreement between the Bahrs and Nicolay and, at Nicolay’s insistence, the contract for sale from Nicolay to the Thompsons contained an express acknowledgment of it. After the Thompsons became registered, their actions made it clear that they acknowledged the rights of the Bahrs. For example, they wrote to the Bahrs acknowledging their (the Thompsons) obligation to sell and had made offers to do this. (These offers had lapsed.) Subsequently, however, the Thompsons sought to rely on their registered title to defeat the rights of the Bahrs. Thus, the evidence showed that the the mortgage involved fraud (not that of the morgagee). Weir has argued that this provision is “troubling”. In the case of a sophisticated fraud, all reasonable steps (including compliance with ss 11A and 11B) may have been taken by the mortgagee and yet the effect of s 189A is to limit the amount which can be recovered: see Weir, “Indefeasibility: Queensland Style” (2007) 15 APLJ 79. 293 The details surrounding the verification of identity requirements can be found in the operating and participation rules for the e-​conveyancing system. See www.arnecc.gov.au. 94 See Bahr v Nicolay (No 2) (1988) 164 CLR 604. 2 295 Note that some of the relevant provisions may be interpreted in such a way that they seem to require specifically that the fraud be in the period prior to registration: see, for example, Real Property Act 1886 (SA), s 69(a). 296 Mason CJ and Dawson J at 615. Query the view of Brennan J at 653–​655. For a recent example where this approach was adopted see Merrell Associates Ltd v HL (Qld) Nominees Pty Ltd (2010) 241 FLR 49; [2010] SASC 155. [4.230]  239

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Thompsons had accepted the obligation and after registration had sought to extinguish it: any dishonest conduct occurred after registration. In deciding whether the title of the Thompsons was indefeasible, the High Court considered whether either the fraud or the in personam exception was applicable. As to fraud, Mason CJ and Dawson  J (at 615)  took the view that the fraud exception includes the fraudulent repudiation of a prior interest which the registered proprietor has acknowledged or agreed to recognise as a basis for obtaining title. In the view of their Honours, there had been no “definitive pronouncements that fraud is confined to fraud in the obtaining of a transfer or in securing registration”. Further, they stated that “there is no difference between the false undertaking which induced the execution of the transfer in Loke Yew and an undertaking honestly given which induces the execution of a transfer and is subsequently repudiated for the purpose of defeating the prior interest”. In contrast, Wilson and Toohey JJ adopted the more accepted and conservative approach in holding that fraud under the Torrens legislation can only be constituted by dishonest conduct in the period leading up to registration. There was no proof of such dishonest conduct by the Thompsons.297 In the view of Wilson and Toohey JJ, fact situations such as the one in Bahr were more properly dealt with under the in personam exception. The in personam exception is discussed at [4.350]–​[4.390]:  as will be shown there, all justices in Bahr took the view that the in personam exception was applicable and thus, in the end, the Thompsons were subject to the rights of the Bahrs: see [4.360]–​[4.390]. The weight of authority298 probably favours the view that it is only fraud in the period prior to registration that is capable of falling within the fraud exception and rendering the registered proprietor’s title defeasible. One of the basic aims of the Torrens system is to confer an indefeasible title on any person who purchases bona fide and enters the instrument of dealing on the Register. The satisfaction of this aim only requires that an inquiry be made into the bona fides of the registered proprietor up until the time of registration. In view of the fact that the in personam exception appears to cover the Bahr type fact situation, the extension to the fraud exception suggested by Mason CJ and Dawson J may be unnecessary. Fraud by the agent [4.235]  It is clear from the Privy Council decision in Assets Co Ltd v Mere Roihi [1905] AC

176 that the title of the registered proprietor may sometimes be impeached, even though he or she has not been personally fraudulent, if his or her agent either has been fraudulent or has knowledge of a fraud. It is necessary to look at two separate situations in order to determine if the title of the registered proprietor is rendered defeasible. 297 The view of Brennan J on this point is not absolutely clear. It appears that his Honour’s reasons for decision are based on the in personam exception. The more likely interpretation is that he would not support the view of Mason CJ and Dawson J on this point. Compare the headnote (1988) 78 ALR 1. 298 See, for example, Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491; Waimiha Sawmilling Co Ltd (in liq) v Waione Timber Co Ltd [1926] AC 101. See Tooher, “Muddying the Torrens Waters with the Chancellor’s Foot?” (1993) 1 APLJ 1 at 8–​9. Some recent decisions of single judges of State Supreme Courts have also preferred this view: see, for example, Tanzone Pty Ltd v Westpac Banking Corporation (1999) NSW ConvR 55-​908 (reversed on another point: Westpac Banking Corp v Tanzone Pty Ltd (2000) 9 BPR 17,521); Conlan v Registrar of Titles (2001) 24 WAR 299; Ryan v Starr [2005] NSWSC 170, but others have preferred the view of Mason CJ and Dawson J: see, for example, Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198; Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312.

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[4.240]  First, the situation where the fraud is actually committed by or “brought home to” the

agent must be considered. To determine if the fraud of the agent is the fraud of the principal (the registered proprietor), the ordinary agency principle of respondeat superior is applied. If the agent acted within the scope of his or her actual or apparent authority, then the fraud of the agent becomes the fraud of the principal. Further “an act of an agent within the scope of his actual or apparent authority does not cease to bind his principal merely because the agent was acting fraudulently and in furtherance of his own interests”.299 In Schultz v Corwill Properties Pty Ltd (1969) 90 WN (Pt 1) (NSW) 529, however, an application of the principle of respondeat superior resulted in the fraud of the agent not being held to be the fraud of the principal. In this case, a solicitor who acted for both parties in the dispute300 was the fraudulent party. The execution of a mortgage from the registered proprietor to the registered mortgagee was a forgery, the solicitor having forged the registered proprietor’s execution of it. Inter alia, the issue arose as to whether the fraud of the agent became the fraud of the registered mortgagee so as to make her registered mortgage defeasible. The court held (at 540) that it did not, as it was not within the scope of the solicitor’s actual or apparent authority to forge the registered proprietor’s execution of the mortgage. “The forged execution of the mortgage was in furtherance of a felonious (activity) … It was an independent activity entirely in furtherance of his own interests”. Under this formulation, if a solicitor’s fraud comprised of, for example, false attestation of a document presented for registration301 (such a fraud not being for the solicitor’s own benefit), the fraud may be within the scope of his or her authority and properly ascribed to the principal.302 In the New Zealand case, Dollars and Sense Finance Ltd v Nathan [2008] 2 NZLR 557, the New Zealand Supreme Court criticised the restrictive interpretation in the Schultz case. On similar facts, where the person appointed agent by the mortgagee to obtain the mortgagor’s signature forged the mortgagor’s signature, it was held that a fraudulent act may be within the scope of an agency “even if done exclusively for the benefit of the agent (and even more so when it is done for the benefit of the principal as well as for the benefit of the agent)”.303 The court held that the real question was whether the agent’s conduct fell within the scope of the task the agent was asked to perform. On the facts, the agent’s task was to procure an executed mortgage and the forgery was committed while performing that task.304 Although the test itself was correctly stated in both Schultz and the Dollars and Sense Finance cases, it is suggested the application of the test was more correctly applied in the New Zealand

299

Reynolds, Bowstead and Reynolds on Agency (17th ed, Sweet and Maxwell, London, 2001), p 279; Russo v Bendigo Bank Ltd [1999] 3 VR 376. 300 In fact, the personal representative (the husband) of one of the parties was the plaintiff in the action as the aggrieved party, the wife, had died. 01 See Australian Guarantee Corporation Ltd v De Jager [1984] VR 483. 3 02 Russo v Bendigo Bank Ltd [1999] 3 VR 376. 3 03 Dollars and Sense Finance Ltd v Nathan [2008] 2 NZLR 557 at [41]. The court relied on Lloyd v Grace, Smith 3 & Co [1912] AC 716. 304 The New Zealand Supreme Court relied upon the argument put forward by Professor Peter Watts in “Imputed Knowledge in Agency Law: Excising the Fraud Exception” (2001) 117 LQR 300. See also Permanent Trustee Co Ltd v O’Donnell [2009] NSWSC 902 where Lloyd v Grace, Smith & Co [1912] AC 716 was quoted with approval. Although not a case concerning the fraud exception and indefeasibility of title, the general rule was stated to be that a principal is liable for the fraud of his or her agent.

[4.240]  241

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case.305 In defining the agency as authorising the registration of a valid mortgage by the agent, Street CJ in the Schultz case took too limited a view of the terms and scope of the agency.306 The application and interpretation adopted by the New Zealand Supreme Court ensures that the public policy considerations behind the general principle that a principal is liable for the actions of his or her agent, are upheld. In Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd307 real estate had been purchased with the traceable proceeds of stolen funds. One defendant knew of the fraud as well as how the funds had been used. The second defendant, while knowing about the fraud, was unaware as to the use of the funds. There was no knowledge in this person that the stolen funds had been used to complete the land purchase. It was held that fraud had been brought home to both defendants with this conclusion based on agency principles. As is discussed at [4.225], current lending practices and the use the mortgage brokers mean that a number of entities are involved in the procuring and execution of the mortgage, and in these circumstances it is often very difficult to prove the requisite factors to demonstrate “fraud by an agent” even where forgery or false attestation exists.308 As O’Connor commented, “[p]‌roof of the element of dishonesty is extremely difficult, particularly where a securitised mortgage programme conducts its operations in such a way that nobody has full field vision and control”.309 It has been suggested that where the fraud is an independent activity of the agent and outside the scope of the agent’s authority, fraud may still be ascribed to the principal on the basis of the rule that a person cannot take or retain the benefit from a fraud committed on his or her behalf.310 The benefit would need to be substantial. [4.245] Secondly, where an agent has knowledge of a fraud in the transaction in issue,

a question arises as to whether this knowledge is to be imputed to the principal. Clearly, if the agent knows personally that a fraud has been committed, whereby, for example, a previous registered proprietor has been deprived of all or part of his or her interest, that knowledge is sufficient to impeach the title of the principal/​registered proprietor.311 There have been a number of decisions where fraud has been ascribed to the registered proprietor in circumstances where her or his employee or agent has known that a document presented for registration had not been properly executed.312 Where, however, there is no fraudulent intent

305

O’Connor, “Immediate Indefeasibility for Mortgagees: A Moral Hazard?” (2009) 21 Bond R 133 at 143. See also Watts, “Imputed Knowledge in Agency Law: Excising the Fraud Exception” (2001) 117 LQR 300. 306 O’Connor, “Immediate Indefeasibility for Mortgagees: A Moral Hazard?” (2009) 21 Bond LR 133 at 143. O’Connor also comments that the Court was incorrect in stating that proof the agent’s fraud was wholly for his own benefit was a determining factor. 07 Sino Iron Pty Ltd v Worldwide Wagering Pty Ltd (2017) 52 VR 664. 3 308 See, for example, the case of Permanent Custodians Ltd v Yazgi [2007] NSWSC 279. The broker knew Mrs Yazgi’s signature was forged and falsely attested, but was not an agent of the mortgagee. The facts available to the actual agent of the mortgagee should have led them to make further enquiries, but it could not be proved that they had failed to make inquiries for fear of learning of the fraud. (Note that the actual decision was overturned on appeal by the New South Wales Court of Appeal on other grounds: Yazgi v Permanent Custodians Ltd (2007) NSW Conv R 56-​195.) 309 O’Connor, “Immediate Indefeasibility for Mortgagees: A Moral Hazard?” (2009) 21 Bond LR 133 at 150. 10 Kettlewell v Refuge Assurance Co [1908] 1 KB 545; Mair v Rio Grande Rubber Estates Ltd [1913] AC 583; Davis 3 v Williams [2003] NSWCA 371 at [37]–​[39] per Hodgson JA. 11 See Assets Co Ltd v Mere Roihi [1905] AC 176. 3 12 Australian Guarantee Corporation Ltd v De Jager [1984] VR 483; National Commercial Banking Corp of Australia 3 Ltd v Hedley (1984) NSW ConvR 55-​211; Hickey v Powershift Tractors Pty Ltd (1999) NSW ConvR 56-​936. 242 [4.245]

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or “reckless indifference”, fraud is not ascribed to the agent or employee (and consequently the principal) even if the transaction involved a false attestation or execution.313 Nevertheless, knowledge of fraud may be imputed from the agent to the principal even where the agent does not have actual knowledge but has deliberately “closed his eyes” to the fraud.314 However, fraud will not be attributed to one joint tenant merely because they are co-​owners in circumstances where the other joint tenant has acted fraudulently. In Cassegrain v Gerard Cassegrain & Co Pty Ltd (2015) 254 CLR 2 a director of the respondent company had, in breach of corporate fiduciary duties, bought a dairy farm for himself by debiting part of his loan account that was held with the company. At a subsequent time, he transferred that dairy farm to himself and his wife as registered joint tenants (the first transfer), with this then followed by a transfer (or more correctly a release) of his interest as a joint tenant, for the nominal consideration of $1, to his wife (the second transfer). The New South Wales Court of Appeal [2014] NSWCA 453 required the wife to transfer the property back to the company, but without uniformity as to why. Some judges of this court considered that the husband had acted as the wife’s agent, for others, the fraud of the husband was sufficient to impugn the wife because of the joint tenancy. The High Court allowed the appeal in part. There could be no fraud ascribed to the wife as there was no evidence of her being aware of what the husband was doing; the husband was not her agent. Without the fraud of the husband being attached to the wife, her interest was not challengeable. However, the company could recover the interest that the wife had obtained from the husband pursuant to the second transfer. She was not a bona fide purchaser for consideration, and for this reason, the company deprived through fraud could recover from her that part of the co-​ownership interest. The wife was a volunteer and ejectment proceedings could lie against her.315 Even where an agent can be held to have knowledge of a fraud, that knowledge only becomes the knowledge of the principal in the relevant sense if the agent’s knowledge can be imputed to the principal.316 There is a presumption that the agent has communicated to the principal any information concerning the transaction of which he or she has express knowledge.317 It has been held, however, that if the matter concerns the agent’s own fraud or the agent’s participation in a fraudulent scheme, the principal is able to rebut the presumption of imputed notice for the agent is unlikely to have communicated knowledge of a fraud where the agent himself or herself has been involved in the fraud.318 313 314 315

316

317

318

Grgic v ANZ Banking Group (1994) 33 NSWLR 202; Peddie v Stein (1988) NSW ConvR 55-​379. Australian Guarantee Corporation Ltd v De Jager [1984] VR 483. Real Property Act 1900 (NSW), s 118. For equivalent provisions in other jurisdictions, see Transfer of Land Act 1958 (Vic), s 44(2); Transfer of Land Act 1893 (WA), s 199; Land Titles Act 1980 (Tas), s 149; Land Titles Act 1925 (ACT), s 152. The decision of Cassegrain is controversial, evoking as it does a rarely utilised section of the legislation. For a discussion of this case, see Thampapillai, “The Vexed Question of Agency and Torrens Fraud: The High Court in Cassegrain” (2016) 35 UTLR 43; Gordon, “Until Fraud Do Us Part: Reconciling Joint Tenancy and the Torrens Land System in Cassegrain v Gerard Cassegrain and Co Pty Ltd” (2016) 16 QUT LR 93. Schultz v Corwill Properties Pty Ltd (1969) 90 WN (Pt I) (NSW) 529 at 583. See also Wombat Nominees Pty Ltd v De Tullio (1990) 98 ALR 307 (clear proof of agency must be demonstrated); Conlan v Registrar of Titles (2001) 24 WAR 299. Schultz v Corwill Properties Pty Ltd (1969) WN (Pt I) NSW 529 at 583–​584; Russo v Bendigo Bank Ltd [1999] 3 VR 376 per Ormiston JA and Winneke P. The knowledge should be acquired in the course of the particular agency or employment: Myers v Aquarell Pty Ltd (in liq) [2000] VSC 429. Re Global Finance Group Pty Ltd (In Liq); Ex parte Read [1999] WASC 23; Conlan v Registrar of Titles (2001) 24 WAR 299 (improper mixing of investors’ funds by agent prior to registration –​act of agent “severs [4.245]  243

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Forgery, insufficient power of attorney or disability [4.250] South Australia is the only jurisdiction in which the Torrens statute provides

specifically that if a recording, certificate of title or other instrument of title is obtained by forgery or by means of an insufficient power of attorney or from a person under some legal disability, the certificate of title or other instrument is void.319 The proviso sets out, however, “that a registered proprietor who has taken bona fide for valuable consideration shall not be affected by reason that a certificate or other instrument of title was obtained by any person through whom he claims title from a person under disability, or by any of the means aforesaid”. The interpretation of the proviso, in particular the last seven words, has given rise to some difficulty and ambiguity. In Wicklow Enterprises Pty Ltd v Doysal Pty Ltd (1986) 45 SASR 247 O’Loughlin J concluded (at 260) that the provision should be read as if it were expressed in the following terms: Provided that the title of a registered proprietor who has taken bona fide for valuable consideration shall not be affected by reason that a certificate of title was obtained –​

(a) By any person through whom he claims title from a person under some legal disability; or



(b) By any of the means aforesaid (namely by forgery or by means of an insufficient power of attorney).

Thus, with respect to forgery, for example, the interpretation of O’Loughlin J would result in a certificate of title obtained by forgery being void, provided that a certificate of title obtained by forgery by a registered proprietor, who has taken bona fide for valuable consideration, is valid. Clearly, this interpretation leaves little scope for the operation of the forgery section. However, it does result in immediate indefeasibility of title where the title is obtained by forgery or by means of an insufficient power of attorney. After the decision in Wicklow, it was argued that the more obvious interpretation, and the one supported by the historical data concerning the introduction of the provision, requires the “deferred indefeasibility proviso” to be applied to forgery and insufficient power of attorney in addition to disability.320 Thus, the argument was posed that the correct construction of the proviso requires that it be read as if it were expressed:321 Provided that the title of a registered proprietor who has taken bona fide for valuable consideration shall not be affected by reason that a certificate of title was obtained by any person through whom he claims title

(a) from a person under a disability; or



(b) by forgery; or



(c) by means of an insufficient power of attorney.

The logic of this construction is clear and in Rogers v Resi-​Statewide Corporation Ltd (1991) 29 FCR 219 von Doussa J accepted this construction and thereby concluded that s 69II (now s 69(b)) of the Real Property Act 1886 (SA) conferred deferred indefeasibility in the case of forgery.

connection” with principal. Not knowledge that would be communicated to principal and not within scope of authority). 319 Real Property Act 1886 (SA), s 69(b). 320 See Moore, “Interpretation of the Real Property Act” (1988) 11 Adel L Rev 405 at 408–​410. 21 Moore, “Interpretation of the Real Property Act” (1988) 11 Adel L Rev 405 at 408. 3 244 [4.250]

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However, the matter now appears to have been decided conclusively in favour of the interpretation conferring immediate indefeasibility. In Arcadi v Whittem (1992) 59 SASR 51322 the Full Court of the Supreme Court of South Australia, after considering the different interpretations, concluded that the correct one was that favoured by O’Loughlin J. Debelle and Matheson JJ were concerned that the approach adopted by the court in the Rogers case would result in a registered proprietor who had taken bona fide but through a fraudulent transaction being in a better position than a registered proprietor who had taken bona fide but through a forgery. In the view of their Honours, this would be an anomalous result as a forgery is just a species of fraud.323 Prior folio or certificate of title [4.255]  The title of a registered proprietor is not indefeasible against the interest or estate of a registered proprietor claiming the same land under a prior folio, grant or certificate of title.324 Thus, in the situation where two folios or certificates of title (or grants) are issued in respect of the same land, the interest of the registered proprietor under the prior one prevails.325 This may occur where the two folios or certificates cover exactly the same area of land or where there is only a partial incompatibility.326 It is clear that the registered proprietor under the second folio or certificate cannot rely on the “protection” provision, such as s 44(2) of the Transfer of Land Act 1958 (Vic).327 The fact that the registered proprietor under the second folio or certificate is a bona fide purchaser for value is of no assistance in relation to this exception. In this instance the “paramountcy” provision giving protection to the registered proprietor under the first folio or certificate has priority over the “protection” provision.328 Further, the conflict arises as soon as the second title covering the same land is issued and is resolved whenever the dispute arises, in favour of the folio or certificate first issued whether the dispute is between the original parties or their successors.329 The exception only applies

322 Application for leave to appeal to the High Court was refused: (1993) 67 ALJR 514. The court held that the appeal would involve the construction of a Torrens System Act that had no equivalent except in the Northern Territory, and that the issue “turn[ed] to a significant extent upon punctuation and syntax and … involve[d]‌no real question of principle”. Importantly, however, the court went on to state its preference for the construction favoured by Debelle and Matheson JJ. (Olsson J in dissent had favoured the interpretation of von Doussa J.) 323 The Full Court’s decision was followed in Tsirikolias v Oakes (1993) 169 LSJS 249 and Public Trustee v Paradiso (1995) 64 SASR 387 (FC). See Wright, “Forgery and the Real Property Act 1886 (SA)” (1994) 16 Adel L Rev 227. 324 Real Property Act 1900 (NSW), s 42(1)(a); Transfer of Land Act 1958 (Vic), s 42(1)(a); Land Title Act 1994 (Qld), s 185(1)(e); Real Property Act 1886 (SA), s 69(e); Transfer of Land Act 1893 (WA), s 68(1); Land Titles Act 1980 (Tas), s 40(3)(b); Land Titles Act 1925 (ACT), s 58(1)(a); Land Title Act (NT), s 189(1)(d). (The terminology differs depending upon the statute. In Queensland, for example, it is “an indefeasible title”.) 325 Lloyd v Mayfield (1885) 7 ALT 48; Stevens v Williams (1886) 12 VLR 152. 326 A partial incompatibility will most often arise because of a mistake in survey. 327 Registrar of Titles v Esperance Land Co (1899) 1 WALR 118. See generally Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 318. 328 See generally Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 318. 329 Any other interpretation could lead to ridiculous results: see Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 191; Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), p 319. Whalan suggests that this proviso is subject to no other exception being applicable: see, for example, National Trustees Co v Hassett [1907] VLR 404. [4.255]  245

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where there are two folios or certificates in existence at the same time.330 If a certificate of title or an interest on it has been cancelled, perhaps by mistake, this provision is inapplicable and a person suffering loss may be able to claim compensation.331 In Queensland and the Northern Territory the Torrens statutes contain a further provision dealing with the situation where there are two titles in existence for the same piece of land.332 The section is applicable where the problem has arisen as a result of a failure to cancel an indefeasible title when a transfer is registered and a new indefeasible title is created. Although the provision is capable of varying interpretations, the most sensible is that it applies to ensure that the title of transferee, rather than the transferor, prevails.333 Erroneous description of land [4.260]  In all jurisdictions the registered proprietor’s title is not indefeasible with respect to

any portion of land which may have been included in the grant, certificate or folio by wrong description of parcels or boundaries.334 Except in Queensland, the Northern Territory and Tasmania, the relevant statutory provisions provide that the exception is inapplicable where the registered proprietor is a purchaser335 for value or someone deriving from or through such a purchaser.336 Generally, this exception concerns surveying mistakes and has usually arisen in the context of converting general law land to Torrens land.337 [4.265] The exception applies very specifically to cases of a “wrong description”.338 For

example, if an applicant describes incorrectly the land for which he or she intends to apply and the description of the land includes land for which he or she did not intend to apply, the land incorrectly included falls within this exception.339 The title to the land so included in the 30 3 331 332 333

See, for example, Medical Benefits Fund of Australia Ltd v Fisher [1984] 1 Qd R 606 at [4.170]. See [4.420]ff. Land Title Act 1994 (Qld), s 185(1)(f); Land Title Act (NT), s 189(1)(e). See Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), pp 381–383. 334 Real Property Act 1900 (NSW), s 42(1)(c); Transfer of Land Act 1958 (Vic), s 42(1)(b); Land Title Act 1994 (Qld), s 185(1)(g) (the lot “wrongly includes land”); Real Property Act 1886 (SA), s 69(c); Transfer of Land Act 1893 (WA), s 68(1); Land Titles Act 1980 (Tas), s 40(3)(f); Land Titles Act 1925 (ACT), s 58(1)(c); Land Title Act (NT), s 189(1)(f). 335 In South Australia the terminology is a “bona fide purchaser”. 36 It is unclear what the position in Tasmania is in the absence of a specific statutory provision. For a New 3 Zealand example of this issue, see Zachariah v Morrow and Wilson (1915) 34 NZLR 885. In Queensland and the Northern Territory the Torrens Acts specifically exclude any reference at all of the concept of bona fide purchaser for value and it is arguable, therefore, that there was an intention to alter the previous position. However, in Beames v Leader [2000] 1 Qd R 347 the Court of Appeal made it clear that s 185(1)(g) was to be considered a simple replacement for s 44 of the repealed Real Property Act 1861 (Qld) (relying on the report of QLRC, Consolidation of Real Property Acts, No 40 (1991), p 50). 37 See Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [11.290]. 3 The exception is not restricted to the issue of the first certificate of title or folio: see Michael v Onisiforou (1977) 1 BPR 9356. 338 Note the difference in wording in the Queensland and Northern Territory statutes: in these jurisdictions the registered proprietor does not obtain an indefeasible title in relation to “the interest of another registered proprietor if the lot described in the indefeasible title wrongly includes land in which the other registered proprietor has an interest”. Despite the difference in wording, it seems that the provision is aimed at misdescription of land boundaries: see Beames v Leader [2000] 1 Qd R 347. 339 See generally Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney), [11 290]. 246 [4.260]

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certificate, because of the wrong description, stays with the true owner.340 If, on the other hand, the applicant describes correctly the land for which he or she intends to apply, but the land or part of it is not actually the applicant’s, any grant, certificate or folio issued including the land is not an instance of “wrong description”. This is a complete lack of title but if the applicant becomes the registered proprietor without fraud, he or she will obtain an indefeasible title.341 [4.270]  In some cases, there may be an overlap and conflict between this exception and the

exception discussed at [4.255] where the same land is included in two certificates, grants or folios. Where the prior certificate was correct and the later certificate included land by wrong description (and the proprietor was a purchaser for value), it seems likely that the prior certificate prevails.342 Where the prior certificate included land by wrong description (but the holder cannot be said to be a purchaser for value of the misdescribed land) and the later certificate is correct, the later certificate prevails. The prior certificate holder does not get indefeasibility of the land included by wrong description.343 Where, however, the prior certificate included land by wrong description (and the holder of the prior certificate was a purchaser for valuable consideration of the misdescribed land) and the later certificate is correct, it appears that the prior certificate holder would prevail in accordance with the wrong description of land exception.344 It has been argued such an outcome is “inappropriate and counter-​intuitive and that a more just and logical outcome would be for the later registered proprietor, with the correct certificate, to be accorded priority”.345 [4.275]  In itself, however, the exception relating to wrong description of parcels or boundaries

is more limited than that relating to two certificates pertaining to the same land. This is because the exception is inapplicable to a registered proprietor who purchased for value, or who derived from or through such a purchaser, and intentionally purchased the whole of the land described in the certificate.346 Where a purchaser transferee relies upon the description of the land in the certificate and intends to purchase what is set out in that certificate, the exception is inapplicable. [4.280]  Difficulties may arise in certain circumstances. The following provides an example.

The physical portion of land intended to be sold is a shop. The certificate of title for the land upon which the shop is built includes an additional area of land beside the shop, which has been included by “wrong description”. Negotiations for the sale of the shop from the vendor

340

Marsden v McAlister (1887) 8 NSWLR (L) 300; Ex parte Solling (1893) 14 NSWLR (L) 399; Overland v Lenehan [1901] QLJ 59; Beames v Leader [2000] 1 Qd R 347. 341 Hamilton v Iredale (1903) 3 SR (NSW) 535; Michael v Onisiforou (1977) 1 BPR 9356. See Wikramanayake, Voumard: The Sale of Land (Thomson Reuters, subscription service, Sydney) at [11.290]. See Note “Indefeasibility” (2000) 74 ALJ 437 commenting on the interaction between these provisions and Coronet Homes Pty Ltd v Bankstown Finance Investment Co Ltd [1966] 2 NSWR 351 and Fliegner v MNM Pty Ltd (2000) NSW ConvR 55-​937. 342 Registrar of Titles v Esperance Land Company [1899] WAR 118; Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 320; Carruthers and Skead, “The Prior Certificate of Title and Wrong Description of Land Exceptions to Indefeasibility: Resolving the Overlap” (2009) 17 APLJ 241 at 254–​256. 343 National Trustees Company v Hassett [1907] VLR 404. 344 National Trustees Company v Hassett [1907] VLR 404. 345 Carruthers and Skead, “The Prior Certificate of Title and Wrong Description of Land Exceptions to Indefeasibility: Resolving the Overlap” (2009) 17 APLJ 241 at 257–​259. 46 Pleasance v Allen (1889) 15 VLR 601. 3 [4.280]  247

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to the purchaser proceed upon the basis that the purchaser intends to purchase the area of land upon which the shop is built. When the purchaser becomes the registered proprietor, a dispute may ensue as to entitlement to the extra piece of land included in the certificate. In such a case, it seems that the proviso to the exception would not apply to give the purchaser an indefeasible title to the whole of the land described in the certificate.347 This is because the purchaser was not a bona fide purchaser for value for all of the land included in the certificate of title. Rather, the intention was to buy the land on which the shop stood. Easements [4.285]  The Torrens statutes in all jurisdictions provide that particular unregistered easements

are an exception to the indefeasibility of the registered proprietor’s title.348 The scope of the exception varies from jurisdiction to jurisdiction. This exception is discussed in detail at [17.445]–​[17.465].349 Adverse possession [4.290] As is the case in relation to easements, the adverse possession exception to the

indefeasibility of the registered proprietor’s title varies considerably from jurisdiction to jurisdiction. The exception is discussed in detail at [3.385]–​[3.405].350 Tenancies [4.295] In all jurisdictions, some measure of protection is given to unregistered leases or tenancies.351 The extent of the protection given varies markedly from the very wide protection given in Victoria, to the situation in South Australia where only a tenant in actual possession under a tenancy for a term not exceeding one year is protected. In Victoria, for example, s  42(2)(e) of the Transfer of Land Act 1958 (Vic) provides that the land included in any folio of the Register or registered instrument is subject to the interest of the tenant in possession of the land, notwithstanding the same is not specifically recorded as an encumbrance. In Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566 the Federal Court reiterated that while the effect of the statutory protection is to deprive the registered proprietor of

347

Pleasance v Allen (1889) 15 VLR 601. The facts of the example posited are based upon the fact situation in the Pleasance case. See also Michael v Onisiforou (1977) 1 BPR 9356. Query and compare the position in Queensland and the Northern Territory. 348 Real Property Act 1900 (NSW), s 42(1)(a1); Transfer of Land Act 1958 (Vic), s 42(2)(d); Land Title Act 1994 (Qld), s 185(1)(c), (3); Real Property Act 1886 (SA), s 69(d); Transfer of Land Act 1893 (WA), s 68(3)(c); Land Titles Act 1980 (Tas), s 40(3)(e); Land Titles Act 1925 (ACT), s 58(1)(b); Land Title Act (NT), s 189(1)(c), (3). For an illustration of the operation of these provisions, see Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd & Anor (2013) 247 CLR 149; Registrar-​General of New South Wales v Jea Holdings [2015] NSWCA 74; Chick v Dockray (2011) 20 Tas R 167; Clarence City Council v Howlin (2019) TASFC 1. 349 The position in relation to profit à prendre and the Torrens system is discussed at [17.515]–​[17.520]. 50 See also the exception in the Real Property Act 1886 (SA) in s 69(f) discussed at [3.400]. Note also s 46 of 3 the Land Titles Act 1980 (Tas). 51 Real Property Act 1900 (NSW), s 42(1)(d); Transfer of Land Act 1958 (Vic), s 42(2)(e); Land Title Act 1994 3 (Qld), s 185(1)(b) (for leases granted before the commencement of the Land Title Act 1994 (Qld) (24 April 1994), see Real Property Act 1877 (Qld), s 11); Real Property Act 1886 (SA), s 69(h); Transfer of Land Act 1893 (WA), s 68(3)(f); Land Titles Act 1980 (Tas), s 40(3)(d); Land Titles Act 1925 (ACT), s 58(1)(d)(e); Land Title Act (NT), s 189(1)(b). 248 [4.285]

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indefeasibility of title which would otherwise be accorded to it, the tenant does not then automatically take priority over the registered interest holder. Rather, the competition between the interests is decided by the application of principles as if between two unregistered interests.352 The tenant has no greater protection than he or she would have had if the land were general law land. Whether the interest is treated as legal or equitable, the concept of notice then becomes relevant:  see [2.490]ff. The exception is discussed in detail at [14.440]–​[14.480]. [4.300] Although it has been argued that the protection given to tenants in Victoria is

too wide,353 it is apparent that the exception in South Australia is too narrow. The fact is that many persons holding under a tenancy exceeding one year do not register their leases. Transaction costs of placing the document in registrable form and actual registration costs deter registration. Such a tenant cannot enforce the lease against a purchaser from the landlord even if the purchaser knows about the lease.354 The new registered proprietor has an indefeasible title except in the case of fraud. The narrowness of the exception encourages, therefore, disputes about whether a registered proprietor’s “notice” was actually more than notice and constituted “fraud”. The Western Australian exception, which gives protection to lessees where the term does not exceed five years, provides a balance between the interests of the tenant and the interests of a purchaser from the landlord.355 A  lease exceeding five years represents a substantial investment on the part of the tenant and it seems reasonable in these circumstances to require that the lessee register the lease in order to gain protection.356 The recent case of Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2007] WASC 88 demonstrated the perils for a lessee with a lease exceeding five years who has not registered the lease. The lease

352 The court relied on the High Court decisions in Burke v Dawes (1938) 59 CLR 1 and Barba v Gas & Fuel Corporation of Victoria (1976) 136 CLR 120. See McNicol, “Constructive Notice of a Spouse in Actual Occupation” (1981) 13 MULR 226. Compare the decision of Middleton J at first instance in the Perpetual Trustee case (Haslam v Money for Living (Aust) Pty Ltd (2008) 250 ALR 419) where his Honour held, at 442, that if a person came within the tenant in possession exception, the interest would have priority and no comparison of competing equities was required. See similarly Balanced Securities Ltd v Bianco [2010] VSC 162 at [114]–​[116] decided before the Federal Court decision in Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566. 353 Compare VLRC, Report No 12, p 11 where it is suggested that the exception be retained in its current form. Additional costs would be incurred if leases had to be registered. The Commission however, took the view that an equity of rectification should not be protected under the exception: cf Downie v Lockwood [1965] VR 257. 354 RM Hosking Properties Pty Ltd v Barnes [1971] SASR 100. Compare Charmar Electrical Pty Ltd v Minda Incorporated (1990) 55 SASR 112, where the Hosking case was distinguished on the basis that in Hosking (unlike in Charmar) there was no suggestion that the purchaser had sought the benefit of, or was subject to, the burden of the unregistered lease. 355 Further, it is specifically provided that options to purchase and renew are not enforceable against the subsequent registered proprietor unless protected by caveat: Transfer of Land Act 1893 (WA), s 68. See Osborne Park Co-​operative Society Ltd v Wilden Pty Ltd (1989) 2 WAR 77, where an option to renew, unprotected by a caveat, was held to be unenforceable against a subsequent registered proprietor. The decision was approved by the High Court in Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407. 356 It has been suggested that a failure to register leases with a term exceeding five years may result in the leases being tenancies at will only (even in circumstances where a caveat has been lodged to protect the interest). The better view, however, is that the principle expounded in Barry v Heider (1914) 19 CLR 197 at 216 ensures that such leases remain enforceable for the term in equity and can be protected by caveat: see Wilson, “What is a Caveat for?” (2008) 22(8) APLB 75. [4.300]  249

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was destroyed when the lessor transferred the land to a purchaser, who became the registered proprietor without fraud.357 Rates and taxes [4.305]  In all jurisdictions, there are specific Acts which impose rates, taxes, duties and charges

against land. In the absence of a specific exception in the relevant Torrens statute for such rates and charges, enforceability against a purchaser who becomes the registered proprietor depends upon whether the statute imposing the charges overrides the Torrens statute and, in particular, the provisions in the Torrens statute conferring indefeasibility on registration.358 In Victoria,359 Western Australia and the Australian Capital Territory the Torrens Acts provide a specific exception to the indefeasibility of title with respect to unpaid rates, taxes and charges of specified authorities.360 In Tasmania there is a specific exception with respect to money charged on land under an Act361 and in South Australia there is an exception for unpaid succession duty.362 It has been suggested that if governments and local councils wish to bind the land with respect to unpaid rates, for instance, they should be required to place a note on the title.363 An alternative means of providing purchasers with information about statutory charges is the use of centralised land information networks. When these are operational and linked with the source of title, any purchaser will be able to discover all such information from one single inquiry.364 Section 71, South Australian Act [4.310]  Unlike the other jurisdictions, the Real Property Act 1886 (SA) contains a general

saving provision setting out that the indefeasibility of the registered proprietor’s title is subject to a number of matters. Section 71 of the Act provides:

357 Discussed in Wilson, “Registered Title is Everything” (2007) 21 (9) APLB 101. The decision was reversed in Lighting by Design (Aust) Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23 on other grounds; on the facts the Court of Appeal held that a new agreement for lease had arisen between the tenant and the new owner on the same terms as the original lease. The court agreed, however, that on completion of the sale to the new registered proprietor, the original unregistered lease did not bind the new registered proprietor. See Mackay and Masson, “Business as Usual –​A Cautionary Tale” (2008) 22 APLB 40. 358 See the discussion on overriding statutes: see [4.325]–​[4.345]. See [8.275]–​[8.285] on the current required disclosures by the vendor when a contract of sale is entered into. See Neave, “Towards a Uniform Torrens System: Principles and Pragmatism” (1993) 1 APLJ 114 at 122; O’Connor, “Public Rights and Overriding Statutes as Exceptions to Indefeasibility” (1994) 19 MULR 649. 359 The Victorian exception is discussed in VLRC, Report No 12, p 12. 360 Transfer of Land Act 1958 (Vic), s 42(2)(f); Transfer of Land Act 1893 (WA), s 68(3)(d); Land Titles Act 1925 (ACT), s 58(1)(f). 361 Land Titles Act 1980 (Tas), s 40(3)(g). 362 Real Property Act 1886 (SA), s 69(i). 363 See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 331. In 1993, in the Northern Territory the Real Property (Amendment) Act (No 2) 1993 (NT) made provision for statutory charges over land to be registered: s 48A. If the statutory charge was not registered, the restrictions imposed or the powers arising under the charge were not exercisable in relation to the land: s 56B(2). However, where the Act under which the charge was established provided that the charge was to be an “overriding statutory charge”, then the charge prevailed over all other interests in the land: s 56B(1) (see now Land Title Act (NT), ss 31, 35, 38). 364 See VLRC, Report No 12, p 13. See generally O’Connor, Christensen and Duncan, “Legislating for Sustainability: A Framework for Managing Statutory Rights, Obligations and Restrictions Affecting Private Land” (2009) 35 Mon Uni LR 233. 250 [4.305]

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Nothing in the two preceding sections contained shall be construed so as to affect any of the following rights or powers, that is to say–​ (a) … the power of the Sheriff to sell the land of a judgment debtor under a writ of execution; (b) … the power of the Court to order the sale of land; (c) … the right of the Official Receiver or of any trustee to land transmitted on the bankruptcy or statutory assignment of the registered proprietor; (d) … the rights of a person with whom the registered proprietor shall have made a contract for the sale of land or for any other dealing therewith; (e) … the rights of a cestui que trust where the registered proprietor is a trustee, whether the trust shall be express, implied, or constructive;

(f) the right of promoters of an undertaking to vest land in themselves by deed-​poll pursuant to the Compulsory Acquisition of Land Act 1925 or any Act amending the same;

provided that no unregistered estate, interest, power, right, contract, or trust shall prevail against the title of a registered proprietor taking bona fide for valuable consideration, or of any person bona fide claiming through or under him.

Even without the provision, it seems that each of these matters is an exception to indefeasibility either under the overriding statute or the in personam exceptions discussed at [4.325]–​[4.345] and [4.350]–​[4.390]. Thus, although not specifically mentioned in the other statutes, it is submitted that the matters listed above in the South Australian statute do constitute exceptions to indefeasibility of title.365

Other possible exceptions to indefeasibility of title [4.315]  Some exceptions to indefeasibility of title,366 which arise outside the Torrens statutes

themselves, are necessary in order for transactions to proceed in an efficient manner. The range and extent of these exceptions has been criticised.367 As Whalan commented in 1982: “[T]‌his type of exogenous growth forms a serious and constantly increasing threat to the integrity of the Torrens system”.368 Registered volunteers [4.320]  In Queensland and the Northern Territory the Torrens statutes specifically provide

that the registered volunteer obtains an indefeasible interest.369 In the other jurisdictions apart from South Australia, the Torrens statutes themselves do not specifically provide that a registered proprietor obtains an indefeasible title only if a bona fide purchaser for value. In South Australia, the wording of s 69 appears to limit the protection of indefeasibility to the registered proprietor who has provided valuable consideration. Recently, the South Australian Supreme Court confirmed this view of the legislation and held that a volunteer who becomes the registered proprietor does not acquire an indefeasible title.370 In the remaining jurisdictions

365 See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 331–​332. 66 Apart from the following exceptions, there is a further issue as to whether the Crown is bound by the 3 Torrens statutes. See Transfer of Land Act 1958 (Vic), s 3(3). 367 VLRC, Report No 12, p 3. 368 Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 332. 369 Land Title Act 1994 (Qld), s 180; Land Title Act (NT), s 183. 370 Peck v Peck [2011] SASCFC 63. [4.320]  251

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there is no specific provision denying indefeasibility of title to a registered proprietor who is a volunteer. The “paramountcy” provisions, such as s 42 of the Transfer of Land Act 1958 (Vic), provide simply that the registered proprietor, except in the case of fraud, holds the land subject only to those interests noted on the Register, but absolutely free from all other encumbrances. However, there are a number of provisions in the Torrens statutes that suggest that a registered volunteer is not intended to obtain an indefeasible title. For example, in the Victorian Act, provisions such as s 43 (“notice” provision), s 44(2) (“protection” provision) and ss 52 and 110(3) all suggest that it is only a purchaser who should benefit by the protection offered in the Act.371 In the Victorian decision of King v Smail [1958] VR 273 Adam  J held that a registered volunteer did not acquire an indefeasible title free from prior unregistered interests. In part, his Honour’s decision relied upon the provisions mentioned above which support the notion that protection is intended only for the registered proprietor/​purchaser.372 King v Smail was decided, however, at a time when deferred indefeasibility was the accepted theory. As has been stated at [4.140], the theory of deferred indefeasibility required a reading of the relevant statute which did not give clear prominence to the provisions such as s 42 of the Transfer of Land Act 1958.373 After the decision in Frazer v Walker [1967] 1 AC 569, and the inherent acceptance there of the importance of the “paramountcy” provision, it was argued that registered volunteers should acquire an indefeasible title because the vital “paramountcy” provisions do not specifically require that the registered proprietor be a purchaser. However, despite the relative importance of the paramountcy provisions, they cannot be considered in isolation and it remains the case that a number of other provisions in the Torrens statutes imply that indefeasibility of title only attaches to the registered proprietor who is a purchaser. It seems that the framers of the Torrens legislation intended that only purchasers for value acquire indefeasibility and that there is no compelling reason existing now pursuant to which volunteers should obtain an indefeasible title.374 Further, the “overriding principle of fairness” suggests that a person’s equitable interest should not be capable of defeat simply by the registered proprietor “donating” it to another person who becomes registered. Coldrey  J used this reasoning in holding that the decision

371 See also Gibbs v Messer [1891] AC 248; Clements v Ellis (1934) 51 CLR 217. 372 It is to be noted that a decision in favour of the registered volunteer would essentially have permitted the registered proprietor to succeed in a scheme to defraud her husband’s creditors. 373 The “paramountcy” provisions. 374 See Official Receiver v Klau; Ex parte Stephenson Nominees Pty Ltd (1987) 74 ALR 67. If the principle that a volunteer does not acquire an indefeasible title had been argued in two particular cases, arguably fairer decisions would have resulted: see State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398 and also Medical Benefits Fund of Australia Ltd v Fisher [1984] 1 Qd R 606. The arguments for and against indefeasibility of title for volunteers are canvassed in Atherton, “Donees, Devisees and Torrens Title: The Problem of the Volunteer under the Real Property Acts” (1998) 4 Aust J Leg Hist 121; Radan, “Volunteers and Indefeasibility” (1999) 7 APLJ 197; Croucher, “Inspired Law Reform or Quick Fix? –​ A Reflection on Voluntary Transactions and Forgeries in the Torrens System” (2009) 30 Adel L Rev 291. See also and compare Tooher and Dwyer, Introduction to Property Law (5th ed, LexisNexis Butterworths, Sydney, 2008), p 116 who argue that there are sound reasons for according indefeasibility to volunteers; for instance, a volunteer may have altered his or her position on the basis that the gift was valid and may have no other recourse to recover loss if indefeasibility of title is denied him or her.

252 [4.320]

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in King v Smail correctly stated the law for Victoria, despite the increased importance of the paramountcy provisions.375 In contrast, the New South Wales Court of Appeal in 1988 held in Bogdanovic v Koteff (1988) 12 NSWLR 472 that a registered volunteer obtained an indefeasible title and was thereby not subject to a prior unregistered interest created by the previous registered proprietor.376 The court took the view that the “paramountcy” provisions, which had gained the ascendancy since Frazer v Walker, did not require the registered proprietor to be a purchaser.377 In Western Australia Owen J in Conlan v Registrar of Titles (2001) 24 WAR 299 held that a volunteer should obtain indefeasibility of title on registration. In the view of his Honour, provisions requiring a bona fide purchase specifically so provided and the provision on indefeasibility (Transfer of Land Act 1893 (WA), s 68(1)) contained no such requirement. Recently, the High Court in Farah Constructions Pty Ltd v Say-​Dee Pty Ltd (2007) 230 CLR 89 at [198] stated that volunteers acquire indefeasibility of title upon registration. Without reasoning or authority provided by the High Court it is possible that the dicta concerning volunteers was directed to the operation of the first limb of Barnes v Addy (1874) LR 9 Ch App 244. Short of statutory intervention, or without an unequivocal High Court decision on this area, the matter remains unresolved. Overriding legislation [4.325]  In all jurisdictions provisions of the Torrens statutes are capable of being overridden

or effectively repealed by a later statute.378 It is not necessary that the later statute specifically provides that earlier statutes or parts thereof are repealed; it is sufficient that repeal is the ordinary and proper implication to be drawn from the later statute.379 The result of this exception is that rights, charges and interests relating to land which are created pursuant to a later statute may be enforceable against the title of the registered proprietor even though the registered proprietor did not know of them and in some instances had no means of finding

375

Rasmussen v Rasmussen [1995] 1 VR 613; Valoutin Pty Ltd v Furst (1998) 154 ALR 119. See also Lansen v Olney (1999) 100 FCR 7. It might be thought that the King v Smail [1958] VR 273 type of fact situation lends strong support to this argument that volunteers should not get an indefeasible title. In King v Smail the court was concerned to ensure that the registered volunteer could not simply by registration defeat the interests of the creditors of her husband. However, a number of fact situations similar to King v Smail would now be covered by the “claw-​back” provisions in the bankruptcy legislation: Bankruptcy Act 1966 (Cth), ss 115–​116, 120–​123. See Radan, “Volunteers and Indefeasibility” (1999) 7 APLJ 197. 376 Leave to appeal to the High Court was refused as the substance had been removed from the dispute. The holder of an unregistered interest who was attempting to maintain a right to occupation against the volunteer registered proprietor had entered a nursing home and thus had no need to pursue her right to occupation. 77 Query the situation where a volunteer has notice of an unregistered interest: (1998) 12 NSWLR 472 at 480. 3 See Atherton, “Donees, Devisees and Torrens Title: The Problem of the Volunteer under the Real Property Acts” (1998) 4 Aust J Leg Hist 121. Compare the decision in Bogdanovic with Allen v Snyder [1977] 2 NSWLR 685. 78 South-​Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603; Miller v Minister of 3 Mines [1963] AC 484 (PC); Calabro v Bayside City Council [1999] 3 VR 688. See also Attorney-​General (NT) v Minister for Aboriginal Affairs (1990) 90 ALR 59. 79 Miller v Minister of Mines [1963] AC 484 (PC); British American Cattle Co v Caribe Farm Industries Ltd [1998] 1 3 WLR 1529 (PC).

[4.325]  253

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out about them.380 Of course, in some cases, alternative principles of statutory interpretation may be relevant and useful in the determination of a particular issue. For instance, where the inconsistent statutes comprise one dealing with a specific matter and the other dealing with the matter generally, the statute dealing with the matter specifically prevails, and a statute dealing with “public rights” will usually prevail over one dealing with “private rights”.381 In some cases, the statute may provide for the right created to be entered on the Register and may further provide that the right is ineffective until so registered. This system fits with the Torrens system ideal of the Register reflecting accurately the state of the title. The development of electronic conveyancing systems will further encourage and assist in the ideal of a conclusive register, including notifications of interests and rights arising under other statutes. Already, the modern Torrens legislation in Queensland and the Northern Territory reinforces the concept of the Register reflecting title by providing for a number of forms of information to be recorded in the land register.382 Many notices, orders and agreements arising from other statutes are now recorded in the Register and, therefore, problems arising from overriding statutes should be reduced.383 Nevertheless, even in these jurisdictions, the Register may not contain a full record of all interests in a piece of land. [4.330]  In the other jurisdictions most statutes which create rights and interests having the

potential to interfere with the indefeasibility of the registered proprietor’s title do not require the interest to be entered on the Register and, in some cases, make no provision at all for such rights to be so recorded.384 The case of Pratten v Warringah Shire Council [1969] 2 NSWLR 161 provides an example.

380

Pratten v Warringah SC [1969] 2 NSWLR 161. This can be accomplished by the setting up of a separate registration system for particular rights (eg, mining registers of mining leases, licences) or by allowing for the creation of interests which do not have to be on the Register. 381 Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 at 505 per Kirby J; Calabro v Bayside City Council [1999] 3 VR 688. In this context, the possible effects of “privatisation” legislation in relation to indefeasibility of title requires consideration: see Broadcast Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (Lands) (2004) 221 CLR 178. 382 Land Title Act 1994 (Qld), ss 29(2), 28(2); Land Title Act (NT), ss 31, 35, 38. See also, for example, s 34 of the Land Title Act 1994 (Qld), which provides also for the Registrar to keep separately from the Register information considered necessary for the efficient operation of the Register. This may include information given to the Registrar by another entity: s 34(2). Note also s 26W of the Transfer of Land Act 1958 (Vic) (inserted in 1998), which provides that if the Registrar is required to make recordings on the Register in respect of land that is not Torrens land, the Registrar must bring the land under the Transfer of Land Act 1958 (and presumably make the requisite recordings on the title). 383 Note, however, there is an ever-​increasing number of restrictions, obligations and administrative controls created by public statutes concerning the use of private land. The impetus to ensure the sustainable use of land has led to this proliferation of controls. While the initial view was that these controls should be reflected on the Torrens Register where possible, it is now recognised that the number and variety of “statutory obligations” would make such a task prohibitively expensive and administratively very difficult. Various other frameworks and proposals for appropriate management of the issue have been canvassed: see O’Connor, Christensen and Duncan, “Legislating for Sustainability: A Framework for Managing Statutory Rights, Obligations and Restrictions Affecting Private Land” (2009) 35 Mon Uni LR 233; Bell and Christensen, “Use of Property Rights Register for Sustainability –​A Queensland Case Study” (2009) 17 APLJ 86; Bell, “Greening the Land Title Register –​How Can the Land Title Register Assist with Sustainable Decision Making?” (2010) 18 APLJ 263. 84 See Miller v Minister of Mines [1963] AC 484 (PC) at 498; Bank of Western Australia v Connell (1996) 3 16 WAR 483. 254 [4.330]

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An unregistered interest of the council (a drainage reserve) created pursuant to a provision of the Local Government Act 1919 (NSW) took priority over the title of the registered proprietor of the land. Before purchasing, Pratten had made inquiries of the Council asking if it claimed any interest and he had made a thorough search of the title. The Council assured Pratten that it claimed no interest in the land. After Pratten became the registered proprietor, the Council asserted its rights claiming that it was the owner of the land in dispute. The court held in favour of the Council on the basis that the title of the registered proprietor is inherently subject to rights created by overriding statutes. In this case, the Local Government Act 1919 overrode the Real Property Act 1900 (NSW). The absolute indefeasibility of title ordinarily flowing from registration does not help, where “the fee simple has in effect been removed from the registration system”.385 The case of Commonwealth v South East Queensland Aboriginal Corp for Legal Services [2006] 1 Qd R 12 provides another example. The Aboriginal and Torres Strait Islander Commission Act 1989 (Cth) (see now Aboriginal and Torres Strait Islander Commission Amendment Act 2005 (Cth)) provided that ATSIC could make grants to particular bodies. A grant was made to South East Queensland Aboriginal Corp for Legal Services (SEQACLS), which purchased land with the money and became the registered proprietor of the land. Subsequently SEQACLS sold the land and the Commonwealth then lodged a caveat claiming that, pursuant to s 21A(1), it had an interest in land purchased with grant moneys. Although on the facts of the case relevant equitable principles were used to provide an acceptable result, the Commonwealth’s interest was a valid one even though there was no record of it on the Register.386 [4.335] The overriding statute exception is based on an initial finding that there is indeed

an inconsistency between two statutes. In a number of recent cases the courts have adopted what has been termed the “sequential” response or argument and found, in a variety of fact situations, that apparently contradictory statutory provisions can be read together and are not inconsistent.387 This new approach helps to ensure that the principle of indefeasibility is

385

Pratten v Warringah Shire Council [1969] 2 NSWLR 161 at 166. The fact that the Council did not apply for its interest to be placed on the Register when that became possible as a result of a statutory amendment did not amount to an estoppel against the Council. This was because there was no duty on the Council to do so. Further, letters written by the Council stating it had no interest in the land did not amount to an estoppel as the Council had no right to dispose of its interests in land without the consent of the Governor-​in-​Council. See O’Connor, “Public Rights and Overriding Statutes as Exceptions to Indefeasibility of Title” (1994) 19 MULR 649 at 668, where she criticises the reasoning of Street J in Pratten on the basis he did not consider and analyse in the appropriate manner the question as to whether the particular provision was actually in conflict with the Torrens legislation. See also Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 at 33–​35; Quach v Marrickville Municipal Council (Nos 1 and 2) (1990) 22 NSWLR 55; Calabro v Bayside CC [1999] 3 VR 688. 386 Discussed in O’Brien, “Putative Mortgagee Subrogated to Purchaser’s Lien” (2005) 79 ALJ 618. 87 The development has been discussed in a number of journal articles: see, for example, Lewis and 3 Schroeder, “The Indefeasibility of Title and Overriding Statutes: Determining Which Prevails in the Event of an Inconsistency” (2008) 16 APLJ 147; Edgeworth, “ ‘Very High Bar to Clear’: Implied Repeal of Torrens Legislation after City of Canada Bay Council v Bonaccorso Pty Ltd” (2008) 82 ALJ 436; Edgeworth, “Indefeasibility and Overriding Statutes: An Attempted Solution” (2009) 83 ALJ 655; Hepburn, “Interpretive Strategies in the Overriding Legislation Exception to Indefeasibility” (2009) 21(2) Bond LR 86. While not directly considering overriding legislation and indefeasibility, the High Court decision in Pike v Tighe [2018] HCA 9, highlights the problems that can occur with the interaction between planning legislation and other land-​related legislation. In this instance, the High Court held that a later owner was subject, because of [4.335]  255

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upheld. For instance, in Horvath v Commonwealth Bank of Australia [1999] 1 VR 643388 the Victorian Court of Appeal held that s 49(a) of the Supreme Court Act 1986 (Vic), providing that loan contracts entered into by a minor were void, and s 42(1) of the Transfer of Land Act 1958 (Vic) could stand together. The court held that the statutes dealt with quite different matters of law and substantial authority existed for the principle that the fact an instrument was void did not protect it from the effects of registration.389 Further, even if the statutes are apparently inconsistent, there might be an initial finding that on the facts of the particular case the overriding statutes exception does not need to be used at all in order for the matter to be resolved.390 In Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 the majority of the High Court, by its findings of fact, avoided deciding the case on the basis of an application of the “overriding statutes” exception. An issue arose as to whether the condition in a development consent issued by the local council for a two-​lot subdivision could be enforced against a subsequent registered proprietor of the burdened land. The condition required an easement to be constructed on the burdened land in favour of the other lot (the benefited land). The easement was never created and the only notification of the condition was an endorsement on the registered plan as to the site of a “proposed right of way”. Originally, there was a specific notification on the certificate of title of the servient tenement disclosing the existence and location of a proposed right of way, but this had disappeared from the Register. At first instance and in the New South Wales Court of Appeal it was held that the condition could be enforced against the new registered proprietor: the registered proprietor’s title was not indefeasible. The planning statute and the Torrens statute were inconsistent and, as the planning statute was later in time, its provisions prevailed.391 On appeal, the majority of the High Court, however, interpreted the facts so that the issue of overriding statutes did not arise. McHugh ACJ and Hayne and Heydon JJ found on the facts that the council had not actually imposed a condition;392 that, in the final analysis, the subdivision had been allowed to proceed without the imposition of the condition requiring creation of an easement.393 The majority found further that even if such a condition had been imposed, it would not have been enforceable against a subsequent owner of the burdened land, as it would have been a condition relating only to the subdivision of the land. The subsequent owner had not undertaken the subdivision and orders restraining or remedying breaches of the relevant planning legislation could not be made against persons who were not actually in breach of the Act.394 Each statute operated within its own time zone and parameters. The Environmental the particular wording of s 245 of the Sustainable Planning Act 2009 (Qld) to comply with development conditions which had been ignored by previous owners of the land. 388 See also Benmar Properties Pty Ltd v Makucha [1996] 2 Qd R 1. 389 Compare Coras v Webb [1942] QSR 66. 390 Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472. See Notes (2003) 77 ALJ 88; (2003) 77 ALJ 416; (2005) 79 ALJ 143. 391 The planning statute was also more specific than the Torrens statute and it was “more of a public law enactment compared to the Real Property Act’s private law complexion”: Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2002) 55 NSWLR 446 at [14] per Meagher JA. 92 Compare the judgments of Kirby J at 502 and Callinan J at 514–​515, both in dissent. 3 393 The reference on the plan of subdivision to a proposed right of way was just a statement of intention by the owner of the burdened land. 94 See similarly Kogarah Municipal Council v Golden Paradise Corporation [2005] NSWCA 230 noted in (2005) 3 79 ALJ 747; Kilpatrick v Wollongong City Council [2005] NSWLEC 658. 256 [4.335]

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Planning and Assessment Act 1979 (NSW) did impose a duty on the person subject to the development consent condition; however, once the property was passed to a purchaser who became the registered proprietor, the Torrens legislation could operate to ensure indefeasibility for the purchaser. The High Court noted, however, that if a consent condition relating to the ongoing and continuing use of the land had been imposed, “[t]‌here would then be a real and lively question about how the two statutory schemes (the scheme under the EPAA and the Torrens system for which the Real Property Act provides) were to be reconciled, and questions of implied repeal or amendment might arise”.395 This sequential approach was more clearly highlighted in City of Canada Bay Council v Bonaccorso Pty Ltd (2007) 71 NSWLR 424. Section 45(1) of the Local Government Act 1993 (NSW) provided that the council could not sell or otherwise dispose of “community land”. The council purchased land which became designated as “Chapman reserve” and in 2003 sold the Chapman reserve to Omaya Holding Pty Ltd. Subsequently, Omaya became the registered proprietor. Another resident in the area objected on the ground that the council had no power to sell the land and sought an order that the register be rectified. Omaya claimed an indefeasible title. It was argued that the Local Government Act 1993, being a later enactment, overrode the Real Property Act 1900 (the Torrens provision) and impliedly repealed the Torrens statute. The New South Wales Court of Appeal, after finding that the land was “community land”, held there was no inconsistency between the statutory provisions. The court took the view that each provision operated in its own time zone (at [83]). [T]‌he statutes do have effect sequentially, that is …. up until registration the transaction or transfer is null and void, but on registration … there is virtually a new Crown grant of the fee simple in the land, so that from that moment the transferee obtains a new clean title … [T]he result is that the transferee’s title is wholly derived from the act of registration by the Registrar General and not upon transfer or the antecedent transaction which gave rise to the transfer.396

As has been suggested by Edgeworth, the consequence of this approach is that overriding statutes appear to be divided into two categories: those which have a continuing operation, such as South-​Eastern Drainage Board (South Australia) v Savings Bank of South Australia (1939) 62 CLR 603,397 and those which have a “once-​off” effect. This approach provides some break on the use of the overriding statute exception as a means of undermining indefeasibility of the registered proprietor’s title. In Hillpalm, for example, the statute in question was interpreted narrowly and arguably the majority decision “implicitly [supported] the paramountcy of indefeasibility”.398 Nevertheless, if the character of a consent condition concerns continuing use of the land, it may affect the indefeasibility of a subsequent registered proprietor’s title. Protection may only be assured by undertaking searches of local council records.399 On the other hand, it has been argued that although there are compelling policy reasons for upholding the concept of indefeasibility wherever possible, there are also strong policy reasons for ensuring that statutory obligations and rights under planning and environmental legislation 395 396

Hillpalm Pty Ltd v Heaven’s Door Pty Ltd (2004) 220 CLR 472 at 491. Compare The Owners of East Fremantle Shopping West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498. 397 See also Pratten v Warringah SC [1969] 2 NSWLR 161 and Quach v Marrickville Municipal Council (Nos 1 and 2) (1990) 22 NSWLR 55. Compare The Owners of East Fremantle Shopping West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498. 398 Griggs, “Hillpalm Pty Ltd v Heaven’s Door Pty Ltd” (2005) 11 APLJ 244. 99 Note (2005) 79 ALJ 143 at 145. 3 [4.335]  257

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are complied with.400 In some instances this may necessitate that the obligation attaches to the land and competing policy considerations will need to be weighed by the courts.401 In The Owners of East Fremantle Shopping West Strata Plan 8618 v Action Supermarkets Pty Ltd (2008) 37 WAR 498 the Western Australian Court of Appeal considered this issue. Section 20(1)(a) of the Town Planning and Development Act 1928 (WA)402 provided that the creation of a lease or licence to use or occupy part of a lot for a term in excess of 10 years was illegal, void and unenforceable, if entered without the approval of the Town Planning Board. Section 21(1) provided that a lease not complying with the requirements could not be received and registered. The legislation was specific and the purpose of ss 20 and 21 was to regulate planning and prevent unauthorised subdivision by the creation of long-​term occupancy rights. Although not having to decide the issue,403 in obiter dicta, the Western Australian Court of Appeal took the view that registration of a lease, where the appropriate approval had not been given under s 20(1)(a), may not confer indefeasibility of title. Buss JA (McLure JA and Murray  AJA agreeing) stated that, “Parliament may by a clearly expressed intention in a subsequent enactment, qualify or override rights and powers which a registered proprietor would otherwise have under the Transfer of Land Act”. In this case there were competing public policy considerations in the two statutory regimes and it was reasonably arguable that the later statute should prevail and deny indefeasibility to the registered title holder.404 In New South Wales s 42(3) of the Real Property Act 1900 (NSW)405 now provides that “this section [s 42, the key indefeasibility section] prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in this section”. It is clear this amendment was intended to ensure that indefeasibility held sway where other statutes impliedly overrode its provisions. The provision has been criticised on a number of grounds,406 not the least of which is that the recent cases discussed above suggest that the amendment may not be necessary. It is also possible s  109 of the Commonwealth Constitution, which provides that the Commonwealth law prevails when there is an inconsistency between a Commonwealth law and a State law, may operate to deny the benefits of indefeasibility. In House of Peace Pty

400

See Edgeworth, “Planning Law v Property Law: Overriding Statutes and the Torrens System after Hillpalm v Heaven’s Door and Kogarah v Golden Paradise” (2008) 25 EPLJ 82. 401 Edgeworth, “ ‘Very High Bar’ to Clear: Implied Repeal of Torrens Legislation after City of Canada Bay Council v Bonaccorso Pty Ltd” (2008) 82 ALJ 436 at 437–​438. 402 See now Planning and Development Act 2005 (WA). 403 Section 20(1)(e) of the Town Planning and Development Act 1928 (WA)provided that, in s 20(1)(a), licence to use or occupy did not include any easement, that is, approval of the Commission did not have to be sought in relation to the grant of an easement. On the facts, the Western Australian Court of Appeal held that the agreement in question (registered as a transfer in the list of encumbrances) gave rise to an easement, not a lease or licence, and was thus not void under s 20(1)(a). 404 The case came on appeal from Master Sandercock who had decided that the appellant (claiming registration did not confer indefeasibility of the agreement) had no reasonable cause of action because once registered the registered holder’s right (whether it was an interest falling under s 20(1)(a) or not), was indefeasible. On the facts, however, the Western Australian Court of Appeal held that it was reasonably arguable that the right constituted an easement and registration would confer indefeasibility. 405 Introduced by the Real Property and Conveyancing Legislation Amendment Act 2009 (NSW). 06 Edgeworth, “Indefeasibility and Overriding Statutes: An Attempted Solution” (2009) 83 ALJ 655. Edgeworth 4 also comments that the provision is unlikely to be able to achieve its purpose as parliamentary sovereignty means the legislature cannot bind future legislatures and that it may have unintended and draconian consequences as it is not confined to future legislation. 258 [4.335]

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Ltd v Bangladesh Islamic Centre of New South Wales Inc (2009) 231 FLR 362 Nicholas J had to decide whether a provision of the Corporations Act 2001 (Cth), which vested the property of a deregistered company in the Australian Securities and Investment Commission, was inconsistent with the indefeasibility provision in the New South Wales Real Property Act 1900. In commenting on the provisions, his Honour stated that: s 109 will operate upon a direct inconsistency or collision of the kind which arises, for example, when Commonwealth and State laws make contradictory provision upon the same topic making it impossible for both laws to be obeyed (at [81])… [but] no inconsistency arises where it is obvious that the Commonwealth law was intended to operate within a legal framework provided by the common law and State law (at [79]).407

On the facts, he found that the Corporations Act provisions, pursuant to which Australian Securities and Investements Commission (ASIC) took the same property rights as the company and subject to its liabilities, were predicated upon an existing legal system and were supplementary to the State law. Therefore, there was no inconsistency between the Commonwealth and State laws.408 [4.340]  The principle also applies where the overriding interest creates a “private” right or

interest. In Brown and Austrust Ltd v Commonwealth Bank of Australia (1993) 173 LSJS 145 (at first instance); (1994) 63 SASR 203, s 9(4A) of the Retirement Villages Act 1987 (SA) was considered.409 Section 9(4) provided that the right of a resident to repayment of a premium is a charge on the land and s 9(4A) specifically provided that such a charge ranks in priority to any other mortgage, charge or encumbrance. A  question arose as to priority between a Torrens mortgage and a charge created by s 9(4A). Debelle J, whose decision was approved by the Full Court held that the s 9(4A) provision was intended to apply to Torrens land and that the provisions were inconsistent and that therefore the later provision (s 9(4A)) should prevail over the Torrens provision. [4.345] A registered proprietor who loses part or all of his or her interest because of the

operation of an overriding statute may not be able to claim compensation from the assurance fund. In Trieste Investments Pty Ltd v Watson (1963) 64 SR (NSW) 98 a person in a similar position to Pratten claimed damages from the fund on the basis that the certificate of title contained an error, misdescription or omission:  see [4.450]. It was held that because there was no duty on the Registrar-​General to note the resumption on the certificate of title, the certificate could not be said to contain an error or misdescription. Such a narrow reading was probably unnecessary. Ferguson J, in dissent, took the view that an order to pay compensation need not imply that the Registrar-​General has neglected his duty, but simply that the registered proprietor sustained loss by relying on the certificate.410 This broader view appears to have been accepted in later cases.411 407 Nicholas J relied upon the High Court’s statements in Re Residential Tenancies Tribunal (NSW); Ex parte Defence Housing Authority (1997) 190 CLR 410 and Telstra Corporation Ltd v Worthing (1999) 197 CLR 61. 408 Nicholas J further found that an indefeasible title did exist as fraud could not be proved. 409 See now s 19(3)–​(6) of the Retirement Villages Act 1987 (SA) to similar effect. Section 19(4) now, however, specifically provides that charges under the Retirement Villages Act 1987 are to rank in priority to Torrens mortgages. 410 Compare Parker v Registrar-​General [1977] 1 NSWLR 22 and Cirino v Registrar-​General (1993) 6 BPR 13,260. See [4.450]. 411 See Voudouris v Registrar-​General (1993) 30 NSWLR 195; Cirino v Registrar-​General (1993) 6 BPR 13,260; Challenger Managed Investments v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452. See also, however, Real Property Act 1900 (NSW), s 31A(4). [4.345]  259

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Rights in personam [4.350] The extent and limits of the in personam exception to indefeasibility have been

analysed in a number of cases recently412 and have been the subject of considerable academic debate.413 Although the basic nature of the exception is clear, there remains uncertainty about its precise parameters. The exception, if indeed it is properly so called,414 acknowledges that the concept of indefeasibility of title enshrined in the Torrens legislation does not affect the personal obligations of the registered proprietor.415 At a simple level, the exception means that a registered proprietor is subject to contracts he or she has entered into and also to trusts, whether express or implied, over the property. Thus, if a registered proprietor enters into a contract to sell the land, the purchaser can seek specific performance of the contract if the registered proprietor refuses to complete. The registered proprietor cannot defend the action successfully by arguing that his or her title is indefeasible and thus not subject to rights or interests not noted on the Register; rights in personam are enforceable against the registered proprietor.416 Similarly, if the registered proprietor is a trustee of the land for another person, that other person, the beneficiary, can enforce the trust against the registered proprietor.417 It is clear, however, that the in personam exception may operate in a range of situations which go beyond the straightforward examples posited above. [4.355]  In South Australia, Queensland and the Northern Territory the exception is set out

specifically in the Torrens statutes.418 In South Australia the title of the registered proprietor is subject to the rights of a person with whom the registered proprietor has made a contract for the sale of land or other dealing and the rights of a beneficiary where the registered proprietor is a trustee. In Queensland and the Northern Territory the registered proprietor does not

412

See, for example, Bahr v Nicolay (No 2) (1988) 164 CLR 604; Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32; Vassos v State Bank of South Australia [1993] 2 VR 316; Garafano v Reliance Finance Corporation Pty Ltd (1992) NSW ConvR 55-​640; Story v Advance Bank of Australia Ltd (1993) 31 NSWLR 722; Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202; Ryan v Brain [1994] 1 Qd R 681; Macquarie Bank v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133; Horvath v Commonwealth Bank of Australia [1999] 1 VR 643; Pyramid Building Society v Scorpion Hotels Pty Ltd [1998] 1 VR 188; LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517; Tara Shire Council v Garner [2003] 1 Qd R 556; Farah Constructions Pty Ltd v Say-​Dee Pty Ltd (2007) 230 CLR 89. 413 A number of articles are cited in the succeeding footnotes in this chapter. Additional writings include Robinson, “Claims in Personam in the Torrens System: Some General Principles” (1993) 67 ALJ 355; Skapinker, “Equitable Interests, Mere Equities, ‘Personal’ Equities and ‘Personal Equities’ –​Distinctions with a Difference” (1994) 68 ALJ 593; Stevens and O’Donnell, Indefeasibility in Decline: The In Personam Remedies in Grinlinton, Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 141–​156; Griggs, “In personam: Barnes v Addy and the High Court’s Deliberations in the Farah Constructions Pty Ltd v Say-​Dee Pty Ltd” (2008) 15 APLJ 268; Moses and Edgeworth, “Taking it Personally: Ebb and Flow in the Torrens Systems In Personam Exception to Indefeasibility” (2013) 35 Syd L Rev 107; Gummow, “The In Personam Exception to Indefeasibility” (2017) 91 ALJ 549. 14 It concerns personal claims against the registered proprietor. Low argues convincingly that indefeasibility 4 and the in personam rule “operate on different planes and [the in personam rule] … is not a true exception to the principle of indefeasibility”: see Low, “The Nature of Torrens Indefeasibility: Understanding of the Limits of Personal Equities” (2009) 33 MULR 205 at 210. 15 Frazer v Walker [1967] 1 AC 569 at 585. 4 16 Frazer v Walker [1967] 1 AC 569. Compare State Bank of New South Wales v Berowra Waters Holdings Pty Ltd 4 (1986) 4 NSWLR 398 and Palais Parking Station Pty Ltd v Shea (1980) 24 SASR 452. 417 See the specific provisions in s 71(d) and (e) of the Real Property Act 1886 (SA). 18 Land Title Act 1994 (Qld), s 185(1)(a); Real Property Act 1886 (SA), ss 71(d), (e), 249(1), (2); Land Title Act 4 (NT), s 189(1)(a). 260 [4.350]

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obtain an indefeasible title to the lot in relation to an equity arising from the act of the registered proprietor.419 Despite the lack of a specific statutory provision, it is clear that the exception exists in the other jurisdictions. The principle has been set out clearly in a number of cases over the years.420 In 1967 the Privy Council in Frazer v Walker [1967] 1 AC 569 (at 585), while adopting the principle of immediate indefeasibility, stressed that “this principle in no way denies the right of a plaintiff to bring against a registered proprietor a claim in personam, founded in law or in equity, for such relief as a court acting in personam may grant”. The personal obligations enforceable against the registered proprietor may arise pursuant to actions of the registered proprietor before or after he or she became registered.421 They may give rise to rights in law or in equity, and they may or may not give rise to interests which are proprietary in nature.422 It appears clear, however, that in order for the in personam exception to be invoked, the facts must demonstrate the existence of a known legal or equitable cause of action that is enforceable against the registered proprietor.423 Further, on one view it seems that the registered proprietor’s conscience must be affected, such that it would be unconscionable for the registered proprietor to assert an unencumbered title.424 The requirement for an element of unconscionability has been considered by the New South Wales Court of Appeal. A question arose as to whether an implied easement over Torrens land under the Wheeldon v Burrows principle can create rights in personam enforceable by the registered proprietor of the putative dominant tenement as against the registered proprietor of the putative servient tenement, when there have been contemporaneous transfers from a common owner. In the absence of the owner of the dominant tenement contributing to the creation of the implied easement or having conducted himself unconscionably otherwise, it was held that a personal equity cannot arise.425 This requirement for unconscionability has been queried by the academe.426 If what is required to establish in personam is a known legal or equitable cause of action, to superimpose unconscionability as an additional element may be considered a gloss that is not warranted.

419

It has been suggested that the use of the term “an equity” is unfortunate as it has no clear meaning. It seems that the exception will be interpreted so as to cover the types of trusts, act and contracts which constitute the in personam exception: see Weir, “Land Title Act 1994 (Qld) –​Statute for a New Millenium” (2000) FJLR 185 at 202. 420 See, for example, Barry v Heider (1914) 19 CLR 197. 21 Bahr v Nicolay (No 2) (1988) 164 CLR 604; Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 543ff 4 per Mahoney J. See Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, where the reasoning of the High Court in the Bahr case was impliedly approved although not applied. 422 Compare Bryan, “Recipient Liability under the Torrens System: Some Category Errors” (2007) 26 UQLJ 83. 23 Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202; Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 4 3 VR 133; Horvath v Commonwealth Bank of Australia [1999] 1 VR 643; Ceedive Pty Ltd v May [2005] NSWSC 222 (decision at first instance reversed on another point –​see May v Ceedive Pty Ltd [2006] NSWCA 369). 24 Vassos v State Bank of South Australia [1993] 2 VR 316; Story v Advance Bank of Australia (1993) 31 NSWLR 4 722; Tutt v Doyle (1997) 42 NSWLR 10; Macquarie Bank Ltd v Sixty-​Fourth Throne Ltd [1998] 3 VR 133; LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517; White v Tomasel [2004] 2 Qd R 438 at 446 per Davies JA in dissent. Compare White v Tomasel discussed at [4.380]. 25 See McGrath v Campbell (2006) NSW ConvR 56-​159. (This was the only way the easement could be enforced 4 as it was not an easement enforceable as an express exception to indefeasibility under s 42(1)(a1) of the Real Property Act 1900 (NSW)). 426 Moses and Edgeworth, “Taking it Personally: Ebb and Flow in the Torrens Systems In Personam Exception to Indefeasibility” (2013) 35 Syd L Rev 107. [4.355]  261

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In Anderson v Anderson the court accepted that it did not have to resolve this matter, though the preference of this appellate court of New South Wales was that the only question to be asked was whether the known cause of action was inconsistent with the Torrens legislation.427 The specific enactment of the exception in some jurisdictions probably does not result in different consequences for the various jurisdictions:428 the interpretation and extent of the exception seems to be the same.429 [4.360] There are a variety of situations in which the in personam claim may be invoked.

The registered proprietor may be liable to a claim in personam if the conduct of the registered proprietor resulted in the dealing, through which he or she became registered, being subject to rectification for mistake.430 Where a transaction, such as a resumption of land pursuant to statute, has not been performed in accordance with relevant statutory provisions, the person or entity becoming registered pursuant to such a transaction may be subject to a claim in personam. The courts, however, have generally been reluctant to uphold an in personam claim on this basis. It has been assumed that such a result would detract from the concept of immediate indefeasibility of title and the courts have been concerned to reinforce the notion that registration of a void instrument can confer an indefeasible title. It is suggested that the result posited does not concern the issue of indefeasibility of title; rather, it explains a situation where in personam rights operate against the title of the registered proprietor.431 Conduct of the registered proprietor giving rise to a claim at law for deceit would constitute a legal cause of action giving rise to a personal equity or, in other words, the in personam exception.432 Registration pursuant to a dealing involving a breach of trust by the registered proprietor may also give rise to an in personam claim.433 As the in personam claim must arise out of the actions of the registered proprietor or his or her agents, the mere fact that the registered proprietor has taken through a forged instrument is insufficient in itself to 427 Anderson v Anderson [2017] NSWCA 131 at [52]. 428 See Wallace and MacDonald, “A New Era in Torrens Title in Queensland –​The Land Title Act 1994” (1994) 68 ALJ 675 at 678. 429 It has been argued that the specific exception to indefeasibility of “an equity arising from the act of the registered proprietor” may in some circumstances enable enforcement of rights not currently enforceable against the registered proprietor in the other jurisdictions. See Moore, “Equity Restitution and In Personam Claims under the Torrens System” (1998) 72 ALJ 258 at 262. These are rights arising from the application of the principles in Barclays Bank v O’Brien [1994] 1 AC 180 and Barnes v Addy (1874) LR 9 Ch App 244, discussed at [4.370]. 430 Lukacs v Wood (1978) 19 SASR 520; Tutt v Doyle (1997) 42 NSWLR 10. Compare Medical Benefits Fund of Australia Ltd v Fisher [1984] 1 Qd R 606; State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398; Tanzone Pty Ltd v Westpac Banking Corp (1999) NSW ConvR 55-​908 (reversed on another point: Westpac Banking Corp v Tanzone Pty Ltd (2000) 9 BPR 17,521). A recent case reiterates that the in personam right such as a right of rectification may be nullified if the interest (such as a leasehold interest) is assigned to another who becomes registered, and against whom no such in personam right exists: see We Are Here Pty Ltd v Zandata Pty Ltd [2010] NSWSC 262. 431 Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 (confirming the availability of the personam claim on this basis). Compare Boyd v Mayor of Wellington [1924] NZLR 1174; Palais Parking Station Pty Ltd v Shea (1980) 24 SASR 452; State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398 (all taking a narrow view of the ambit of the in personam exception in relation to this matter). Discussed in Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict” (1997) 21 MULR 460 at 493–​494. 432 Garafano v Reliance Finance Corporation Ltd (1992) NSW ConvR 55-​640 at 59,662. 433 Corozo Pty Ltd v Total Australia Ltd [1988] 2 Qd R 366.

262 [4.360]

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support a claim in personam by the defrauded party.434 In Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32, however, the court upheld an in personam claim where there was a forgery. The plaintiff’s husband forged her name to a variation of mortgage over property she owned. The mortgagee already had possession of the certificate of title and used it to procure registration of the forged variation of mortgage. The majority of the New South Wales Court of Appeal held that, although the mortgagee was not fraudulent and was unaware of the forgery, Mrs Gosper had a personal equity that was enforceable against the mortgagee. The decision has been widely criticised for unnecessarily broadening the scope of the in personam exception and, as a corollary, weakening the indefeasibility of the registered proprietor’s title. It has been argued that the only reasonable explanation of the Gosper case is that, in addition to the forgery, there was an unauthorised use of the certificate of title by the registered mortgagee thus giving rise to the personal equity against it. The case has been distinguished and is regarded as very much confined to its specific facts.435 It has been doubted if the decision would be followed in Victoria.436 The fact that the registered instrument was executed by a minor is insufficient to give rise to an in personam claim.437 Neither, it seems, is mere neglect sufficient.438 [4.365] The High Court decision in Bahr v Nicolay (No  2) (1988) 164 CLR 604 makes

clear that the in personam exception may arise where the registered proprietor purchases the property having acknowledged the existence of a prior unregistered interest or right binding on the vendor and having agreed either expressly or by implication to take subject to that interest or right.439 The facts of the Bahr case are set out at [4.230]. All of the High Court judges in the Bahr case found that the Thompsons were bound in personam to respect the interests of the Bahrs.440 However, different views emerged as to the precise nature of the in personam claim. Wilson and Toohey JJ took the view that the Thompsons, by undertaking 434

Vassos v State Bank of South Australia [1993] 2 VR 316; Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202; Story v Advance Bank of Australia Ltd (1993) 31 NSWLR 722; MDN Mortgages Pty Ltd v Caradonna [2010] NSWSC 1298. 435 Ginelle Finance Pty Ltd v Diakakis (2002) 12 BPR 22,137; Vella v Permanent Mortgages Pty Ltd (2008) 13 BPR 25,343. 436 Paradise Constructors & Co Pty Ltd v Poyser (2007) 20 VR 294. 437 See Horvath v Commonwealth Bank of Australia [1999] 1 VR 643. 438 Vassos v State Bank of South Australia [1993] 2 VR 316. 439 The “interest” could include an equity of rectification in a mortgage or a lease. See Conlan v Registrar of Titles (2001) 24 WAR 299; Tanzone Pty Ltd v Westpac Banking Corp (1999) NSW ConvR 55-​908 (see Westpac Banking Corp v Tanzone Pty Ltd (2000) NSW ConvR 55-​939 where the decision of the judge at first instance was reversed on another point). In these cases, it was made clear that the equity must be shown to exist and secondly, in order for it to be enforceable against a transferee registered interest holder, the principles expounded in Bahr v Nicolay (No 2) (1988) 164 CLR 604 must be satisfied for the in personam exception to arise (ie, there must be some unconscionable conduct on the part of the transferee: mere notice of the equity is insufficient). Compare the situation in Victoria where the interest of a tenant in possession (an express exception to indefeasibility) has been held to include any equity of rectification: Downie v Lockwood [1965] VR 25 discussed at [14.445]. 40 Bahr v Nicolay (No 2) (1988) 164 CLR 604 is significant in that it stands for the proposition that the person 4 relying on the exception does not have to be a party to the transaction which led to registration. See also Trident General Insurance v McNiece (1988) 165 CLR 107 and Langford, The In Personam Exception to Indefeasibility of Title (Adelaide Law Review, Research Paper 1994, No 6), pp 145–​146. The use of the trust, pursuant to the Bahr principle, to aid recovery by a third party to a contract, is an avenue the courts may be increasingly willing to use to prevent an unconscionable reneging: see Seddon and Ellinghaus, Cheshire

[4.365]  263

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to respect the claim of the Bahrs, became constructive trustees for the Bahrs.441 Further, and unexceptionally, in the view of their Honours, the indefeasibility provisions do not protect a registered proprietor from his or her own actions where those actions have given rise to a personal equity in another. In contrast, Mason  CJ and Dawson  J reviewed the evidence and found that the “matrix of circumstances” was sufficient to establish that there was an intention to create an express trust. The effect of the trust was that the Thompsons held their interest subject to the rights of the Bahrs created under the agreement pursuant to which the Bahrs had sold to Nicolay.442 [4.370] An area of recent dispute in relation to the in personam exception concerns the

applicability of the principles in Barnes v Addy (1874) LR 9 Ch App 244443 to Torrens system interests.444 Under the principles of Barnes v Addy, a person is liable as a constructive trustee of property if he or she receives the property with knowledge that it is trust property and that it has been misapplied by the trustee (“knowing receipt” or “recipient” liability –​first limb) or knowingly assists a trustee in misapplying the trust property (“accessory” liability –​second limb). The majority of the Victorian Court of Appeal in Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133 held that the indefeasibility of the registered proprietor’s title could not be affected by an application of the first limb445 of Barnes v Addy. Tadgell JA (Winneke  P agreeing) relied partly on the fact that constructive notice has no place in the Torrens system and that, in order for the title to be defeasible, statutory fraud had to be proved. The rejection of the knowing receipt claim was also based, however, on the fact

and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008) at [7.49] and [8.53]; Symbion Pathology Pty Ltd v Healthscope Ltd [2006] ANZ ConvR 347; [2006] VSC 191. 441 Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 638 per Wilson and Toohey JJ. The conduct of the Thompsons gave rise to the constructive trust: see Binions v Evans [1972] Ch 359. 442 Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618 per Mason CJ and Dawson J. Query the view of Brennan J. See also Valbirn Pty Ltd v Powprop Pty Ltd [1991] Qd R 295; Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198; Bourseguin v Stannard Bros Holdings Pty Ltd [1994] 1 Qd R 231; Cottee Dairy Products Pty Ltd v Minad Pty Ltd (1997) 8 BPR 15,611. 443 The interpretation and application of the principles in Barnes v Addy (1874) LR 9 Ch App 244 have themselves been the subject of considerable discussion: see, for example, Bant and Bryan, “Outflanking Barnes v Addy? The Persistence of Strict Liability” (2017) 11 Journal of Equity 271; Gummow, “Knowing Assistance” (2013) 87 ALJ 311; Havelock, “The Battle over Knowing Receipt” (2015) 26 New Zealand Universities Law Review 587. 44 See Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133; Koorootang Nominees Pty Ltd v ANZ 4 Banking Group Ltd [1998] 3 VR 16. See Moore, “Equity Restitution and In Personam Claims under the Torrens System” (1998) 72 ALJ 258; Moore, “Equity, Restitution, and In Personam Claims under the Torrens System: Part Two” (1999) 73 ALJ 712; Dodds-​Streeton, Mind/​Knowledge of Company and What Outsiders Are Entitled to Assume (Paper delivered to Leo Cussen Institute, Corporate Conference, May 1996). See also Burke v State Bank of New South Wales [1994] 37 NSWLR 53 and Pyramid Building Society (in liq) v Scorpion Hotels Pty Ltd [1998] 1 VR 188. It has been argued that in Queensland and the Northern Territory, where an equity arising from the actions of the registered proprietor is a specific exception to indefeasibility of title, the principles from Barnes v Addy (1874) LR 9 Ch App 244 would more clearly be applicable to Torrens system land: Moore, “Equity Restitution and In Personam Claims under the Torrens System” (1998) 72 ALJ 258 at 262. 445 The knowing receipt claim was also rejected on the basis that a mortgagee takes only a contingent and part interest in the land and that this is an insufficient interest to support such a claim: [1998] 3 VR 133 at 156–​157 per Tadgell JA; cf Gold v Roseberg [1997] 3 SCR 767; 152 DLR (4th) 385. It has been argued that this is a technical distinction and “does not make substantial sense”: see Moore, “Equity, Restitution, and In Personam Claims under the Torrens System: Part Two” (1999) 73 ALJ 712 at 715. 264 [4.370]

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that a mortgagee of Torrens land does not acquire title from the mortgagor, but pursuant to registration, and thus has not, in the Barnes v Addy sense, “received” trust property which was transferred in breach of trust. In a dissenting judgment Ashley AJA took the view that the facts fell within the “knowing receipt” limits of Barnes v Addy and consequently within the in personam exception to indefeasibility of title. His Honour stated (at 166): “It is one thing to say (in the context of transfer) that, absent fraud, a potential transferee is not to be affected by notice, actual or constructive of any trust. It is quite separate matter to say that such a person is to be unaffected by notice, actual or constructive, of a breach of trust”.446 After the decision in Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133, the appeal courts of Queensland and New South Wales447 supported the dissenting view of Ashley AJA, while a majority of the Western Australian Full Court of the Supreme Court in LHK Nominees Pty Ltd v Kenworthy (2002) 26 WAR 517 adopted the view of the Victorian Court of Appeal and held that the title of the registered proprietor could not be made defeasible merely on the basis that he or she took the property with the knowledge that it was trust property and that there had been a breach of trust.448 The conflict within the state courts now seems to have been settled with the High Court in Farah Constructions Pty Ltd v Say-​Dee Pty Ltd (2007) 230 CLR 89 preferring the view of Tadgell  JA in the Victorian Court of Appeal.449 The High Court overruled the decision of the New South Wales Court of Appeal in Say-​Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309.450 The court held that as a person acquires title under the Torrens system pursuant to the act of registration and not by any antecedent act, a person who acquires title by operation of the Torrens statute cannot be seen as having “received” trust property from the trustee.451 Title emanates from the fact of registration by the State. The

446 447

See also Koorootang Nominees Pty Ltd v ANZ Banking Group Ltd [1998] 3 VR 16 per Hansen J. Tara Shire Council v Garner [2003] 1 Qd R 556 and Say-​Dee Pty Ltd v Farah Constructions Pty Ltd [2005] NSWCA 309. The facts in the Tara case provide a simple example of the sort of fact situation where a party has attempted to use the first limb of Barnes v Addy (1874) LR 9 Ch App 244 to overcome the indefeasibility of the registered proprietor’s claim and substantiate its claim. In Tara Shire Council v Garner the Garners were the registered proprietors of Torrens land, the Moonie Hotel. They contracted to sell part of the land on which there was a water bore to the council. A transfer was executed and the council paid for the land but a sub-​division did not occur and the transfer was never registered. Subsequently, the Garners sold the Moonie Hotel to Arcape Pty Ltd and explained that part of the land had already been sold to the council. Arcape Pty Ltd became the registered proprietor of the whole of the land. An interlocutory issue arose as to whether there was an arguable case that Arcape Pty Ltd held part of the land on a constructive trust for the council under the “knowing receipt” limb of Barnes v Addy. The majority of the Queensland Court of Appeal preferred the view of Ashley AJA and held there was an arguable case on the facts that a valid equitable claim could be established against a registered proprietor, in circumstances where the first limb of Barnes v Addy was satisfied. 448 The court held that the second limb of Barnes v Addy (1874) LR 9 Ch App 244 requires actual fraud. 49 The High Court did not engage in a detailed discussion on the matter. It has been suggested that the High 4 Court’s discussion of the use of the principles concerning knowing receipt claims under Barnes v Addy (1874) LR 9 Ch App 244 when the property concerns Torrens land was “surprisingly brief” and “arguably uncertain”: see Atkin, “ ‘Knowing Receipt’ Following Farah Constructions Pty Ltd v Say-​Dee Pty Ltd” (2007) 29 Syd L Rev 713 at 720. 450 A detailed discussion of the Court of Appeal’s decision can be found in the 4th ed of this book at [4.370]. 451 Atkin, “ ‘Knowing Receipt’ Following Farah Constructions Pty Ltd v Say-​Dee Pty Ltd” (2007) 29 Syd L Rev 713 and Low, “The Nature of Torrens Indefeasibility: Understanding of the Limits of Personal Equities” (2009) 33 MULR 205 argue that the High Court has not made clear exactly where the limits are on the operation of the first limb in relation to Torrens land. [4.370]  265

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reasons for the decision in the Farah case have been the subject of considerable discussion and criticism. Bryan, for example, has argued that the Farah case and many of the preceding cases have “misconceived claims to the recovery of specific property as Barnes v Addy cases”.452 Where real property and its recovery are concerned, the investigation concerns simply an examination of indefeasibility and exceptions to it. The in personam exception (apart from the straightforward case of the registered proprietor binding herself by, for instance, declaring herself a trustee of the land for another) covers cases where a court is prepared to impose an equitable interest as a result of some conduct of the registered proprietor.453 The registered proprietors in the Farah case did not take on any equitable obligation to the claimant; they had acted in good faith throughout.454 Despite the debate about the reasoning in High Court decision, the High Court has made it clear that the first limb of Barnes v Addy cannot be used to overcome the indefeasibility of a registered proprietor’s title.455 [4.375] Various equitable doctrines, such as duress,456 undue influence457 and unconscionable

dealing458 provide for the setting aside of transactions. Where the transaction concerns Torrens land, and the person relying on the instrument is responsible for or involved in the vitiating factor, the in personam exception (or where appropriate, the fraud exception) may be used to defeat the title of the registered proprietor. These disputes often arise in the context of a mortgage and often involve fraudulent action of a third party.459 In these circumstances the mortgagor who seeks to establish that the mortgagee does not have an indefeasible title on the basis of the in personam exception must show that the mortgagee or his agent was guilty of the fraud, duress or unconscionable conduct such that a direct cause of action arose against the mortgagee.460 52 Bryan, “Recipient Liability under the Torrens system: Some Category Errors” (2007) 26 UQLJ 83. 4 453 See [4.360]–​[4.365] and [4.375]. 454 If the registered proprietors had expressly acknowledged and agreed to abide by the interest of Say-​Dee, the position would have been different and the in personam exception could have been properly applied under the Bahr v Nicolay (No 2) (1988) 164 CLR 604 principle: see Bryan, “Recipient Liability under the Torrens System: Some Category Errors” (2007) 26 UQLJ 83 at 97. Bryan also comments that the inappropriateness of the in personam exception would not have left Say-​Dee, the claimant, with no remedy (possibility of equitable compensation against Farah or a personal remedy against the registered proprietors under the first limb of Barnes v Addy (1874) LR 9 Ch App 244). See similarly Super 1000 v Pacific General Securities (2008) 221 FLR 427 (NSWSC). 455 See Bli Bli No 1 Pty Ltd v Kimlin Investments Pty Ltd [2008] QSC 289; Fletcher v George (No 6) [2009] FMCA 69; HL (Qld) Nominees Pty Ltd v Jobera [2009] SASC 165; St Vincent de Paul Society v Ozcare Ltd (2009) 74 ACSR 676 (QCA); Merrell Associates Ltd v HL (Qld) Nominees Pty Ltd [2010] SASC 155, all quoting with approval from the High Court’s comments in Farah Constructions Pty Ltd v Say-​Dee Pty Ltd (2007) 230 CLR 89 on this point. See Michael Afanassiev, “Overlapping Claims: The Intersection Between Indefeasibility, Unjust Enrichment and Equitable Third-​party Liability” (2019) 27 APLJ 185. 456 Sundell & Sons Pty Ltd v Yannoulatos (Overseas) Pty Ltd (1955) 56 SR (NSW) 323; Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40. These equitable doctrines are discussed in more detail at [9.155]–​[9.215]. 457 Johnson v Buttress (1936) 56 CLR 113; Westmelton (Vic) Pty Ltd v Archer & Shulman [1982] VR 305. 458 Blomley v Ryan (1956) 99 CLR 362; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; Louth v Diprose (1992) 175 CLR 621. For an example specifically involving Torrens land, see Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275. See also ANZ Banking Group Ltd v Dzienciol [2001] WASC 305, where a number of the equitable principles including special disability and unconscionable dealing were discussed in the context of a dispute where the registered mortgagee made a claim for possession. 459 Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32; Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202; Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275. 460 Mercantile Mutual Life Insurance Co Ltd v Gosper (1991) 25 NSWLR 32; Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202; Parker v Mortgage Advance Securities Pty Ltd [2003] QCA 275. 266 [4.375]

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Further, the High Court has affirmed in Garcia v National Australia Bank Ltd (1998) 194 CLR 395 that there is another separate doctrine, pursuant to which a married woman who gives a guarantee to a third party to secure her husband’s debts, has a right, in certain circumstances, to set aside the surety against the third party (usually a mortgagee).461 If the wife does not understand the nature and effect of the transaction, does not gain any benefit from the transaction and the lender understands the wife may repose trust and confidence in the husband and has not ensured she seek independent advice, then, in the view of the High Court, it is unconscionable for the creditor to rely on the guarantee.462 Undue influence per se need not be proved. In the Garcia case the wife was a professional, articulate woman but the court held on the facts that she did not understand the nature of the transaction and the way in which it would operate.463 The cases concerning this principle have not been argued on the basis of the indefeasibility or defeasibility of the registered proprietor’s title. It seems likely, however, that if the guarantee, or part of it, comprises a mortgage of Torrens land, the application of the doctrine may give rise to a right enforceable in personam against the registered mortgagee’s title.464 461

Garcia v National Australia Bank (1998) 194 CLR 395, affirming Yerkey v Jones (1939) 63 CLR 649. See generally Wright, “The Special Wives’ Equity and the Struggle for Women’s Equality” (2006) 31 Alt LJ 66–​ 69. For a more recent application, see Roseville Estate Pty Ltd v Bouris [2006] VSC 49. 462 See State Bank of NSW v Chia (2000) 50 NSWLR 587, where the wife failed in a Garcia v National Australia Bank (1998) 194 CLR 395 type claim as she could not prove lack of understanding of the terms of the guarantee. Comapre the analogous development in England (Barclays Bank v O’Brien [1994] 1 AC 180; Royal Bank of Scotland v Etridge (No 2) [2002] AC 773) discussed in Wilson, “Unconscionability and Fairness in Australian Equitable Jurisprudence” (2004) 11 APLJ 1. In the Barclays Bank case, it was held that a mortgagee’s constructive notice of wrongdoing or unconscionable conduct towards the mortgagor (the wife of the debtor), resulted in the mortgagor having an equity to have the transaction set aside which was enforceable against the mortgagee. The notion that such a claim can give rise to an in personam claim enforceable against the registered proprietor of Torrens land was rejected by the Victorian Court of Appeal in Macquarie Bank Ltd v Sixty-​Fourth Throne Pty Ltd [1998] 3 VR 133. The view of Tadgell JA (and also Winneke P) was primarily based on the finding that the doctrine of constructive notice is to be excluded wholly from the operation of the statutory scheme: s 43. Tadgell JA’s view was that the dispute in Barclay’s Bank was ultimately decided by using constructive notice in determining a priority dispute: this was not an available option under the Torrens system. (Compare Hedigan J at first instance in Sixty-​Fourth Throne Pty Ltd v Macquarie Bank Pty Ltd (1996) V ConvR 54-​546 and HG & R Nominees Pty Ltd v Fava [1997] 2 VR 368. Compare also the dissenting judgment of Ashley AJA in the Court of Appeal.) The basic premise for the refusal to allow the Barclays Bank circumstances as an in personam claim in a case such as Macquarie Bank may be incorrect: see Moore, “Equity, Restitution, and In Personam Claims under the Torrens System: Part Two” (1999) 73 ALJ 712 at 712–​713. It has been argued that there is no true priority dispute in these circumstances: the surety’s claim does not in fact arise until the transfer of legal title. The notice provisions (such as s 43 of the Transfer of Land Act 1958 (Vic)) protect the registered proprietor only from notice of prior existing interests; they do not protect against claims arising at registration. The right can be viewed as a claim for restitution or unjust enrichment arising at registration. (See Chambers, “Indefeasible Title as a Bar to a Claim for Restitution” (1998) Restitution Law Review 126; Moore, “Equity, Restitution, and In Personam Claims under the Torrens System: Part Two” (1999) 73 ALJ 712 at 714; Koorootang Nominees Pty Ltd v ANZ Banking Group Ltd [1998] 3 VR 16. There are other problems to its application: see Moore, “Equity, Restitution, and In Personam Claims under the Torrens System: Part Two” (1999) 73 ALJ 712 at 713–​715.) 463 The inclusion of “all moneys” clauses in standard form guarantees and mortgages has been identified as a cause of many disputes which arise in cases of wives giving third-​party guarantees. See Pascoe, “Women’s Guarentees and ‘All Moneys’ Clauses” (2004) 4 QUTLJJ 17. 64 See Griggs, “In Personam, Garcia v NAB and the Torrens System –​Are They Reconcilable?” (2001) 1 QUTLJJ 4 76 and Moore, “Equity Restitution and In Personam Claims under the Torrens System” (1998) 72 ALJ 258; Moore, “Equity, Restitution, and In Personam Claims under the Torrens System: Part Two” (1999) 73 ALJ 712. [4.375]  267

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It has been argued that the Garcia principle has the potential to undermine the central tenets of the Torrens system –​the conclusive register and indefeasibility of title. This is particularly so as the High Court left open the possibility of an extension of the principle to other long-​term and publicly declared relationships, with a similar basis of trust and confidence.465 Subsequently, the Victorian Court of Appeal in Kranz v National Australia Bank Ltd (2003) 8 VR 310 looked at the reasons underlying the analysis of the High Court in Garcia and found that the principle could be applied in any situation where the guarantor reposed trust and confidence in the debtor in business matters. Thus it could embrace close family relationships where the parties were not in a sexual relationship. Similarly, in ANZ Banking Group Ltd v Alirezai (2004) Q ConvR 54-​601 the Queensland Court of Appeal took the view that the High Court did not intend to limit the principle in Garcia to marriage or marriage-​like relationships –​the relationships of trust and confidence were not “a closed category [and could arise] in some parent-​child relationships or perhaps in the relationship between a disabled person and carer; many other potential examples can be envisaged”.466 The application of the Garcia principle in a variety of as yet undetermined circumstances means there is the potential for the range of in personam claims to be widened considerably.467 The area provides yet another example of the difficulties involved in ensuring a balance between the application of equitable principles and Torrens principles.468 [4.380]  As noted, it has been queried as to whether unconscionable is an additional element

that needs to be proven to establish in personam. The Queensland Court of Appeal in White v Tomasel [2004] 2 Qd R 438 answers that in the negative. A dispute arose as to whether a contract for the sale of land had been validly executed. The Tomasels, the purchasers, secured an order for specific performance from the District Court. When White, the vendor, refused to execute a transfer, the Registrar of the District Court signed a transfer on behalf of the vendor and the Tomasels became the registered proprietors. The vendor appealed from the District Court decision and the Queensland Court of Appeal set aside the order for specific performance. The Tomasels argued, however, that they had an indefeasible title as they had acquired the title without any fraud. Williams JA and McMurdo J held in separate

465 See, for example, Watt v State Bank of New South Wales [2003] ACTCA 7 (on the facts Garcia principle not applied to situation where parents had mortgaged property to guarantee debts of daughter and son-​in law); Liu v Adamson (2004) NSW ConvR 56-​074 (where held Garcia principle could extend to longstanding de facto relationship but on facts wife not volunteer); Wenczel v Commonwealth Bank of Australia [2006] VSC 324 (where the Garcia principle was applied in circumstances where the married couple was separated on the basis that the wife still reposed the requisite degree of trust and confidence in the husband. In the alternative, Habersberger J also considered undue influence, duress and unconscionable conduct). 466 See at [39] per McMurdo P. See also Australian Regional Credit v Mula (2009) 14 BPR 26,779; cf Watt v State Bank of NSW [2003] ACTCA 7. 467 It has been suggested that the analogous development of the law in this area in England (see Barclays Bank v O’Brien [1994] 1 AC 180; Royal Bank of Scotland v Etridge (No 2) [2002] AC 773) may provide greater certainty. (Note, however, that this is not the Torrens system of registration.) The suggestion is that where the relationship between surety and debtor is non-​commercial, then Garcia principles should apply, thus effectively requiring creditors to ensure that all sureties in a non-​commercial relationship with the debtor seek independent advice. While concerns have been raised about the economic cost of this suggestion, it is clear that such a principle engenders greater certainty. See, for example, the judgment of Eames JA in Kranz v National Australia Bank Ltd (2003) 8 VR 310 at 338–​339. 468 See generally Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict” (1997) 21 MULR 460; Griggs, “Torrens Title: Arise the Registered and Unregistered, Befall the Legal and Equitable” (1997) 4 Deakin LR 35. 268 [4.380]

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judgments that the in personam exception (Land Title Act 1994 (Qld), s 185(1)(a)) operated in the circumstances to make the Tomasels’ title defeasible.469 In the view of Williams  JA, the principle that there is a right to recover money or other benefits under a court order that is subsequently set aside on appeal applied to Torrens land and did not impinge upon indefeasibility of title. The right would fall under the in personam exception. McMurdo  J agreed but more specifically characterised the right of the vendor as a restitutionary right to have the title restored. The right was not based on unconscientious conduct of the purchaser in the procuring of his title.470 McMurdo J also emphasised that the recognised right in law or equity must not operate to the detriment of the policy of Torrens title.471 Davies  JA, in dissent, held that the registered proprietors’ title was indefeasible. In his Honour’s view, the in personam exception encompasses only known legal and equitable causes of action and there must be some act of the registered proprietor that would make it unconscionable in the circumstances for him or her to assert indefeasibility of title. The judgment of Davies JA is more in accord with the traditional view of the ambit of the in personam exception than the majority judgments and, reinforcing as it does the principles underlying the operation of the Torrens system, has, by some, been preferred over the majority judgments.472 [4.385]  Some of the recent cases, including the decision in Bahr v Nicolay (No  2) (1988)

164 CLR 604, highlight the fact that in particular situations there may be a fine dividing line between the “fraud” exception and the “in personam” exception. In fact, the judgments of Mason CJ and Dawson J demonstrate that in some cases there is no dividing line between the two but an overlap where either or both exceptions may be applicable. Clearly some cases of “equitable” fraud which do not constitute fraud under the Torrens system may fall within the in personam exception. [4.390] Although there remains uncertainty as to the precise scope of the in personam

exception, recent cases demonstrate that the exception may be applicable in many cases where the plaintiff does not have quite enough proof to satisfy the strict definition of “fraud”. If a registered proprietor has actual or constructive “notice” of a prior unregistered interest, such notice is insufficient per se to bind in personam the title of the registered proprietor. However, if a registered proprietor has notice of a prior unregistered interest and implies that he or she will abide by that interest, but after registration refuses to do so, such action may not constitute fraud but it may come within the in personam exception.

469 The court did not order a reconveyance immediately as the matter was sent for retrial on the issue of the validity of the sale. 470 If an unconscionability element were required, McMurdo J held that it existed not in the aquisition of the interest, but rather in the purchasers’ refusal to comply with their restitutionary obligations. 471 White v Tomasel [2004] 2 Qd R 438 at 455, cited in Sino-​Resource Imp & Exp Co Ltd v Oakland Investment Group Limited (No. 2) [2018] QSC 133 at [8]‌. 472 See Christensen and Duncan, “Indefeasibility of Title –​A Bar to Restitution after Reversal of a Judgment on Appeal?” (2005) 11 APLJ 81, where the authors argue that the judgment of Davies JA in dissent is clearly more in line with accepted authority and is to be preferred over the majority judgments. See also Case Note, “Torrens Title: Indefeasibility Affected by “Equities” –​What is an Equity?” (2005) 79 ALJ 30 and more generally Papamatheos, “What are the Juridical Bases of Reversal of Judgment Restitution?” (2004) 25 ABR 268. Contrast Moses and Edgeworth, “Taking it Personally: Ebb and Flow in the Torrens Systems In Personam Exception to Indefeasibility” (2013) 35 Syd L Rev 107. [4.390]  269

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Registrar’s power to correct the Register [4.395]  In all jurisdictions there are provisions in the Torrens statutes giving the Registrar473

powers to correct the Register.474 The very existence of such powers raises the question as to whether the concept of indefeasibility of title is thereby impinged upon. In its purest form indefeasibility connotes that the Register contains all information relating to the title and that any changes to entries on the Register derogate from the concept of indefeasibility of title. There will be circumstances, however, where the smooth running of the registration system requires the Registrar to have some powers of correction. For example, mistakes in entries on the Register by the Registrar’s staff are bound to occur from time to time and a means of correction should be available.475 The introduction of electronic conveyancing will make the nature and breadth of the Registrar’s powers in this regard even more important.476 In the paper-​ based system, traditionally the Registrar identifies errors in instruments presented for registration and returns them for correction before registration. Although the electronic conveyancing scheme introduced for Australian jurisdictions retains the Registrar’s overseeing role, it is unclear whether the perusal of all instruments lodged in electronic form will be undertaken in the same manner. In England and New Zealand the “registration” will take place simultaneously with lodgement by the registered conveyancer and it would be thought that the need for the Registrar’s power to correct (even after registration) would be vital to the smooth operation of the system where errors are subsequently discovered.477 There are some provisions in the Torrens statutes designed to give Registrars additional powers which may be needed as a result of e-​conveyancing. For example, s  44Q(1) of the Transfer of Land Act 1958 (Vic) (inserted by Transfer of Land (Electronic Transactions) Act 2004 (Vic), s 6) provides that the Registrar may correct errors and supply omissions in the Register if the error or omission resulted from a malfunction of the electronic lodgement network. The provision appears to confer broad powers, but it seems unlikely that the

473 Until recently, there had been no comprehensive and comparative analysis of the Registrars’ statutory powers under the State Torrens Acts and the cases interpreting those powers. For an excellent, updated analysis see Skead and Carruthers, “The Registrar’s Powers of Correction: ‘Alive and Well’, Though Perhaps ‘Unwelcome’? Part 1: The Slip Provision” (2010) 18 APLJ 32 and Carruthers and Skead, “The Registrar’s Powers of Correction: ‘Alive and Well’, Though Perhaps ‘Unwelcome’? Part 2: The Substantive Provision” (2010) 18 APLJ 132. 474 Real Property Act 1900 (NSW), s 12(1)(d), (d1); Transfer of Land Act 1958 (Vic), s 103(2)(a); Land Title Act 1994 (Qld), s 15(1)(a); Real Property Act 1886 (SA), s 220(f); Transfer of Land Act 1893 (WA), ss 188(1), (3),  189(1); Land Titles Act 1980 (Tas), s 139(1); Land Titles Act 1925 (ACT), ss 14(1)(e), 160; Land Title Act (NT), s 17(1)(a). Compare s 44H of the Victorian Act, which gives the Registrar the power to correct errors that were made as a result of a “malfunction of the electronic lodgement network”. 475 See, however, Equitiloan Securities Pty Ltd v Registrar of Titles [1997] 2 Qd R 597, where it is suggested that the power to correct does not encompass procedural errors. The requirement under s 15 of the Land Title Act 1994 (Qld) is that the entry is in fact incorrect. See also Nightingdale v Recorder of Titles [2018] TASSC 56 where the Recorder of Titles in Tasmania was ordered by the Supreme Court to remedy a boundary inconsistency between neighbouring titles which, following a survey had resulted in a rectification on one of the titles, but not the other. 476 See Grinlinton, “The Registrar’s Powers of Correction” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 217–​246. 477 Land Transfer Act 1952 (NZ) appears to allow a wide discretion to the Registrar to correct the computer register: see ss 80(2) and 81(2) inserted by Land Transfer (Computer Register and Electronic Lodgment) Amendment Act 2002 (NZ). Discussed in Grinlinton, “The Registrar’s Powers of Correction” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), p 218. 270 [4.395]

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Registrar would seek to use them to overturn indefeasibility of title. Section 155(2)(b) of the Land Title Act 1994 (Qld) provides that the Registrar may correct an obvious error in a lodged instrument in an electronic form in the appropriate Register (provided that the Registrar is satisfied that the instrument is incorrect and the correction will not prejudice the rights of a person: s 155(3)). [4.400] In all jurisdictions except Victoria, Queensland, the Australian Capital Territory

and the Northern Territory the Torrens statutes contain two sets of provisions relating to the Registrar’s power to correct the Register.478 First, in all jurisdictions the so-​called “slip” provisions provide that the Registrar may479 correct errors in the Register and supply omitted entries, but the Registrar must ensure that in doing so the original entry is not erased or made illegible.480 Corrections or entries made are to have the same effect as if the error or omission had not occurred, but without prejudicing any rights acquired from an entry on the Register before the time of correcting the error or supplying the omitted entry.481 Thus, in most jurisdictions whatever power the Registrar has under this provision is limited to the period before a bona fide purchaser or mortgagee acquires a title having relied upon the Register as it was.482 Further, it is clear that there must be an error in the relevant sense. This requires that the recording in the Register does not reflect the material contained in the instrument presented for registration, upon which the recording was based.483 The Registrar does have power to correct the Register to show an exception to indefeasibility to which the registered proprietor is subject, whether or not the correction is made.484

78 There is overlap between the sets of provisions. 4 479 In Western Australia the Registrar “shall” upon the direction of the Commissioner correct errors in the Register. 480 Real Property Act 1900 (NSW), s 12(1)(d), (3)(a)–​(d), (3A)(a)–​(c); Transfer of Land Act 1958 (Vic), s 103(2) (a); Land Title Act 1994 (Qld), s 15; Real Property Act 1886 (SA), s 220(f); Transfer of Land Act 1893 (WA), s 188(4); Land Titles Act 1980 (Tas), s 139(2)(a); Land Titles Act 1925 (ACT), ss 14(1)(e), 160–​162A; Land Title Act (NT), s 17(1), (3). The wording differs from jurisdiction to jurisdiction in relation to ensuring that the original entry is not erased. The intent of the provisions, however, appears to be the same. In Queensland and the Northern Territory, for example, the Registrar must record the state of the Register before the correction and then the time, date and circumstances of the change: Land Title Act 1994 (Qld), s 15(6)(a), (b); Land Title Act (NT), s 17(3)(a), (b). Note that s 220(f) of the Real Property Act 1886 (SA) does not appear to make provision for this matter. 481 Real Property Act 1900 (NSW), s 12(3)(b), (c), (3A)(b), (c); Transfer of Land Act 1958 (Vic), s 103(2)(b); Land Title Act 1994 (Qld), s 15(1)(b), (7), but see s 15(8) (exception to principle that power to correct cannot prejudice a holder); Transfer of Land Act 1893 (WA), s 188(6); Land Titles Act 1980 (Tas), s 139(2)(b), (c); Land Titles Act 1925 (ACT), ss 14(1)(e), 160(6) (no provision that correction to have same effect, but presumably this is the case even in the absence of the provision); Land Title Act (NT), s 17(1)(b). Compare s 220(f) of the Real Property Act 1886 (SA), which does not specifically provide that rights acquired before the correction are not to be prejudiced. Query the effect of this. 482 See James v Registrar-​General (1967) 69 SR (NSW) 361. Compare, however, s 12(3) of the Real Property Act 1900 (NSW) enacted after James v Registrar-​General (1967) 69 SR (NSW) 361. This provision appears to give the Registrar-​General the power to correct the Register after a person has become registered. There is, however, a provision that the correction is not to prejudice that person’s rights: see FNCB-​Waltons Finance Ltd v Crest Realty Pty Ltd (1977) 10 NSWLR 621. 483 Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 619. 484 James v Registrar-​General (1967) 69 SR (NSW) 361. In Queensland there was doubt as to whether the Registrar could restore an omitted easement, as had been done in the James case: see Weir, “Registrar’s Power of Correction-​Queensland Reforms” (1998) 6 APLJ 101. See now s 15(3) of the Land Title Act 1994 (Qld), which provides that the Registrar may correct the Register, whether or not the correction prejudices the rights of a registered interest holder, if the correction is to show particulars of an omitted or misdescribed [4.400]  271

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In most jurisdictions, where an incorrect entry leads to a further (ostensibly correct) entry, if both are seen as part of the same error, both can be corrected.485 In the most recently updated Torrens statutes, Queensland and the Northern Territory, the Registrar’s power has been made clearer and, arguably, broader.486 For instance, the Registrar can hold an inquiry to determine whether the Register is incorrect. Although the term “bona fide purchaser for value” does not appear in the Queensland and Northern Territory Acts, it is still clear in these jurisdictions that the Registrar cannot exercise his or her power in such a manner that the indefeasible title of a registered proprietor is adversely affected.487 However, s 15(8) of the Land Title Act 1994 (Qld) provides that the rights of the holder of an interest recorded in the Register are not prejudiced if the holder acquired the interest with actual or constructive knowledge that the Register was incorrect.488 Secondly, in most jurisdictions, the so-​called “substantive” provisions provide that the Registrar has power to cancel or correct a document where he or she is satisfied that some fraud was involved. For example, in New South Wales, where the Registrar-​General is satisfied that a certificate of title or recording in the Register has been fraudulently or wrongfully489 obtained or a certificate of title or duplicate registered dealing is fraudulently or wrongfully retained, the Registrar-​General may summon or require delivery up to him of the relevant document for cancellation or correction.490 Further, this procedure is applicable if the Registrar is satisfied that any entry or endorsement has been made in error on a certificate of title or recording.491 These provisions provide considerable overlap with the first set of provisions described above. In Queensland and the Northern Territory the provisions are more general (ss  15 and 17 respectively set out the Registrar’s powers to correct). The grounds on which the Registrar’s power to correct may be exercised are not specified. Section 15(1)(a) of the Queensland Act provides that the Registrar may correct any register in the land registry if satisfied that the Register is incorrect. By s 19, the Registrar is given power to hold an inquiry to consider, inter

easement. For discussion as to the problems with omitted easements, see Griggs, “Omitted Easements in the Torrens System: Devising a Better Strategy” (2018) 26 APLJ 333. 485 Re Jobson and the Real Property Act 1900 (1951) 51 SR (NSW) 76. Comapre Equitiloan Securities Pty Ltd v Registrar of Titles [1997] 2 Qd R 597 discussed in Skead and Carruthers, “The Registrar’s Powers of Correction: ‘Alive and Well’, Though Perhaps ‘Unwelcome’? Part 1: The Slip Provision” (2010) 18 APLJ 32 at 39–​40 and  42–​43. 486 See Skead and Carruthers, “The Registrar’s Powers of Correction: ‘Alive and Well’, Though Perhaps ‘Unwelcome’? Part 1: The Slip Provision” (2010) 18 APLJ 32 at 46. Compare, however, Equitiloan Securities Pty Ltd v Registrar of Titles [1997] 2 Qd R 597. 87 Equitiloan Securities Pty Ltd v Registrar of Titles [1997] 2 Qd R 597; Land Title Act 1994 (Qld), s 15(1)(b), (8); 4 Land Title Act (NT), s 17(1)(b), (5). Weir, “Land Title Act 1995 (Qld) –​Statute for a New Millennium?” (2000) 4 FJLR 185 at 190–​194 has argued that the wording of the Queensland provision (Northern Territory the same) results in the Registrar having a lesser power of correction than in the other jurisdictions. 488 See also Land Title Act (NT), s 17(5). 489 The use of the word “wrongfully” is concerning. It is “inherently ambiguous and nowhere defined or explained in the legislation unlike other terms such as fraud, error, misdescription”: Grinlinton, “The Registrar’s Powers of Correction” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), p 218. For a discussion of the meaning and import of the word wrongfully in this context, see Grinlinton, “The Registrar’s Powers of Correction” in Grinlinton, Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 235–​239. 90 Real Property Act 1900 (NSW), ss 136, 137; Transfer of Land Act 1893 (WA), ss 76, 77; Land Titles Act 1980 4 (Tas), ss 163, 164. 91 Real Property Act 1900 (NSW), s 136; Transfer of Land Act 1893 (WA), s 76; Land Titles Act 1980 (Tas), s 163; 4 Land Titles Act 1925 (ACT), ss 160–​161. 272 [4.400]

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alia, whether a person has fraudulently or wrongfully procured a particular in a register or an endorsement or an instrument affecting land.492 Under s 15(2)(b), the Registrar may correct the Register if he or she has held an inquiry and has decided that the Register is incorrect, including because there has been fraud affecting the Register. It has been suggested that the combination of these relevant provisions in the Queensland and Northern Territory statutes has “significantly extended” the Registrar’s powers to correct, although the Registrar’s power is limited by the “no-​prejudice” proviso.493 [4.405] In Frazer v Walker [1967] 1 AC 569 the Privy Council considered the equivalent

sets of provisions in the New Zealand Torrens legislation to the “substantive” provision in jurisdictions other than Queensland and the Northern Territory. The Privy Council took the view that the first provisions, and the only provisions relating to the Registrar’s power to correct the Register in Victoria, were merely “slip” provisions and had no substantive importance. However, in the opinion of the Privy Council, the second set of provisions was significant and had the capacity to derogate from the principle of indefeasibility of title.494 It is submitted, however, that so far the provisions have not been used to create a further exception to indefeasibility of title and the courts have encouraged this position by suggesting that the power should only be used in very clear cases where no difficult issues of law or fact are involved.495 As the Privy Council stated in Frazer v Walker, the substantive provision is to be read subject to the protection of purchaser provision and thus the Registrar’s power to correct is “limited to the period before a bona fide purchaser … acquires a title under the latter section”.496 The second set of provisions does contain an inherent capacity for a further exception to indefeasibility to be created. In view of the Privy Council’s comments in Frazer v Walker, however, it is perhaps unlikely that Registrars will exercise the power in such a manner as to create a further exception. Thus, where a registered proprietor would have an immediately indefeasible title under the Frazer v Walker principle, but there is evidence to show that fraud (but not the fraud of the registered proprietor) was involved in procuring the registration, it is suggested that the Registrar, although having the power, is unlikely to use the power to

492

There is no direct link between the provisions, but presumably the power to hold an inquiry is to enable the Registrar to determine whether to alter the Register. Note, however, the wording of s 19 of the Land Title Act (NT), which gives the Registrar power to hold an inquiry to determine if the Register should be corrected or if an entry has been fraudulently or wrongfully procured: see s 20–​23. 493 Carruthers and Skead, “The Registrar’s Powers of Correction: ‘Alive and Well’, Though Perhaps ‘Unwelcome’? Part 2: The Substantive Provision” (2010) 18 APLJ 132 at 147; Weir, “Indefeasibility: Queensland Style” (2007) 15 APLJ 79; Weir, “Registrar’s Power of Correction –​Queensland Reforms” (1998) 6 APLJ 101. 494 Comapre Pottinger v Raffone [2007] UKPC 22, where the Privy Council took the view that similar provisions conferred only administrative powers. 495 See, for example, Re Macarthy and Collins (1901) 19 NZLR 545; State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398; Scallan v Registrar-​General (1988) 12 NSWLR 514; Pottinger v Raffone [2007] UKPC 22. Compare the view of Salmond J in dissent in Boyd v Mayor of Wellington [1924] NZLR 1174. See generally Carruthers and Skead, “The Registrar’s Powers of Correction: ‘Alive and Well’, Though Perhaps ‘Unwelcome’? Part 2: The Substantive Provision” (2010) 18 APLJ 132 at 139–​145. 96 Frazer v Walker [1967] 1 AC 569 at 586. See the discussion in Carruthers and Skead, “The Registrar’s Powers 4 of Correction: ‘Alive and Well’, Though Perhaps ‘Unwelcome’? Part 2: The Substantive Provision” (2010) 18 APLJ 132 at 135–​137 as to meaning of this provision and the ramifications for the Registrar’s power to correct. See also Medical Benefits Fund of Australia Ltd v Fisher [1984] 1 Qd R 606. [4.405]  273

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correct. If the power were so used it would render nugatory the indefeasibility of the registered proprietor’s title.497 [4.410]  The Registrar’s powers are discretionary (apart from in Western Australia) and the

court will not interfere with the exercise of the Registrar’s discretion.498 [4.415] Apart from the specific provisions, the Registrar also has other various powers

to correct the Register. These powers emanate from the express statutory exceptions to indefeasibility. The powers exist quite independently of the specific correction powers and can be used whether or not a bona fide purchaser for value has taken a registered interest. Recently, various amendments in Torrens statutes have given Registrars some broader powers in specific areas. Some of these powers go beyond the administrative and amount to Registrars deciding substantive issues between parties.499 As an illustration, in New South Wales and Victoria the Registrars have power to remove from the Register easements which they find to be abandoned500 and in New South Wales the Registrar-​General now has broad powers in relation to the removal of restrictive covenants.501

MISCELLANEOUS IMPORTANT PROVISIONS State guarantee of title [4.420] When the Torrens system of land registration was first introduced, a provision

enabling a person suffering loss to seek compensation from a guarantee fund was considered vital. The fear of loss of title without compensation, a fear engendered largely by South Australian lawyers opposed to the system, resulted in such a provision being important in order to assuage the concern and to ensure the successful passage of the legislation: see [4.25]. A  further, less pragmatic reason for including a State guarantee of title was to give those administering the system some flexibility to ensure the smooth running of the system. Recently, the New South Wales Supreme Court reiterated that a purpose of the assurance fund was to ensure the smooth and efficient running of the system by giving: assurance to the Registrar-​General that he is to go ahead and administer the Real Property Act in a confident and effective manner, without paying undue attention to the readily discernible possibility that in any particular transaction the Registrar-​General may have been deceived and may be acting on a wrong basis.502

497 As to the use of correction on the basis of “wrongfulness”, see Grinlinton, “The Registrar’s Powers of Correction” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 228–​ 238, where it is argued that “wrongfully” could be confined to analogous situations that amount to in personam claims and thus reduce any general and overarching threat that the Registrar’s power to correct in relation to entries “wrongfully obtained” theoretically contains. Compare District Land Registrar v Thompson [1922] NZLR 627 referred to in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 371. 498 Re Transfer of Land Statute; Ex parte Mutual Trust & Investment Society Ltd (1885) 11 VLR 166. 499 See Note, Titles Cleansed of Covenants (1999) 73 ALJ 236. 500 Real Property Act 1900 (NSW), s 49; Transfer of Land Act 1958 (Vic), ss 73, 73A. 501 Real Property Act 1900 (NSW), ss 81I–​81L. 502 Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452 at 461 per Bryson J. 274 [4.410]

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More specifically, it seems the provisions were designed to ensure that persons who suffered loss because of the new concept of indefeasibility or because of the error or misfeasance of the Registrar or the Registrar’s officers should be able to obtain compensation from an assurance fund.503 [4.425]  When the Torrens system was introduced, the idea was that the guarantee schemes

would be funded by contributions from particular users of the system. Thus, for example, in New South Wales persons who wished to convert their general law titles to Torrens title were required to contribute into the fund. A compulsory contribution was also required upon the transfer of the land after the death of a registered proprietor. In Victoria, contributions were required upon various risk-​related transactions, such as conversion to Torrens title and registration of title based on adverse possession. The contributions were paid into a separate fund, the assurance fund. Because of the rate of payments out in comparison to contributions, the assurance funds became very well endowed. In turn, this led to contributions being abolished in some States and to the separate assurance funds being abolished in some States.504 For example, in Victoria the assurance fund was abolished in 1983 and claims are paid out of Consolidated Revenue. In Queensland and the Northern Territory the entitlement is to compensation from the State or Territory respectively, for the deprivation of an interest505 and in the Australian Capital Territory it is the Commonwealth that is liable to pay if there is a proven case for compensation.506 In New South Wales there has been a reversion to a system requiring users of the system to finance the fund. A special deposit account called the Torrens assurance fund is established with the Minister able to direct that fees paid to the Registrar-​General in relation to any lodgement of a dealing, caveat, or withdrawal of a caveat can be moved into the fund. Other sources of the fund include amounts recovered by the Registrar-​General, amounts advanced by the Treasurer and amounts appropriated by Parliament for payment into the fund.507 [4.430]  In 1989, the right to compensation was questioned508 by the Law Reform Commissions

of New South Wales and Victoria in a joint discussion paper. In the paper, it was stated that there was no evidence to prove that the concept of indefeasibility of title had caused significant

503

Note that the term “assurance fund” is no longer universally applicable. See [4.425]. In addition, Registrar-​ Generals have sought, sometimes unsuccessfully, to have other insurance schemes pay for the mistakes that lead to compensable claims. For an example of an unsuccessful application, see Registrar-​General of New South Wales v Lawcover Insurance Pty Ltd (2014) 17 BPR 33,235. This action followed the successful claim on the fund for an amount of approximately $3.8 million, with legal costs in excess of $300,000 (Pedulla v Panetta (No 2) [2011] NSWSC 1533/​Pedulla v Panetta (2011) 16 BPR 30,229). For a discussion of this litigation see Griggs and Low, “Going Through the Obstruction, the Torrens System Assurance Fund and Contemporary Solutions: A Tale Weaved from a Story of a Nun, a Romantic Triangle and Sibling Corruption” (2014) 23 APLJ 17. 504 In New South Wales, the Closer Settlement and Public Reserves Fund was abolished in 1987. In 1992, a separate fund, “The Torrens Assurance Fund”, was set up: see Real Property Act 1900 (NSW), s 134. See Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.1400]. 05 Land Title Act 1994 (Qld), s 188(2); Land Title Act (NT), 192(2). 5 06 Land Titles Act 1925 (ACT), ss 154–​155. 5 07 Real Property Act 1900 (NSW), s 134. 5 508 NSWLRC and VLRC, Torrens Title: Compensation for Loss, Discussion Paper (June 1989), p 11. NSWLRC, Torrens Title: Compensation for Loss, Issues Paper (December 1989). Discussed in Butt, “Reforming the Torrens Title Assurance Fund” (1990) 64 ALJ 78. See also Toomey, State Guarantee of Title under the Torrens System: Adequate, Inadequate or Forgotten? (Paper delivered at the Real Property Teachers Conference, Bond [4.430]  275

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loss and that errors by the Registrar or his or her officers resulting in loss could be dealt with adequately under the ordinary principles of tort law. The Commissions reasoned that the State does not pay compensation to innocent persons who suffer loss in other areas of registration of property interests (eg, motor vehicle registration). In the discussion paper the New South Wales Law Reform Commission commented that there was “a case for abolishing the State compensation scheme for losses arising from operation of the Torrens system”.509 In its final report, however, on the reform of the assurance fund provisions (Torrens Title: Compensation for Loss (LRC 76, 1996)), the New South Wales Law Reform Commission accepted the need for some insurance scheme and made wide-​ ranging recommendations for reform of the current system.510 The Real Property Amendment (Compensation) Act 2000 (NSW) adopted many of these recommendations.511 Strong arguments remain for the retention of the compensation scheme. As it was when the Torrens system was first introduced, it is still the case that innocent persons may suffer loss under the Torrens system that they would not have suffered under the general law system of conveyancing. For example, a forged conveyance has no effect under the general law whereas, under the Torrens system, registration of a forged transfer may operate to deprive an owner of his or her land and to confer a good title on the transferee providing the forgery was not perpetrated by the transferee.512 One of the aims of the compensation provisions was to compensate persons who would not have been deprived of an interest but for the introduction of the Torrens system. On balance, it is thought the compensation scheme should be retained in order to provide protection for such innocent persons. In addition, there are other reasons for maintaining compensation schemes.513 Public confidence in the accuracy of the Register is engendered. More specifically, provisions to encourage the more rapid conversion of general law titles to Torrens title require a less thorough analysis of a general law chain of title and are partly predicated on compensation being freely available for persons who suffer loss as a result of the conversion:  see [4.510]. It is interesting to note that in the most recently reformed Torrens legislation in Australia, the Land Title Act (NT), the traditional State guarantee of title was re-​established after being absent from the legislation for some time. The joint discussion paper of the New South Wales and Victorian Law Reform Commissions proposed that the commissions consider the viability of private insurance either, as a substitute for or complement to, the State indemnity schemes. In fact, in the final report of the New South Wales Law Reform Commission, little consideration was given to this. Since then, however, there has been considerable academic comment and some action in relation to private title

509 510 511 512 513

University, July 1995). Carruthers and Skead, “150 Years on: the Torrens Compensation Provisions in the ‘Last Resort’ jurisdictions” (2011) 19 APLJ 174. NSWLRC and VLRC, Discussion Paper, p 11. By inference, it seems that the VLRC did not agree with this proposal. The Report is discussed in Sherry, “Torrens Title Compensation for Loss –​Recommendations for Reform” (1996) 4 APLJ 251. See Mitchell, “Torrens Title Compensation for Loss –​The Real Property Amendment (Compensation) Act 2000 (NSW)” (2001) 9 APLJ 40. Compare Real Property Act 1886 (SA), s 69(b). See generally NSWLRC, Torrens Title: Compensation for Loss (Report No 76, (1996)), p 75.

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insurance.514 There appears to be general agreement that even in a Torrens-​based system, with indefeasibility of title and State indemnities, private insurance can assist in managing the risks involved in conveyancing.515 Private insurance can protect against some title risks which are not protected by the State guarantee. Thus, risks presented by overriding interests, by some interests enforceable under the in personam exception and by interests that may gain priority because of the time gap between settlement and registration may be managed by private insurance. Further, risks which are not concerned with title defects or the Torrens system, but which the purchaser must take responsibility for, may be covered by private insurance: such as boundary disputes, and structures built without council approval even when compensation is available from the assurance fund, claiming under a private insurance policy may often prove to be a far simpler, less expensive avenue to pursue than seeking indemnity from the assurance funds.516 Private title insurance may also be important in the new environment of electronic conveyancing as policies will often provide coverage for aspects that are unique or which emanate from the introduction of electronic conveyancing.517 Despite its many advantages, it is possible that electronic conveyancing may increase registration errors and private title insurance contains the potential to assist “in underpinning its safe use by extending compensation beyond the limits of that provided by the State”.518 While the introduction of private insurance as a complement to State-​based indemnity has been welcomed, it has been argued that the worst scenario would be if governments removed the State indemnity and allowed people voluntarily to choose whether or not to take out private insurance. Many may choose not to insure and risk huge losses.519

514 Ziff, “Title Insurance: The Big Print Giveth but Does the Small Print Taketh Away?” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 371–​395; Flaws, “Compensation for Loss under the Torrens System –​Extending State Compensation with Private Insurance” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 397–​418; O’Connor, “Double Indemnity –​Title Insurance and the Torrens System” (2003) 3(1) QUTLJJ 142; O’Connor, “Title Insurance –​ Is There a Catch?” (2003) 10 APLJ 120; Griggs, “The Assurance Fund: Government Funded or Private?” (2002) 76 ALJ 250; Ziemer, “Title Insurance: The Good, the Bad and the Ugly: Does Victoria Need it?” (2011) 20 APLJ 1. In Australia there are now companies offering insurance policies which complement the State indemnity assurance funds, for example Stewart Title Ltd and First Title. 515 See, for example, O’Connor, “Double Indemnity –​Title Insurance and the Torrens System” (2003) 3(1) QUTLJJ 142; Flaws, “Compensation for Loss under the Torrens System –​Extending State Compensation with Private Insurance” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 397–​418; cf Ziff, “Title Insurance: The Big Print Giveth but Does the Small Print Taketh Away?” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 371–​395, who is less certain of benefits in Torrens-​based system. 516 See generally O’Connor, “Double Indemnity –​Title Insurance and the Torrens System” (2003) 3(1) QUTLJJ 142. In this regard, see, for example, s 188D of the Land Title Act 1994 (Qld), which provides that an insurer cannot be subrogated to another person in relation to the other person’s entitlement to compensation under ss 188 and 188A. 517 See Flaws, “Compensation for Loss under the Torrens System –​Extending State Compensation with Private Insurance” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp  414–​417. 518 Flaws, “Compensation for Loss under the Torrens System–​Extending State Compensation with Private Insurance” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), p 418. 519 O’Connor, “Double Indemnity –​Title Insurance and the Torrens System” (2003) 3(1) QUTLJJ 142 at 169.

[4.430]  277

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[4.435] A person who is deprived of all or part520 of his or her estate or interest521 in the

land and thus suffers loss or damage may have a claim for compensation.522 In New South Wales the amended provisions relating to claims against the fund require that the loss or damage suffered must arise “as a result of the operation of the Act”.523 This clause has been interpreted broadly so that it is not limited to deprivation of an interest as a result of the operation of the Act. A loss suffered as a result of fraud whereby a registered proprietor is able to maintain an indefeasible title can still be a loss arising as a result of the operation of the Act.524 In all jurisdictions except New South Wales, Victoria, Queensland and the Northern Territory, the loss or damage must comprise deprivation of an estate or interest in the land. In these jurisdictions the loss or damage arising pursuant to some, but not all, of the listed circumstances may be by a means other than deprivation of an interest in land.525 In order to sustain a claim for compensation, the loss or damage must arise out of one of a number of listed circumstances set out in the statutes. These circumstances vary from jurisdiction to jurisdiction. [4.440]  First, in all jurisdictions except Victoria, a person who has been deprived of an estate

or interest in land in consequence of fraud may make a claim for compensation.526 It seems that fraud in this context has a broader meaning than the restricted meaning of fraud as defined for 520 A person may be deprived of part of his or her estate if, for example, a mortgage is registered on the title: Cox v Bourne (1897) 8 QLJ 66; Parker v Registrar-​General [1977] 1 NSWLR 22; Beardsley v Registrar of Titles [1993] 2 Qd R 117. 521 This could be an equitable interest: Williams v Papworth [1900] AC 563. With respect to future interests, there is no deprivation until the interest becomes a right to present enjoyment: Finucane v Registrar of Titles [1902] SRQ 75. A person could be “deprived” of an interest if he or she loses a priority dispute to the holder of another interest in the land: see, for example, Breskvar v White [1978] Qd R 188 and see [4.130] and [5.165] for discussion of Breskvar v Wall. 522 Real Property Act 1900 (NSW), ss 120, 128–​135; Transfer of Land Act 1958 (Vic), ss 108–​111; Land Title Act 1994 (Qld), ss 188–​190; Real Property Act 1886 (SA), ss 201–​205, 207–​219; Transfer of Land Act 1893 (WA), ss 201, 205–​211; Land Titles Act 1980 (Tas), ss 127–​128, 150–​159; Land Titles Act 1925 (ACT), ss 143–​151, 154, 155; Land Title Act (NT), ss 192–​196. 523 Real Property Act 1900 (NSW), ss 120(1), 129(1). 524 See Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 at 583–​585, where a purchaser suffered loss as a result of a mortgage remaining on the title (purchaser thought mortgage would be discharged but discharge of mortgage restrained from being registered because of fraud). Further, it is sufficient if the operation of the Act “materially contributed to the loss without being its dominant cause”: Kirkland v Quinross Pty Ltd (2008) 14 BPR 26,979 at [71]. In Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675 and (2008) 13 BPR 25,259 a mortgagee of a forged, unenforceable all moneys mortgage was able to obtain compensation for the loan moneys which were not secured by the registered mortgage. It has been argued that this loss was not caused by the operation of the Act –​under general law, the forged mortgage would have been ineffective and as the same result flowed under the Torrens system, the mortgagee’s loss does not occur “as a result of the operation of the Act”: see Grattan, “Forged but Indefeasible Mortgages: Remedial Options” in Bennett Moses, Edgeworth and Sherry (eds), Property and Security: Selected Essays (Thomson Reuters, Sydney, 2010), pp 171–​198. Grattan discusses whether s 129B(3) of the Real Property Act 1900 (NSW), inserted in 2009, gives statutory recognition to the Chandra decision, but concludes it does not: see pp  193–​195. 525 The case of Oakden v Gibbs (1882) 8 VLR 380 (discussed in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 347) demonstrates the possible difficulty of a requirement that the loss must be by deprivation of an interest in the land. See [4.465]. If the loss is through omission or misfeasance of the Registrar, the loss does not have to be pursuant loss of interest in land. 526 Real Property Act 1900 (NSW), s 129(1)(e); Land Title Act 1994 (Qld), s 188(1)(a); Real Property Act 1886 (SA), s 203; Transfer of Land Act 1893 (WA), s 201; Land Titles Act 1980 (Tas), s 152(1)(a); Land Titles Act 1925 (ACT), s 154(1)(a); Land Title Act (NT), s 192(1)(a). Section 188A of the Land Title Act 1994 (Qld) and s 193 278 [4.435]

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an exception to indefeasibility of title.527 The fraud is not confined to particular types of fraud, such as forgery, which relate directly to the registration system. “As a consequence of fraud” is given its natural meaning and any person who loses an interest in land because of the fraud of another person who takes a registered interest, is entitled to compensation.528 Although the Transfer of Land Act 1958 (Vic) does not have a specific provision relating to fraud, there are other listed circumstances in s 110 under which a defrauded person could demonstrate a claim. For example, s 110(1)(c) provides that a person sustaining loss by reason of the registration of any other person as proprietor is entitled to be indemnified.529 [4.445] Secondly, in all jurisdictions a person who is deprived of his or her interest and

thereby suffers loss as a consequence of the bringing of the land under the Torrens system is entitled to compensation.530 [4.450]  Thirdly, in all jurisdictions a loss suffered through any error, omission or misdescription

in the Register gives rise to a claim for compensation.531 In Trieste Investments Pty Ltd v

527

528

529 530

531

of the Land Title Act (NT) allow for compensation for loss or damage in listed situations, fraud not being one of them. It appears that compensation for loss for fraud is only available if deprivation of an interest in land can be demonstrated: see s 188 (Qld) and s 192 (NT). Note also in Queensland it is specifically provided that compensation under ss 188 and 188A of the Land Title Act 1994 (Qld) does not include compensation for personal injury: s 188AA. In New South Wales the loss of damage through fraud does not have to arise from deprivation of an interest in land: Real Property Act 1900 (NSW), s 129(1)(e). Parker v Registrar-​General [1977] 1 NSWLR 22; Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 (compensation payable where damage arose because of fraud which enabled an interest to remain on the Register). However, see also Heid v Connell Investments Pty Ltd (1989) 16 NSWLR 629 –​in earlier proceedings it had been found that the registered proprietor had not been deprived of his legal estate by the fraud of Connell Investments. This created an issue estoppel and Heid was thus prevented from claiming from the assurance fund under the Real Property Act 1886 for damages for deprivation of his interest. See Parker v Registrar-​General [1977] 1 NSWLR 22 at 25 per Glass JA, at 30 per Mahoney JA; Northside Developments v Registrar-​General (1990) 93 ALR 385. Compare Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 –​fraud did not extend to fraud of person who procured the registration of another innocent person. But cf this decision with Saade v Registrar-​General (1993) 179 CLR 58. In Elfar v Registrar General of New South Wales [2010] NSWSC 539 the plaintiff claimed compensation on the basis that his signature to a discharge of mortgage had been forged and he had therefore suffered loss “as a consequence of fraud”. The court was not satisfied that his signature had been forged (and, even if it had been, the court found the plaintiff was complicit in the forgery) and thus, on the facts, any loss suffered by the plaintiff was not as a consequence of fraud. See Fairless v Registrar of Titles [1997] 1 VR 404. Real Property Act 1900 (NSW), ss 120(1)(c), 129(1)(d); Transfer of Land Act 1958 (Vic), s 110(1)(a); Land Title Act 1994 (Qld), ss 188(1)(b), (c), 188A(1)(a), (b); Real Property Act 1886 (SA), s 203; Transfer of Land Act 1893 (WA), s 201; Land Titles Act 1980 (Tas), s 152(1)(b); Land Titles Act 1925 (ACT), s 154(1)(b); Land Title Act (NT), ss 192(1)(b)(c), 193(1)(a)(b). In Queensland, the Australian Capital Territory and the Northern Territory there is no general law land and the provisions referred to above are for a more general purpose than their counterparts in the other jurisdictions. Real Property Act 1900 (NSW), ss 120(1)(b), 129(1)(c); Transfer of Land Act 1958 (Vic), s 110(1)(c); Real Property Act 1886 (SA), s 203; Transfer of Land Act 1893 (WA), s 201; Land Titles Act 1980 (Tas), s 152(1)(d); Land Titles Act 1925 (ACT), s 154(1)(d). Note the differences in wording in these provisions. The provisions are more specific in Queensland and the Northern Territory: Land Title Act 1994 (Qld), ss 188(1)(b), 188A(1)(a); Land Title Act (NT), ss 192(1)(b), 193(1)(a) (incorrect creation of indefeasible title in another person). Note “incorrect” probably does not require an element of fault by the Registrar: see Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), pp 473–474; Land Title Act 1994 (Qld), ss 188(1)(c), 188A(1)(b); Land Title Act (NT), ss 192(1)(c), 193(1)(b) (incorrect registration. Covering registrations apart from new indefeasible title); Land Title Act 1994 (Qld), ss 188(1)(d), 188A(1)(c); Land Title Act (NT), ss 192(1)(d), 193(1)(c) (“error” in indefeasible title or register). [4.450]  279

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Watson (1963) 64 SR (NSW) 98 at 109 it was held that an error, omission or misdescription conveyed “the concept of something lacking from the Register Book which would be expected to be in it”. Thus, where there was no duty on the Registrar-​General to note on the Register a resumption which effectively deprived the registered proprietor of part of its land, the Register could not be said to contain an error or misdescription.532 This interpretation of the provision was considered unduly restrictive and, in subsequent decisions, the presence or absence of fault in the Registrar has been considered irrelevant. In Cirino v Registrar-​General (1993) 6 BPR 13,260 the court held that “omission” means “not there”; it does not connote that the Registrar has failed to make an entry which should have been made. This broader view was also applied by Bryson J in Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452. Fourthly, in all jurisdictions loss sustained through the registration of any other person as proprietor gives rise to a claim for compensation. This provision will often overlap with other circumstances giving rise to a claim for compensation. [4.455]  As noted at [4.435], the compensation provisions, including the grounds upon which

compensation may be granted, vary markedly from jurisdiction to jurisdiction.533 For example, in Queensland and the Northern Territory a claim for compensation in relation to deprivation of an interest in land may be made as a result of a tampering with the freehold land register.534 This ground appears to have been included as a direct consequence of the computerisation of titles. In the unlikely event a person loses an interest because a third party tampers with the computer title, he or she is entitled to be compensated. In Victoria there are several other specific situations that give rise to a claim for compensation:  there is considerable scope for overlap between the provisions. The circumstances as set out in s 110(1) of the Transfer of Land Act 1958 (Vic) are: (aa) a legal practitioner’s failure to disclose in a legal practitioner’s certificate a defect in title or the existence of an estate or interest in land; …

(d) any payment or consideration given to any other person on the faith of any entry in the Register;



(e) the loss or destruction of any document lodged at the Office of Titles for inspection or safe custody or any error in any official search;535 …

532

533

534 535

See also Mayer v Coe (1968) 88 WN (Pt 1) NSW 549. Compare the judgment of Ferguson J in dissent (at 107), in the same case, who took a broader view of the provision and held that if the Register does not reflect the true situation, innocent persons who thereby suffer loss should be entitled to compensation. Comapre also the generally broader view of compensation taken in Parker v Registrar-​General [1977] 1 NSWLR 22. For a more detailed explanation of the New South Wales provisions, see Mitchell, “Torrens Title Compensation for Loss –​The Real Property Amendment (Compensation) Act 2000 (NSW)” (2001) 9 APLJ 40; Grattan, “Forged but Indefeasible Mortgages: Remedial Options” in Bennett Moses, Edgeworth and Sherry (eds), Property and Security: Selected Essays (Thomson Reuters, Sydney, 2010), pp 171–​198; and of the Queensland (and Northern Territory) provisions, see Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), pp 462–488. In that book, reference is also made to the different compensation provisions in Queensland under the repealed legislation (still relevant as applying to losses occurring before 24 April 1994). Land Title Act 1994 (Qld), s 188(1)(e); Land Title Act (NT), s 192(1)(e). See also Land Titles Act 1980 (Tas), s 170(2)(b).

280 [4.455]

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(g) the exercise by the Registrar of any of the powers conferred on him in any case where the person sustaining loss or damage has not been a party or privy to the application or dealing in connexion with which such power was exercised …

Under provisions introduced in 1986 in Victoria,536 a simplified procedure was introduced to convert general law titles to Torrens title.537 Instead of the painstaking and extensive investigation of the general law title being undertaken by the Registrar, the scheme provides that the Registrar may issue a Torrens title if satisfied as to certain matters and if a legal practitioner certifies that the person seeking title has acquired a good safe holding and a marketable title to the land. Section 110(1)(aa) was inserted to ensure that any person who suffered loss as a result of the legal practitioner’s certificate is entitled to compensation. Section 110(1)(d) seems to give considerable protection and may include, for example, compensation for a person who searches the Register, enters into a contract on the faith of the Register and then suffers loss because the Register was incorrect. [4.460]  In South Australia, Western Australia, Tasmania and the Australian Capital Territory

the person who has suffered the loss must first bring an action against the individual who was responsible for the loss. Thus, for example, if the loss is caused by fraud, the action is brought against the person who has registered through fraud.538 A claim may only be made on the fund if the first action does not result in the person suffering loss being compensated or if the bringing of such an action is not possible in the circumstances. Thus if the person liable for damages is dead, bankrupt or insolvent or cannot be found within the jurisdiction, damages may be recovered out of the fund by way of action against the Registrar as nominal defendant.539 Further, the person liable for damages ceases to be so liable when he or she transfers the land bona fide for value and, in such a case, compensation may be obtained from the fund by way of action against the Registrar as nominal defendant.540 There is a further general provision permitting direct action against the Registrar as nominal defendant where the rights of action against the wrongdoer discussed above are inapplicable.541 In New South Wales,542 Queensland and the Northern Territory, where there have been recent amendments of the State guarantee provisions designed to make claims simpler, and in Victoria, proceedings do not have to be taken against the wrongdoer first. Proceedings may

536 Transfer of Land (Conversion) Act 1986 (Vic), discussed at [4.510]. 537 See now further provisions to speed conversion at [4.510]. 538 Real Property Act 1886 (SA), s 203; Transfer of Land Act 1893 (WA), s 201; Land Titles Act 1980 (Tas), s 152(2) (b)(iii); Land Titles Act 1925 (ACT), s 154(1)(a), (3). 539 Real Property Act 1886 (SA), s 205; Transfer of Land Act 1893 (WA), s 201; Land Titles Act 1980 (Tas), s 152(8) (b), (c); Land Titles Act 1925 (ACT), s 143(b) (note that in the Australian Capital Territory the damages are recovered against the Territory). See also Registrar-​General v Behn [1980] 1 NSWLR 589. 540 Real Property Act 1886 (SA), s 205; Transfer of Land Act 1893 (WA), s 201; Land Titles Act 1980 (Tas), s 152(8) (a); Land Titles Act 1925 (ACT), ss 143(a), 154(5). 541 Real Property Act 1886 (SA), s 208; Transfer of Land Act 1893 (WA), s 205; Land Titles Act 1980 (Tas), s 153(1)(b); Land Titles Act 1925 (ACT), s 155 (against “the Territory”);. See the Real Property Amendment (Compensation) Act 2000 (NSW). 542 The new scheme in New South Wales allows for proceedings to be brought directly against the person causing the loss, or directly against the Registrar-​General: Real Property Act 1900 (NSW), s 120. When the proceedings are against the Registrar, ss 128–​135 operate. It does not appear that s 120 creates a separate statutory cause of action –​it just “authorises” the proceedings and would usually be superfluous as the right of action already exists under general law: Challenger Managed Investments Ltd v Direct Money Corporation Pty Ltd (2003) 59 NSWLR 452 at 456; Kirkland v Quinross Pty Ltd [2008] NSWSC 286 at [63]. [4.460]  281

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be taken directly against the Registrar-​General in New South Wales, the State or Territory in Queensland and the Northern Territory and the Registrar as nominal defendant in Victoria.543 In Victoria the Registrar can then join any person as a co-​defendant. In New South Wales, Queensland and the Northern Territory, upon payment of compensation, the State or Territory is subrogated to the rights of the claimant against the person responsible for the deprivation, loss or damage under the section.544 In view of the fact that the scheme is intended to provide a form of insurance and in view of the difficulties claimants face elsewhere, it has been suggested that these schemes are preferable. Further, the compensation schemes which have been recently reviewed, set up administrative procedures which provide for recovery of compensation with the need for court action only if resolution with the Registrar cannot be reached.545 [4.465] In all jurisdictions any person who suffers loss or damage through the omission,

mistake or misfeasance of the Registrar or his or her officers in the execution of their duties, may seek damages for the loss from the Registrar and, under this head, the loss suffered does not have to be pursuant to the loss of an estate or interest in the land.546 [4.470] There are a number of restrictions on the payment of compensation from the

funds;547 in New South Wales, recent amendments restrict the circumstances in which compensation is payable and also limit the amount of compensation payable in particular circumstances.548 Compensation is not payable for loss occasioned by a breach of trust.549 Further, compensation is not payable in any case in which the same land has been included in two or more Crown grants,550 or in any case in which loss has been suffered by the land being included in the same certificate of title with other land through misdescription of boundaries or parcels of land, unless (in some jurisdictions) it is proved that the person liable

543

Real Property Act 1900 (NSW), s 120(2); Transfer of Land Act 1958 (Vic), s 110(2); Land Title Act 1994 (Qld), s 188(2); Land Title Act (NT), s 192(2). 544 Real Property Act 1900 (NSW), s 133; Land Title Act 1994 (Qld), s 190; Land Title Act (NT), s 196. See also Transfer of Land Act 1958 (Vic), s 109(3)(a). 545 Real Property Act 1900 (NSW), s 131; Land Title Act 1994 (Qld), s 188B; Land Title Act (NT), s 194. See also Transfer of Land Act 1958 (Vic), s 111. The position is set out clearly in the New South Wales statute itself. Where the Registrar settles a claim, he or she can amend the Register: Real Property Act 1900 (NSW), s 138A. 546 Real Property Act 1900 (NSW), ss 120(1), 129(1); Transfer of Land Act 1958 (Vic), s 110; Land Title Act 1994 (Qld), s 188A; Real Property Act 1886 (SA), s 208; Transfer of Land Act 1893 (WA), s 205; Land Titles Act 1980 (Tas), s 153(1); Land Titles Act 1925 (ACT), s 155; Land Title Act (NT), 193. Note that in Challenger Managed Investments Ltd v Direct Money Corp Pty Ltd (2003) 59 NSWLR 452 at 456 Bryson J took the view that s 120 of the Real Property Act 1900 (NSW) does in itself create a cause of action and “perhaps is superfluous as an entitlement would exist under the general law”. Rather, his Honour took the view that its significance is in its direction that proceedings against the Registrar be undertaken in accordance with s 129ff. 547 Despite restrictions, in some cases ex gratia payments can be made even if the circumstance is one where compensation would not be generally payable: see, for example, s 130 of the Real Property Act 1900 (NSW). 48 See Real Property and Conveyancing Legislation Amendment Act 2009 (NSW). 5 49 Real Property Act 1900 (NSW), s 129(2)(f)(i); Transfer of Land Act 1958 (Vic), s 109(2)(a); Land Title Act 1994 5 (Qld), s 189(1)(a) (or breach of fiduciary duty); Real Property Act 1886 (SA), s 211; Transfer of Land Act 1893 (WA), s 196(1); Land Titles Act 1980 (Tas), s 151(1)(a); Land Titles Act 1925 (ACT), s 147(a); Land Title Act (NT), s 195(1)(a). 50 Real Property Act 1900 (NSW), s 129(2)(f)(ii); Transfer of Land Act 1958 (Vic), s 109(2)(b); Land Title Act 1994 5 (Qld), s 189(1)(b)(e); Transfer of Land Act 1893 (WA), s 196(1); Land Titles Act 1980 (Tas), s 151(1)(b); Land Title Act (NT), s 195(1)(b). Compare Real Property Act 1886 (SA), s 214 (fund not liable but can proceed against nominal defendant); cf Land Titles Act 1925 (ACT), s 154(2) (the action where the land has been included in two or more grants, shall be brought and prosecuted against the Territory). 282 [4.465]

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is dead or bankrupt or has absconded or is unable to pay the full amount in any action for recovery of such compensation and damages.551 There are further various restrictions which differ from jurisdiction to jurisdiction.552 For example, under s  129(2)(g) of the Real Property Act 1900 (NSW), compensation is not payable where the loss arises from the recording or omitting to record an approved determination of native title or other matters relating to native title rights and interests, or by s 129(2)(b)(ii), where the loss is compensable by a professional indemnity insurer. Under the provisions introduced in 2009 in New South Wales, there is no compensation for loss arising from the recording or the removal of a caveat by the Registrar-​General,553 from the acts or omissions of an insurance broker, from the execution of an attorney where the attorney acts beyond authority or, where the claimant is a mortgagee, from failure to comply with the new verification of mortgagor’s identity provisions.554 In Queensland, ss 11A and 11B of the Land Title Act 1994 (Qld) provide that mortgagees must take reasonable steps to confirm the identity of the mortgagor.555 Under s 189(1)(ab), mortgagees who suffer deprivation, loss or damage because of a failure to take those reasonable steps cannot claim compensation from the State. Further, by s 189A(2)–​(5), a mortgagee claiming compensation as a result of a forged mortgage is limited in the amount he or she can retain for interest and costs out of the proceeds of sale.556 Section 189(1)(j) and (k) excludes compensation in relation to omitted or misdescribed easements.557 Another important restriction on access to the fund in New South Wales, Victoria, Queensland and the Northern Territory is that no indemnity is payable where the claimant or his or her indemnified legal practitioner or agent caused or substantially contributed to the loss by fraud, neglect or wilful default or where the claimant derives title (otherwise than under a registered disposition) from a person whose legal practitioner or agent has been guilty of such fraud, neglect or wilful default.558 It has been argued that the claimant should

551

Transfer of Land Act 1958 (Vic), s 109(2)(c); Real Property Act 1886 (SA), s 212; Transfer of Land Act 1893 (WA), s 196(1); Land Titles Act 1980 (Tas), s 151(1)(d), (2); Land Titles Act 1925 (ACT), s 147(b). Compare Real Property Act 1900 (NSW), s 129(2)(e); Land Title Act (NT), s 195(1)(d); Land Title Act 1994 (Qld), s 189(1)(e), (f), (g). 552 See, for example, Real Property Act 1900 (NSW), ss 31A, 129(2), (3); Transfer of Land Act 1958 (Vic), ss 56, 109; Land Title Act 1994 (Qld), s 189; Real Property Act 1886 (SA), ss 211, 216; Transfer of Land Act 1893 (WA), ss 196, 211; Land Titles Act 1980 (Tas), ss 127, 128; Land Title Act (NT), s 195. 53 See similarly Land Title Act 1994 (Qld), s 189(1)(i); Land Title Act (NT), s 195(1)(f). 5 54 See [4.225]. 5 55 See [4.225]. 5 556 It seems s 129B of the Real Property Act 1900 (NSW) (introduced by the Real Property and Conveyancing Legislation Amendment Act 2009 (NSW)) was intended to produce a similar result for New South Wales; it is not clear that the provision successfully produces this result: see Grattan, “Forged but Indefeasible Mortgages: Remedial Options” in Bennett Moses, Edgeworth and Sherry (eds), Property and Security: Selected Essays (Thomson Reuters, Sydney, 2010), pp 194–​196. 557 This exclusion has been criticised as “strange and contrary to the compensation principle”: see Weir, “Indefeasibility: Queensland Style” (2007) 15 APLJ 79. 58 Real Property Act 1900 (NSW), s 129(2) (includes licensed conveyancer or real estate agent); Transfer of Land 5 Act 1958 (Vic), s 110(3)(a); Land Title Act 1994 (Qld), s 189(1)(b); Land Title Act (NT), s 195(1)(b). See also, s 216 of the Real Property Act 1886 (SA), which provides that the court can have regard to contributory negligence of the plaintiff or a person through or under whom he or she claims. See Registrar of Titles v Fairless [1997] 1 VR 404, where Phillips JA (Tadgell JA agreeing) commented that an act or omission does not “substantially contribute” unless the contribution is “considerable, large or big” (at 416). [4.470]  283

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be entitled to claim from the fund and then to subrogate the rights against the fraudulent or negligent solicitor to the fund.559 [4.475] The provisions discussed setting out that the compensation is not payable if the

claimant has caused or substantially contributed to the loss, are broad and may prevent the recovery of compensation in a number of cases. Further, there are some specific provisions that prevent compensation in particular instances where some blame may be attached to the applicant. Thus, where a person knows of an application to bring land under the Torrens statute and omits to caveat or allows a caveat to lapse, compensation is not payable.560 Apart from such specific provisions, the relevance of contributory negligence of an applicant remains an area of doubt.561 [4.480]  In some jurisdictions, the limitation provisions operate to bar the claim of a person

with a right to seek compensation from the fund. In New South Wales,562 Victoria, Western Australia and Tasmania the action must be commenced within six years of the date of the deprivation, in South Australia within 20 years and in Queensland within 12 years after the person becomes aware, or ought reasonably to have become aware, of the circumstances giving rise to the entitlement.563 It has been suggested that limitation periods are inappropriate in this context.564 If the complete absence of a limitation period is not acceptable, it seems at least that, as is now the case in Queensland, the cause of action should not arise until the person suffering loss knew, or ought reasonably to have known the facts.565 The case of Breskvar v Wall (1971) 126 CLR 376566 provides an example of how the presence of a limitation period may operate inequitably to prevent access to the fund. The applicant succeeded in an application for damages, but the judgment could not be satisfied against the fraudulent person. By the time access to the fund was sought, six years had elapsed from the date of the deprivation and access to the fund was denied. [4.485]  Once a claimant gains access to compensation, the question arises as to the amount

of compensation that may be claimed. It seems that the aim is to place the applicant in the same position he or she would have been in, had the mistake or the fraud, for example, not occurred.567 Where a fraudster has been involved in the transaction, the sale price may not represent the market value as the fraudster is not a participant at arms-​length. In this scenario

559 See the litigation that was behind and led to the decision of the New South Wales Supreme Court in Registrar-​General of New South Wales v Lawcover Insurance Pty Ltd (2014) 17 BPR 33,235. 560 Real Property Act 1886 (SA), s 216; Transfer of Land Act 1893 (WA), s 211; Land Titles Act 1980 (Tas), s 158(2). 561 Discussed in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 363. 562 Further, in New South Wales the limitation period to bring an appeal against an administrative decision concerning a claim has been reduced from 12 to 3 months: see Real Property Act 1900 (NSW), s 132(2A). 563 Real Property Act 1900 (NSW), s 131(2); Land Title Act 1994 (Qld), s 188C; Law of Property Act 1936 (SA), s 215; Transfer of Land Act 1893 (WA), s 211; Land Titles Act 1980 (Tas), s 158(1); Limitation of Actions Act 1958 (Vic), s 5(1)(d); Limitation Act 1985 (ACT). (Note the extended period where a person with the cause of action is under a disability: see [3.280].) Query s 12(1)(d) of the Limitation Act (NT) which suggests a three-​year period. 564 See, for example, Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 361. 565 This would be so in some cases in these jurisdictions where the barring of the claim is under the limitation statutes. 566 See Breskvar v White [1978] Qd R 188 (under the previous Queensland Torrens legislation). 567 Registrar of Titles v Spencer (1909) 9 CLR 641; Parker v Registrar-​General [1977] 1 NSWLR 22. 284 [4.475]

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the person defrauded is entitled to the market value, net loss of rent, and the transaction costs associated with the purchase of an equivalent house.568 Where the loss comprises a fixed amount, such as would be the case where a registered proprietor has to pay out a mortgage he or she did not create, the measure of damage is clear –​the amount required to discharge the mortgage.569 If the mortgage debt exceeds the value of the land, however, compensation will usually be limited to the value of the land.570 The position is less clear where the property is jointly owned and one joint owner forges the other’s signature to a mortgage over the property to secure a loan. Where the mortgage is held to be indefeasible,571 it has been held that the innocent co-​owner’s loss is the difference between the value of her interest (eg, 50% if she is a joint tenant) and the sum received after payment out of the mortgage from the proceeds of sale.572 Compensation is payable on this basis. In New South Wales and Queensland various limits have been placed on the amounts which may be recovered. In New South Wales s 129A of the Real Property Act 1900 (NSW) provides that where the claim relates to deprivation of an interest in land, compensation is now limited to the market value of the land plus direct costs, such as legal costs, reasonably incurred.573 Costs such as lost opportunity to sell or develop the land are not recoverable. Section 129B574 provides that where there is a claim by a registered mortgagee, the claim is limited to the market value of the land at the date compensation is awarded, less the amount secured by any other (prior) mortgage affecting the land. In Queensland s 189A of the Land Title Act 1994 (Qld) sets out specific limits on the amounts of interest and costs a mortgagee may retain from the proceeds of sale on a mortgagee’s sale. In cases where the loss is by a deprivation of an estate or interest in the land, such estate not comprising a fixed and certain sum, the time at which the value of the land is assessed may be very important. Inflation may increase the value of land considerably over a period of time. In Victoria it is provided specifically that the value of the interest in the land is assessed at the date of the loss.575 Although the same position appeared to be accepted elsewhere, more recent authority suggests that in some circumstances the value of the land, and thus the amount of the loss, is to be assessed at the date of the trial.576

Conversion of title [4.490] All land alienated from the Crown since the introduction of the Torrens statutes

automatically falls under the operation of the Torrens system of land registration.577 Further, 568 569

Astell v Australian Capital Territory [2016] ACTSC 238. The value of improvements which have been erected on land after the loss is suffered should not be included in assessing the compensation: Real Property Act 1886 (SA), s 209; Transfer of Land Act 1893 (WA), s 201; Land Titles Act 1980 (Tas), ss 152(9), 153(2). Compare Registrar of Titles (WA) v Spencer (1909) 9 CLR 641. 570 Keddell v Regarose Pty Ltd [1995] 1 Qd R 172. 571 See [4.170] for discussion of this issue. 72 See Breskvar v White [1978] Qd R 188 (under the previous Queensland Torrens legislation). 5 73 Inserted by Real Property and Conveyancing Legislation Amendment Act 2009 (NSW). 5 74 Inserted by Real Property and Conveyancing Legislation Amendment Act 2009 (NSW). 5 75 Transfer of Land Act 1958 (Vic), s 110(4). 5 576 See, for example, Registrar-​General v Behn [1980] 1 NSWLR 589; Glensaugh Pty Ltd v Registrar-​General (2001) 10 BPR 19,311. 577 Crown leaseholds are often under the Torrens system (see [6.170]) and land which is compulsorily acquired is brought under the Torrens system: see Real Property Act 1900 (NSW), s 31A(2); Transfer of Land Act [4.490]  285

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provisions were enacted to enable general law land to be brought voluntarily under the Torrens system. There are also provisions in most jurisdictions providing for the compulsory conversion of general law title to Torrens title. As of 2013, less than 0.5% of land in New South Wales was under the old system title, less than 0.3% in South Australia (2015 figures), 2100 titles still require conversion in Tasmania (2014), 10,000–​15,000 parcels in Victoria (2015), and less than 1% of freehold land in Western Australia remains under old system title (2010).578 Voluntary conversion [4.495]  The provisions allowing for voluntary conversion to Torrens title permit particular

persons to apply to bring the land under the Torrens system.579 For example, the fee simple owner entitled at law and in equity, a life tenant and some long-​term lessees may apply. A mortgagor cannot apply without the mortgagee’s consent, but, in particular circumstances, the mortgagee may so apply. There are a variety of schemes available and, although the detail differs, in outline the requirements are that the application must be in the approved or prescribed form and should contain a description of the land, a list of the documents in the chain of title, a note of any encumbrances over the land and the names of the owner and occupier of the land and of the owners and occupiers of any adjoining land.580 The applicant must surrender the documents of title to the Registrar. Before proceeding with the application the Registrar is required to give various notices of the intention to bring the land under the Torrens system. The nature and extent of these notices does vary from State to State. The notices include advertisements in newspapers, physical notices on the property and direct notices to adjoining landowners and persons who hold interests in the land. In some States the more doubtful the title, the more vigorous is the advertising required. [4.500]  There is provision for the lodgement of caveats against bringing the land under the

Torrens statute. The person lodging the caveat must have some interest in the land: see [5.25]–​ [5.45]. Thus, for example, a person claiming an easement over the land that is the subject of the application would be entitled to lodge a caveat. The land cannot be brought under the Torrens statute while the caveat remains on the title. The Registrar notifies the person who has made the application. The caveator has a set period of time after lodging the caveat within which to institute court proceedings to establish his or her interest and notify the Registrar of this fact or at least to have obtained an interim injunction against the Registrar to prevent the application proceeding. If the caveator has failed to take such action within the set period, the caveat lapses and the application may proceed. Once a caveat against an application for bringing the land under the Act has lapsed, no further caveat may be lodged on the same facts by the same person. The only remaining course of action for a person wishing to prevent the registration would be an application to the court seeking an injunction.

1958 (Vic), s 54; Real Property Act 1886 (SA), s 115A; Land Titles Act 1980 (Tas), s 126; Land Titles Act 1925 (ACT), s 80. 578 Moore, Laws of Australia, Real Property, Land Covered by the Torrens System, 28.4.170. 79 Real Property Act 1900 (NSW), s 14(2); Transfer of Land Act 1958 (Vic), s 10; Real Property Act 1886 (SA), s 27; 5 Transfer of Land Act 1893 (WA), s 20; Land Titles Act 1980 (Tas), s 11. 80 Real Property Act 1900 (NSW), s 14(4); Transfer of Land Act 1958 (Vic), see generally Pt II, ss 8–​26W; Real 5 Property Act 1886 (SA), ss 27–​38; Transfer of Land Act 1893 (WA), ss 20, 20A; Land Titles Act 1980 (Tas), ss 11, 12. 286 [4.495]

The Torrens System and Indefeasibility  Chapter  4

[4.505]  After completion by the Registrar of required formalities, the Registrar may proceed

to examine the title. The Registrar has a broad discretion to decide whether to bring the land under the Torrens system, but this discretion has traditionally been exercised in a very conservative manner. Generally, Registrars have demanded a very clear chain of title before proceeding to bring the land under the Act. This approach has limited the number of voluntary conversions and thus hindered the aim of converting all general law title to Torrens title. In view of the existence of assurance funds and of the aim of bringing all land under the Torrens system, the extremely rigorous approach adopted by the Registrars in this area was perhaps unnecessary and has been relaxed. [4.510]  Various other measures have been introduced in some jurisdictions to facilitate the

conversion of general law title. In Victoria, for example, the Transfer of Land (Conversion) Act 1986 (Vic) was enacted to provide for the Registrar to register a title under the Torrens system upon receipt of a legal practitioner’s certificate verifying the title.581 In these circumstances further examination of the title by the Registrar is not required. Whenever general law land is sold or mortgaged, the legal practitioner for the purchaser or the mortgagee thoroughly investigates the title of the vendor or mortgagor in order to ensure his or her client receives a good title or security. The purpose of the 1986 amendment was to make use of such searches by permitting the legal practitioner to certify as to the state of the title and by permitting registration under the Torrens system on reliance of such certification (providing the certification demonstrates a good safe holding and a marketable title to the land) without the need for further and expensive investigation by the Registrar. As conversion would be less expensive to the holder of the general law title, it was hoped that conversions would occur regularly upon the sale or mortgage of general law land. Further efforts to speed conversion were made in Victoria in 1998 with the introduction of the Transfer of Land (Single Register) Act 1998 (Vic).582 Perhaps the most important reform in this legislation was the provision that no further documents affecting general law land can be registered under the deeds registration system contained in s 6 of the Property Law Act 1958. Thus any party dealing in general law land who seeks “registration” can only do so under the Torrens system. A new conversion scheme is set up to permit registration where the transaction involves general law land. Another new conversion scheme allows for conversion without a legal practitioner’s certificate. The conversion schemes set up under the 1986 Act have been maintained with some simplification. The 1998 Act introduced two new forms of folio-​identified and provisional folios.583 The identified folio may be created when a general law land lot is identified:  it contains only a description of the land, no certificate of title is issued and general law priorities continue to apply.584 It is really a “tag” for a general law parcel.585 The provisional folio replaces the limited and qualified folios and issues as a result of any of the conversion schemes not requiring submission of a legal practitioner’s certificate.586 The provisional folio remains 81 5 582 583 584 585 586

See Note, “How General Law Land is Being Converted” (1987) 61 LIJ 162. See Transfer of Land Act 1958 (Vic), Pt II Div 3. Sections 26J–​26W (Div 4 of Pt II are general provisions relating to all conversions under Pt II). Transfer of Land Act 1958 (Vic), ss 26E–​26I. Van Den Heuvel v Perpetual Trustees Victoria Ltd [2010] NSWCA 171. In some cases, even where the scheme involves a legal practitioner’s certificate. See generally Transfer of Land (Single Register) Act 1998 (Vic), ss 22–​26D. [4.510]  287

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subject to existing general law interests and these, plus any other restrictions, are noted on the folio. Generally, any warning on a provisional folio ceases to have effect after 15 years. [4.515]  In New South Wales and Tasmania there is provision for qualified Torrens titles to be

issued where there is doubt about the general law title.587 In New South Wales the Registrar-​ General may issue a qualified folio where the applicant has made a primary application but is prepared to withdraw it. The aim is to permit the general law land to be brought under the Torrens system even where the Registrar-​General would not, in view of the material presented in the application, be prepared to issue an unqualified title. The qualified title is subject to any subsisting interests588 which would have been enforceable against the person being registered as proprietor had the qualified Torrens title not been created.589 The issue as to whether such an enforceable subsisting interest exists at the time of the issue of the qualified title requires an analysis of the relevant priority rule. Thus, for example, where the interest is a prior equitable interest, it is not a “subsisting interest” if the applicant for conversion was a bona fide purchaser of the legal estate for value without notice of the prior equitable interest.590 Any “subsisting interest” is enforceable against the proprietor whether or not it appears on the title and a note or “caution” to this effect is placed on the title.591 There are various provisions for the lapsing of cautions. Some lapse at the expiration of six years from the creation of the qualified title or upon a bona fide purchaser becoming registered, whichever is the later. Others do not lapse until six years after a bona fide purchaser has become registered or a further person has become registered whichever is the later. Any caution which has not lapsed under these provisions lapses 12 years from the date of the issue of the qualified title even if there have not been any dealings with the land.592 The lapsing of the caution frees the title from the formerly subsisting interests. Of course, interests that are recorded on the folio remain enforceable. There is also provision in the New South Wales Act for the issue of limited titles where precise definition of the boundaries is not possible.593 Ordinary or qualified titles may be issued subject to the limitation caveat stating that the physical boundaries have not been investigated by the Registrar-​General. If a plan of survey is subsequently lodged and registered, the limitation may be cancelled.594 In Tasmania there is provision for the issue of a qualified certificate of title if the Recorder is not satisfied that the title of the applicant for conversion is sufficiently certain and clear.595 The qualified certificate of title contains a caution relating to the defects in the title and the caution does not lapse until 20 years after the qualified certificate was issued.596

587 Real Property Act 1900 (NSW), s 28B; Land Titles Act 1980 (Tas), s 21. 588 Defined in s 28A of the Real Property Act 1900 (NSW). See also s 28EA where an ordinary folio may be created in certain circumstances (eg, subdivision) where there are some subsisting interests. 589 Real Property Act 1900 (NSW), s 28P(1)(d). 590 Pilcher v Rawlins (1872) 7 Ch A 259. This example leaves out of consideration the registration of deeds legislation. 591 Victoria, Parliamentary Debates, Legislative Assembly, 15 May 1998 (2nd reading). 592 Real Property Act 1900 (NSW), ss 28M–​28MH. 593 Real Property Act 1900 (NSW), s 28T. 594 Real Property Act 1900 (NSW), ss 28S(1), 28V. 595 Land Titles Act 1980 (Tas), ss 21, 25. 596 Unless it has earlier ceased to have effect. 288 [4.515]

The Torrens System and Indefeasibility  Chapter  4

[4.520]  In Western Australia, where an application is made to bring land under the Transfer

of Land Act 1893 (WA) by a description different from that in the title deeds, the Registrar may grant the application as to the land in the occupation of the applicant if the discrepancy appears to be due to the inaccuracy of any survey or plan.597 Compulsory extension of Torrens system [4.525]  Over the years, and in some jurisdictions more than others, voluntary conversion has

proved to be a slow method of achieving the aim of bringing all land under the Torrens system of registration. A number of schemes for compulsory conversion have been mooted and some of these have been adopted. For example, land which is to be subdivided or used under a strata title scheme must be brought under the Torrens system.598 Some other forms of dealing require the land to be brought under the Torrens system before the dealing can take place. For example, in Tasmania the Recorder may convert general law titles to Torrens titles every time a conveyance on sale or mortgage is lodged for registration under the deeds registration system. When such a document is lodged, a statement as to ownership and all instruments affecting the title must be given to the Registrar of Deeds by the person seeking registration. The Registrar of Deeds passes these documents on to the Recorder who may bring the land under the Torrens system by the issue of an ordinary or qualified certificate of title.599 [4.530] Another form of compulsory registration is where the Registrar has the power to

initiate and to proceed with the process of converting general law titles. All States except Western Australia provide in various ways for this form of compulsory registration. The Victorian and South Australian provisions are similar and provide for the Registrar to bring general law land under the Torrens system with all convenient speed.600 The Registrar proceeds as if a voluntary application had been made and may issue a folio if satisfied that such a folio would have been issued on a voluntary application and that there is no person in adverse possession. In cases where the Registrar is not wholly satisfied with the general law title, he or she may issue a provisional certificate which is limited as to the description of the land or as to the title (or both). The limitation lapses at the expiration of 30 years in Victoria or 12 years in South Australia or earlier if the Registrar is of the view that the defect no longer affects the land. A limitation as to a description of the land only lapses upon the completion of a survey. A lack of resources has resulted in these provisions being little used in Victoria. In contrast, very little general law land remains in South Australia.

597

598 599 600

Transfer of Land Act 1893 (WA), s 27. These provisions are discussed in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 60–​61. See also ss 28–​29 of the Transfer of Land Act 1893 (WA), power to remove discrepancies by allocating between allotments. Real Property Act 1900 (NSW), ss 28C, 28EA; Real Property Act 1886 (SA), Pt 19AB; Land Titles Act 1980 (Tas), ss 17A, 18. See also, for example, Subdivision Act 1988 (Vic), s 22(1)(e). Land Titles Act 1980 (Tas), s 17. This provision has been very effective in reducing the amount of general law land remaining in Tasmania. Transfer of Land Act 1958 (Vic), s 9; Real Property (Registration of Titles) Act 1945 (SA). See also s 115A(b) of the Real Property Act 1886 (SA) which provides that if the Registrar-​General is satisfied that land has become vested in a person by operation of an Act and the land is not Torrens land, the Registrar-​General can bring the land under the provisions of the Act, register the person as proprietor and issue a certificate of title. (Where the land is Torrens land, the Registrar-​General can register the person as proprietor: s 115A(a)). [4.530]  289

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[4.535] In Queensland, very little general law land remained in 1974. In that year the

legislature introduced new provisions to speed up the completion of the conversion process.601 In outline, the scheme provided for unregistered land to be registered in the name of the Public Curator if no person made a claim to the land after appropriate advertisement notices had been issued by the Registrar. Even after such registration, there was provision for a person claiming to be entitled to the land to apply to the Registrar to have the land registered in his or her name. If no person had established title to the land within 12 years, the land vested in the Crown absolutely. There are now no general law land titles in Queensland. When the Land Title Act 1994 (Qld) was introduced, there was no need for it to contain conversion provisions. In Victoria the Transfer of Land (Single Register) Act 1998 (Vic), discussed at [4.510], although not as draconian as the Queensland provisions, provides a very strong incentive for conversion when there is a dealing in a general law land lot. [4.540]  In New South Wales and Tasmania the Registrar has the power upon his or her own

initiative to convert general law land into Torrens land by the issue of ordinary or qualified certificates of title.602 The Registrar is empowered by notice to require any person to inform the Registrar as to whether he or she claims any interest in the land. If the person claims an interest by way of an assurance, the assurance and all documents in the chain of title must be produced to the Registrar. Alternatively, if the person claims by way of adverse possession, the relevant evidence must be produced. The Registrar may then bring the land under the Torrens system by the issue of an ordinary or qualified title. The nature and operation of qualified titles in New South Wales and Tasmania are discussed at [4.515]. Various amendments have been made in New South Wales to improve the operation and effectiveness of these provisions, but their ultimate success depends upon the resources available to the Registrar.

Interrelationship of general property statutes with Torrens statutes [4.545] Some attempt is made to deal with the issue of the interrelationship of the Torrens

statutes and the general law statutes. In most jurisdictions, however, many areas of doubt remain. [4.550] In New South Wales, s  6(1) of the Conveyancing Act 1919 (NSW) provides that

the Act “so far as inconsistent with the Real Property Act 1900, shall not apply to lands, whether freehold or leasehold, which are under the provisions of that Act”. This provision seems to require an analysis as to whether a particular provision in the Conveyancing Act 1919 is inconsistent with the Torrens statute. Despite this general provision, however, many provisions in the Conveyancing Act 1919 specifically provide whether or not they apply to Torrens land,603 thus obviating the need to determine whether or not there is an inconsistency. [4.555]  In Victoria s 3(1) of the Transfer of Land Act 1958 (Vic) provides: Except so far as is expressly enacted to the contrary no Act or rule of law, so far as inconsistent with this Act, shall apply or be deemed to apply to land under the operation of this Act; but

601 602

Property Law Act 1974 (Qld), ss 250–​254. Real Property Act 1900 (NSW), ss 28E, 28EA; Land Titles Act 1980 (Tas), ss 19, 21. See [4.515] as to ordinary and qualified certificates. 603 See, for example, ss 19(3), 19A(3), 55(5), 56(3), 60(2), 81(3), 82(2), 85(2), 86(3), 88A(3), 97(3), 106(17), 107(12). 290 [4.535]

The Torrens System and Indefeasibility  Chapter  4

save as aforesaid any Act or rule of law relating to land, unless otherwise expressly or by necessary implication provided by this or any other Act, shall apply to land under the operation of this Act whether expressed so to apply or not.

Thus, in Victoria, prima facie, the Property Law Act 1958 (Vic) applies to Torrens land. However, the issue of inconsistency must be addressed for if there is an inconsistency, the relevant provision in the Property Law Act 1958 is inapplicable. There are specific provisions in the Act which state clearly that certain sections do not apply to Torrens land604 and, although it may seem unnecessary in view of the prima facie position, there are certain provisions which state positively that particular sections do apply to Torrens land.605 There are, nevertheless, a number of provisions in the Property Law Act 1958 where applicability to the Torrens system remains unclear. Section 62 is one example of a provision that has been in the “realm of uncertainty” for many years.606 Often it is a difficult task to determine definitively whether a particular provision in the Property Law Act 1958 is inconsistent with the Transfer of Land Act 1958.607 [4.560]  In Queensland s 5(1)(b) of the Property Law Act 1974 (Qld) provides: This Act shall–​ …

(b) apply to land under the provisions of the Land Title Act 1994, including any lease of such land, but subject to that Act.

Unless there is a specific exclusion, the provisions of the general law statute apply to Torrens land. Importantly, however, it is provided that the provisions of the Property Law Act 1974 are subject to the provisions of the Torrens statute. [4.565]  In South Australia and Western Australia the Torrens statutes provide that any law

which is inconsistent with the Torrens statute is inapplicable to Torrens land.608 The general law statutes in South Australia and Western Australia provide that, in so far as their provisions are inconsistent with the Torrens statutes, they are inapplicable to Torrens land.609 This suggests that, where there is no inconsistency, the general property law statutes are applicable to Torrens land. Although there are some specific provisions which expressly exclude or include the operation of the general property statute to Torrens land,610 in many cases the

04 See, for example, Property Law Act 1958 (Vic), ss 198(6), 200(3). 6 605 See, for example, Property Law Act 1958 (Vic), s 273. 606 Discussed in Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [11.34]. See also [18.220]. 607 Barton, “The Applicability of Section 62 of the Property Law Act (1958) (Vic), to a Transfer of Torrens System Land” (1987) 61 ALJ 214; Wallace, “Property Law Reform in Australia” (1987) 61 ALJ 174. The Victorian Law Reform Commission has recently recognised the uncertainty flowing from the current Victorian position. The Commission has recommended that provisions which relate solely to general law land be set out in a part of the recommended new Property Law Act and that all provisions of the new Property Law Act (apart from those specifically relating to old system land) apply to Torrens land, but subject to the Transfer of Land Act 1958 (Vic): see Victorian Law Reform Commission, Review of the Property Law Act 1958, Final Report (September 2010)at [2.22]–​[2.33]. 608 Real Property Act 1886 (SA), s 6 (see South-​Eastern Drainage Board (South Australia) v Savings Bank of South Australia (1939) 62 CLR 603); Transfer of Land Act 1893 (WA), s 3. 609 Law of Property Act 1936 (SA), s 6; Property Law Act 1969 (WA), s 6. 610 See, for example, Law of Property Act 1936 (SA), s 56. [4.565]  291

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inconsistency principle must be applied.611 In the Northern Territory, it seems that the Law of Property Act (NT) is subject to the Land Title Act (NT).612 [4.570]  In Tasmania, the position is much clearer than in the other jurisdictions. Section 91 of

the Conveyancing and Law of Property Act 1884 (Tas) provides that particular listed sections do not apply to Torrens land and that all other provisions, so far as they are applicable, do apply to Torrens land. Uncertainties existing in the other jurisdictions could be removed if the Tasmanian approach were adopted.

611 612

For an example where the court had to apply this principle, see Sandgate Corporation Pty Ltd (in liq) v Ionnou Nominees Pty Ltd (2000) 22 WAR 172. Real Property Act 1900 (NSW), ss 28I, 28J.

292 [4.570]

CHAPTER 5

Torrens Priorities [5.05] GENERAL..................................................................................................................... 293 [5.25] CAVEATS..................................................................................................................... 296 [5.25] General........................................................................................................ 296 [5.30] Caveat against dealings lodged by person claiming an estate or interest in the land....................................................................................... 297 [5.30] Operation of the caveat..................................................................... 297 [5.35] Nature of caveatable interest.............................................................. 298 [5.50] Describing the claimed interest............................................................ 307 [5.55] Effect of caveat................................................................................. 308 [5.80] Methods by which a caveat may be removed from title............................. 312 [5.85] Withdrawal..................................................................................... 313 [5.90] Application for removal of caveat......................................................... 313 [5.95] Lapse of caveat................................................................................ 315 [5.100] Removal by Registrar......................................................................... 315 [5.105] PRIORITY BETWEEN UNREGISTERED INTERESTS.......................................................... 316 [5.105] Equitable interest and equitable interest......................................................... 316 [5.105] Applicable principles and theoretical bases............................................. 316 [5.130] The impact of the caveat and other relevant Torrens factors....................... 320 [5.135] The nature of disputes....................................................................... 321 [5.150] The relevant authorities..................................................................... 323 [5.205] Effect of notice................................................................................. 333 [5.215] Protection between settlement and registration....................................... 334 [5.235] Other statutory provisions affecting priority between unregistered interests.... 338 [5.245] Equity and subsequent equitable interest........................................................ 340 [5.245] The nature of the equity..................................................................... 340 [5.275] The priority rule................................................................................ 346 [5.280] Future directions............................................................................... 347

GENERAL [5.05] In Chapter  4, the Torrens system of statutory registration of interests in land, and

the concept of indefeasibility, are discussed in detail. The analysis there explains the ways in which disputes between registered interest holders, and between an unregistered interest and a registered interest, are resolved. This chapter is concerned with priority disputes between unregistered interest holders. [5.10]  Except in Queensland and the Northern Territory, there is a provision in each of the

Torrens statutes which suggests that unregistered interests cannot exist under the Torrens system. For example, s 40(1) of the Transfer of Land Act 1958 (Vic) provides:1 Subject to this Act no instrument until registered as in this Act provided shall be effectual to create vary extinguish or pass any estate or interest or encumbrance in on or over any land under the operation of this Act, but upon registration the estate or interest or encumbrance shall be created varied extinguished or pass in the manner and subject to the covenants and

1

See Real Property Act 1900 (NSW), s 41(1); Real Property Act 1886 (SA), s 67; Transfer of Land Act 1893 (WA), s 58; Land Titles Act 1980 (Tas), s 49(1); Land Titles Act 1925 (ACT), s 57(1). [5.10]  293

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conditions specified in the instrument or by this Act prescribed or declared to be implied in instruments of a like nature.

However, there are other provisions in the Torrens statutes that make clear that unregistered interests may exist: see [4.85]. Over the years, there has been considerable debate as to the precise nature of these “interests”. In early times there was support for the notion that rights created before, or outside, the Register were simply contractual or personal rights and did not give rise to any proprietary interest in the land.2 However, this view places considerable reliance on the provisions referred to above which state that no estate or interest in the land can pass until registration. The more widely accepted view is that these unregistered interests are to be regarded as equitable estates or interests in the land.3 It seems that all transactions or sets of circumstances which would lead to the creation of equitable interests under the general law conveyancing system will also lead to the creation of equitable or unregistered interests under the Torrens system. Thus, a specifically enforceable contract of sale gives rise to an equitable interest in the purchaser4 and a properly executed trust relating to land gives rise to an equitable interest in the beneficiary. Similarly, implied trusts apply to Torrens land: see generally Chapters 8 and 9. If there is a completed gift of Torrens land within the principles of Corin v Patton (1990) 169 CLR 540,5 the donee holds an equitable interest before registration. Further, a person holding an unregistered but registrable instrument has an equitable interest.6 A question arises as to how the s  40(1) type provision can be reconciled with the now entrenched view that equitable interests may exist outside the Register. The judgment of Isaacs J in Barry v Heider (1914) 19 CLR 197 provides the answer. Isaacs J stated (at 216): The Torrens statutes do not touch the form of contracts. A proprietor may contract as he pleases, and his obligation to fulfil the contract will depend on ordinary principles and rules of law and equity. [The provision] in denying effect to an instrument until registration, does not touch whatever rights are behind it. Parties may have a right to have such an instrument executed and registered; and that right, according to accepted rules of equity, is an estate or interest in land.

Thus, it is necessary to look to the transaction behind the instrument to determine if an equitable interest has been created.7 Sometimes the term “unregistered interest” is used and sometimes the term “equitable interest” is used by judges and authors. In this section, the 2

3

4

5 6

7

This view has received coherent support in more recent times. See Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), Chs 5 and 6. See also Griggs, “Torrens Title: Arise the Registered and Unregistered, Befall the Legal and Equitable” (1997) 4 Deakin LR 35. Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), pp 538–539 (although not fully agreeing with the result, accepting that the interests are so viewed); Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 282. See Barry v Heider (1914) 19 CLR 197. The High Court has cautioned against wholly equating unregistered interests with equitable interests: Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 229 CLR 545 at [35]. Barry v Heider (1914) 19 CLR 197. Note that the vendor retains a continuing beneficial interest too: see Road Australia Pty Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 327. See [8.110]. Compare Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. Discussed at [8.60] and [12.360]. According to Isaacs J in Barry v Heider (1914) 19 CLR 197 at 216 the contract behind the instrument creates the equitable interest. Compare the view of Griffith CJ to the effect that the registrable instrument itself creates the interest (at 208). See also Chan v Cresdon Pty Ltd (1989) 168 CLR 242; Corin v Patton (1990) 169 CLR 540; Ashton v Hunt [1999] 1 Qd R 571.

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terms are used interchangeably. It is also important to recall, too, that some unregistered interests may be “legal” in character, although not registered: see [4.75]. In Queensland and the Northern Territory the position is made clear by s 181 of the Land Title Act 1994 (Qld) and s 184 of the Land Title Act (NT), which provide that “an instrument does not transfer or create an interest at law until it is registered” (emphasis added). [5.15]  Although it may be generally accepted that equitable or unregistered interests can exist

under the Torrens system, these interests are far more vulnerable under the Torrens system than they are under the general law system. The doctrine of notice in relation to a priority dispute between an unregistered interest and a subsequently registered interest is inapplicable to Torrens land. Subject to certain exceptions, a registered proprietor gains an indefeasible title. The vulnerability of an equitable interest in Torrens land is most aptly demonstrated by comparing the means of resolution of a dispute between a prior equitable interest and a subsequent legal or, in Torrens terminology, registered interest under both the general law system and the Torrens system. Under the general law system, the legal interest would only prevail over the equitable interest if the holder of the legal interest had purchased bona fide for value and without notice (actual, constructive or imputed) of the prior equitable interest. In contrast, under the Torrens system, the registered interest would prevail over the unregistered interest unless fraud could be proved on the part of the holder of the registered interest.8 [5.20] Disputes may arise between holders of equitable or unregistered interests. Despite

some criticism of the approach,9 priority between unregistered interests is decided by applying the general priority rules governing conflicts between equitable interests under the general law: see [2.565]–​[2.595]. Although the principles to be applied are the same, an application of the principles to a dispute under the Torrens system necessarily involves a consideration of factors that are exclusive to the Torrens system. Thus, for example, the lodgement or non-​ lodgement of a caveat or priority notice is a factor likely to be considered in any application of the general principles.10 Apart from this proviso, the principles and underlying bases for deciding disputes between the holders of equitable interests are equally applicable to Torrens land.11 Recently, attention has been focused on developing alternative, simpler and more certain means of resolution of such disputes. It has been argued that the introduction of electronic conveyancing will provide a feasible opportunity to introduce a better scheme.12 It is also very possible that the introduction of electronic conveyancing, and the reduction, if not elimination

8 9 10

11

12

Note also, however, the application of the in personam exception. Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), Ch 5; Robinson, “Caveatable Interests –​ Their Nature and Priority” (1970) 44 ALJ 351. Further, in Black v Garnock (2007) 230 CLR 438 the High Court made it clear that any apparent priorities dispute must be considered in the context of, and with due regard to, all relevant legislation. In that case the majority of the High Court found that an application of the relevant legislation (Civil Procedure Act 2005 (NSW), s 112(1) and Real Property Act 1900 (NSW), s 105) resulted in the judgment creditor with a writ of execution in their favour (but no interest in the land) defeating the equitable interest of purchasers of the property; cf Gleeson CJ and Crennan J in dissent. For an example of a Torrens case involving a prior equity against a subsequent equitable interest, see Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409. The general law principle was applied: the holder of the subsequent equitable interest wins if a bona fide purchaser for value without notice. See [5.245]ff. See O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 249–​275. [5.20]  295

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of the gap between settlement and registration of interests will reduce greatly the number of priority disputes between unregistered interests within the Torrens system. E-​conveyancing, however, will not eliminate all disputes. There will still be situations, particularly family or personal situations where interests are deliberately, or through ignorance, not registered on title. The relevance and importance of the caveat in priorities disputes requires an examination of the caveat provisions.

CAVEATS General [5.25]  Although it is registration that confers title and protection, the Torrens statutes permit

some degree of protection for holders of unregistered interests. This protection is afforded through the use of the caveat.13 Perhaps the most used and probably the most litigated type of caveat is a caveat lodged by a person who claims an estate or interest in the land and who wishes to prevent the registration of any dealing inconsistent with his or her interest. Detailed attention is directed to this type of caveat at [5.30]ff. However, there are however, many other situations where various provisions of the Torrens statutes permit the lodgement of caveats.14 The range of caveats varies from jurisdiction to jurisdiction. For example, in some jurisdictions a person claiming an interest in the land in question may lodge a caveat against the bringing of land under the Torrens statutes15 and against the grant of a title based on an adverse possession claim.16 Further, in certain circumstances, the Registrar may lodge a caveat against dealings. For example, and depending on the jurisdiction, the Registrar may enter a caveat on behalf of the Queen, the Crown, or a person under a disability for that person’s protection restraining any dealing in any land.17 The Registrar may enter a caveat to prevent fraud or error or to prohibit any dealing with land in which the Registrar is of the view that there has been a misdescription of the land in the Register or any dealing document.18

13

14 15 16

17

18

It seems clear that the holder of an unregistered interest may also pursue other means of protecting his or her interest, in addition to lodging a caveat (eg, equitable relief such as an injunction: see Hamdan v Widodo [2004] WASC 123). A detailed list is set out in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 223–​225. See now, for example, Land Title Act 1994 (Qld), s 17. Real Property Act 1900 (NSW), s 74B; Transfer of Land Act 1958 (Vic), s 26R; Real Property Act 1886 (SA), s 39; Transfer of Land Act 1893 (WA), s 30; Land Titles Act 1980 (Tas), s 14; Land Titles Act 1925 (ACT), s 30. Real Property Act 1900 (NSW), s 74F; Transfer of Land Act 1958 (Vic), s 61; Land Title Act 1994 (Qld), s 104; Real Property Act 1886 (SA), s 80F; Transfer of Land Act 1893 (WA), s 223A; Land Titles Act 1980 (Tas), s 138Z. Contrast Land Title Act (NT), s 198; Land Titles Act 1925 (ACT), s 69. Real Property Act 1900 (NSW), s 12(1)(e), (f); Transfer of Land Act 1958 (Vic), s 106(1)(a); Land Title Act 1994 (Qld), ss 17, 122(1)(b); Real Property Act 1886 (SA), s 220(g); Transfer of Land Act 1893 (WA), s 188(7); Land Titles Act 1980 (Tas), s 160(3); Land Titles Act 1925 (ACT), s 14(1)(e) (on behalf of Commonwealth); Land Title Act (NT), s 18. Real Property Act 1900 (NSW), s 12(1)(e), (f); Transfer of Land Act 1958 (Vic), s 106(1)(a); Land Title Act 1994 (Qld), ss 17, 122(1)(b); Real Property Act 1886 (SA), s 220(g); Transfer of Land Act 1893 (WA), s 188(7); Land Titles Act 1980 (Tas), s 160(3); Land Titles Act 1925 (ACT), s 14(1)(e) (on behalf of Commonwealth); Land Title Act (NT), s 18.

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In New South Wales, South Australia, Western Australia and the Australian Capital Territory a document creating a trust may be deposited with the Registrar but not registered.19 In New South Wales and the Australian Capital Territory the Registrar must lodge a caveat prohibiting the registration of dealings not in compliance with the trust.20 In South Australia and Western Australia the Registrar appears to have a power to lodge a caveat to protect the interests under the trust.21 In Queensland, Tasmania and the Northern Territory the Registrar may register an instrument of transfer which describes the registered proprietor as a trustee.22

Caveat against dealings lodged by person claiming an estate or interest in the land Operation of the caveat [5.30]  The holder of an unregistered interest is in a vulnerable and precarious position. The

caveat against the registration of inconsistent dealings provides some protection. In outline, the caveat against registration of dealings operates in the following manner. A person claiming an estate or interest in the land may lodge a caveat prohibiting the registration of all, or specifically named, dealings in the land which would affect the interest protected by the caveat.23 A memorandum of the caveat is noted in the Register24 and, except in Queensland and the Northern Territory, remains there until a dealing inconsistent with the caveator’s claim is lodged for registration or proceedings are commenced under the relevant statutory provisions for the removal of the caveat:  see [5.80]–​[5.100]. It operates as an injunction to the Registrar against the registration of subsequent dealings and also provides notice of an interest to those who search the Register.25 19

20

21

22

23

24

25

Real Property Act 1900 (NSW), s 82(2); Real Property Act 1886 (SA), s 162; Transfer of Land Act 1893 (WA), s 55; Land Titles Act 1925 (ACT), s 124(3). Note that s 37(2) of the Transfer of Land Act 1958 (Vic) (introduced in 2009 by the Land Legislation Amendment Act 2009 (Vic)) now prohibits the lodging of a declaration of trust with the Registrar. Real Property Act 1900 (NSW), s 82(3); Land Titles Act 1925 (ACT), s 124(4). See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 121, where it is argued that the New South Wales provision derogates from the aim that trusts not be registered. Note also that in South Australia, Tasmania and the Australian Capital Territory settlors of trusts can lodge caveats: Real Property Act 1886 (SA), 191; Land Titles Act 1980 (Tas), 133(1)(a); Land Titles Act 1925 (ACT), s 104(1)(a). Real Property Act 1886 (SA), s 220(g) (power to lodge caveat to prevent fraud and improper dealing); Transfer of Land Act 1893 (WA), s 55(3) (the Commissioner has power to protect the rights of a person beneficially entitled). Land Title Act 1994 (Qld), s 110(1), (2); Land Titles Act 1980 (Tas), s 132(3); Land Title Act (NT), s 126(1). In Queensland the trust document must be deposited with the Registrar, but does not form part of the Register: see Land Title Act 1994 (Qld), s 110(3), (4). In Tasmania and the Northern Territory the provisions on registration of trusts do not include a reference to the ability to deposit documents creating a trust with the Registrar-​General. Real Property Act 1900 (NSW), s 74F(1); Transfer of Land Act 1958 (Vic), s 89(1); Land Title Act 1994 (Qld), ss 122, 124; Real Property Act 1886 (SA), s 191; Transfer of Land Act 1893 (WA), s 137; Land Titles Act 1980 (Tas), s 133; Land Titles Act 1925 (ACT), s 104; Land Title Act (NT), ss 138, 140. Real Property Act 1900 (NSW), s 74G: “[f]‌or the purpose only of acknowledging the receipt of a caveat” and “if satisfied that the caveat complies with the requirements made in respect of it”; Transfer of Land Act 1958 (Vic), s 89(2); Real Property Act 1886 (SA), s 191(b); Transfer of Land Act 1893 (WA), s 141; Land Titles Act 1980 (Tas), s 133(3)(a); Land Titles Act 1925 (ACT), s 104A(1). Compare Queensland and the Northern Territory, which have no specific provision, but s 29 of the Land Title Act 1994 (Qld) and s 31 of the Land Title Act (NT) appear to give the power to record. Goldstraw v Goldstraw (2006) V Conv R 54-​712; [2002] VSC 491. [5.30]  297

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When a dealing is lodged for registration, the caveator is given notice of this fact. The caveator has a set period in which to consent to registration or to take action to demonstrate the validity of her or his interest and thus show cause why the dealing should not be registered.26 If the caveator takes no action, the caveat lapses and the dealing is registered. The lapsed caveat cannot be renewed. If the caveator does prove the interest, a priority dispute may ensue between the unregistered interests of the caveator and the person who has lodged the dealing. Such a dispute is resolved according to the various priority rules discussed below (see [5.105] and ff) and the presence of the caveat itself may be a factor in the resolution of the dispute. In addition, and conversely, the withdrawal of a caveat can act as postponing conduct such as to lead to a loss of priority for the person who once had lodged a caveat.27 The caveat aids both intending purchasers and caveators in that a search of the title reveals to any intending purchaser that there is an existing interest over the land and the lodgement of a dealing for registration has the effect of alerting the caveator. The caveat against dealings, however, has given rise to a large number of legal issues and generated more litigation than other areas of the Torrens system.28 Nature of caveatable interest [5.35]  It has been stated in many cases that caveats may only be lodged to protect proprietary

interests in land.29 Whether an estate or interest exists in land must be determined by the general principles discussed in Chapters  7 and 8.  Although the emergence of new types of proprietary interest in land is not a common occurrence, new interests are defined and

26

27 28

29

Real Property Act 1900 (NSW), s 74I (21 days); Transfer of Land Act 1958 (Vic), s 90(1), (2) (30 days); Transfer of Land Act 1893 (WA), s 138 (14 days); Land Titles Act 1980 (Tas), s 136 (28 days); Land Titles Act 1925 (ACT), s 106(1) (14 days). Compare Queensland, South Australia and the Northern Territory: see [5.75]. Barlin Investments Pty Ltd v Westpac Banking Corporation (2012) 16 BPR 30,671; [2012] NSWSC 699. See generally Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict” (1997) 21 MULR 460; O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis NZ, 2003), pp 249–​275. Recent academic commentary on the area includes Aitken, “Many Shabby Manoeuvres –​The Use and Abuse of Caveats in Theory and Practice” (2005) 26 ABR 205; Aitken, “Current Issues with Caveats: A Pan-​Australian Conspectus” (2010) 84 ALJ 22; Cahill, “Caveats: Current Issues” (2008) 16 APLJ 87; Aristei, “Recent Developments in the Law of Caveats” (2008) 16 APLJ 62. See, for example, McMahon v McMahon [1979] VR 239; [1981] Qd R 81; Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870; Martin v Official Trustee in Bankruptcy [1990] Tas R 65; Miller v Minister of Mines [1963] AC 484; Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672; Valerica Pty Ltd v Global Minerals Australia Pty Ltd (2001) NSW ConvR 55-​963 (also reported as Global Minerals Australia Pty Ltd v Valerica Pty Ltd (2000) 10 BPR 18,463); Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd (2000) 9 Tas R 444; Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287. In a recent case it was accepted that, in particular circumstances, a caveat may be lodged where the caveator does not have a legal or equitable interest in the land: see New South Wales Crime Commission v Lee [2010] NSWSC 1012. Although the Real Property Act 1900 (NSW) is generally considered to constitute a code in relation to the lodgment of caveats, Schmidt J noted that the legislature is able to enact other legislation which impacts on that code. Rules of statutory interpretation must be addressed. Here the ss 10A and 15(3) of the Crimes Assets Recovery Act 1990 (NSW) permitting lodgment of caveats in certain circumstances where the caveator clearly has no proprietary interest in the land, was a specific act, enacted after the general Real Property Act 1900 (NSW). In those circumstances, after considering the purpose of the Crimes Assets Recovery Act 1990 (NSW) and other relevant matters, the court held that a caveat could be lodged pursuant to s 15(3) of Crimes Assets Recovery Act 1990 (NSW) even though no caveat could have been lodged under s 74F of the Real Property Act 1900 (NSW).

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accepted by the courts30 or the legislature from time to time and such developments are to be noted for the purpose of determining the existence or non-​existence of a caveatable interest. In developing areas the dividing line between what is and what is not a proprietary interest is sometimes blurred and there may be no clear consensus as to whether a caveatable interest exists.31 It has sometimes been suggested that in order for a caveatable interest to exist, the estate or interest claimed must be one which, if established, “results in an entry being made on the Register”.32 The proposition is that the interest claimed must be capable of being placed on the Register; that is, the caveator must hold an interest under a registrable instrument, or at the least under a transaction which can give rise to a registrable instrument. Despite this view, the stronger weight of Australian authority suggests that a caveatable interest need not necessarily be one which is capable of being placed on the Register.33 It has also been argued that the wording of the legislation in a number of jurisdictions results in a proprietary interest not being essential to establish a caveatable interest.34 For instance, under s 137(1) of the Transfer of Land Act 1893 (WA), which permits a caveat to be lodged to protect an “interest” in land, the suggestion is that the word “interest” does not necessarily import a proprietary interest.35 This argument was considered by Hasluck J in Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287; [2002] WASC 248, but his Honour preferred the view that a proprietary interest is necessary to support a caveat. In Mijo Developments Pty Ltd v Royal Agnes Waters Pty Ltd [2007] NSWSC 199 at [43], however, Hammerschlag J held that s  122(1)(a) of the Land Title Act 1994 (Qld) may allow a person with a “right” 30

31 32

33

4 3 35

See, for example, Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143. In Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287 it was specifically held that a person with the right to the benefit of a restrictive covenant has a caveatable interest in the burdened land. It has been argued that native title can give rise to a caveatable interest. Although there was not a clear consensus in the High Court in Mabo v Queensland (No 2) (1992) 175 CLR 1 as to whether native title constituted a proprietary interest, the enactment of the Native Title Act 1993 (Cth) and other State legislation suggests that a native title interest does come within the classification of “proprietary interest”: see Butt, “The Native Title Act: A Property Law Perspective” (1994) 68 ALJ 285; Babie, “Case Note: James Smith Indian Band v Saskatchewan (Master of Titles) –​Is Native Title Capable of Supporting a Torrens Caveat?” (1995) 20 MULR 588; Secher, “Native Title –​An Exception to Indefeasibility and a Ground for Invoking the Deferred Indefeasibility Theory” (2000) 7 JCULR 17 at 19. See generally O’Connor, “Happy Partners or Strange Bedfellows: The Blending of Remedial and Institutional Features in the Evolving Constructive Trust” (1996) 20 MULR 735 at 750–​753. See Robinson, “The Nature of Cautionable Interests” (1971) 35 Conveyancer (NS) 21 at 24 relying upon statements of the Privy Council in Miller v Minister of Mines [1963] AC 484. See also Bacon v O’Dea (1989) 25 FCR 495. Batt J in Classic Heights Pty Ltd v Black Hole Enterprises Pty Ltd (1994) V ConvR 54-​506 held that an unregistered and unregisterable lease was incapable of supporting a caveat. See also George v Biztole Corporation Pty Ltd (1995) V ConvR 54-​519; National Bank of Australia v Dyer (1996) V ConvR 54-​533; Elmant Pty Ltd v Dickson (2001) V ConvR 54-​647. Queensland Estates Pty Ltd v Collas [1971] Qd R 75; Avco Financial Services Ltd v White [1977] VR 561; King v AGC (Advances) Ltd [1983] 1 VR 682; Ex parte Lord [1985] 2 Qd R 75; Crampton v French (1995) V ConvR 54-​529; Chiodo v Murphy (1995) V ConvR 54-​531; Bunning Building Supplies Pty Ltd v Sgro (1995) V ConvR 54-​535; Troncone v Aliperti (1994) NSW ConvR 55-​703; Composite Buyers Ltd v Soong (1995) 38 NSWLR 286; Valerica v Global Minerals Australia Pty Ltd (2001) NSW ConvR 55-​963; Renwarl Pty Ltd v Birky (1998) V ConvR 54-​578; Schmidt v 28 Myola St Pty Ltd (2006) 14 VR 447. Note also s 124(5) of the Land Title Act 1994 (Qld), which specifically provides that lodgment of a caveat does not create in the caveator a registrable interest. The area has given rise to considerable academic comment: see, for example, Wikrama, “Do Caveats Need Supporting by Registrable Instruments?” (1995) 69 LIJ 101; Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict” (1997) 21 MULR 460. See Boyle, “Caveatable Interests –​The Common Lore Distinguished” (1995) 69 ALJ 237. Similar reasoning could possibly be applied to s 106 of the Land Titles Act 1925 (ACT), s 122 of the Land Title Act 1994 (Qld) and s 138 of the Land Title Act (NT). [5.35]  299

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in relation to land to lodge a caveat. His Honour referred to s 36 of the Acts Interpretation Act 1954 (Cth), which defined an interest in relation to land to include “a right, power or privilege … in relation to land and stated that … this is clearly in addition to the notions of legal or equitable interest”. A number of fact situations clearly give rise to caveatable interests. The claim of a beneficiary under a trust, including the right of a unit holder in a unit trust (depending on the terms of the trust deed),36 gives rise to a caveatable interest. The interest of an optionee under an option to purchase, provided the terms and conditions are set out in the option, is an equitable interest and caveatable.37 The rights under an agreement for a mortgage or a charge38 or for a lease, an easement or a profit à prendre,39 the interest of a purchaser of a registered interest under a contract for sale,40 a vendor’s lien41 all give rise to caveatable 36

37

38

39

40

41

Costa & Duppe Properties Pty Ltd v Duppe [1986] VR 90; Schmidt v 28 Myola St Pty Ltd (2006) 14 VR 447; Interview Holdings Pty Ltd v Registrar of Titles [2008] WASC 144; Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WASC 68 suggesting the right is caveatable. (Note the decision in the Navarac case was reversed by the WACA but not on this point: [2009] WASCA 95.) Compare the High Court decision in CPT Custodian Pty Ltd v Commissioner for State Revenue (2005) 221 ALR 196. The earlier cases are discussed in Furnell, “Do Beneficiaries Have an Interest in Trust Properties?” (2006) 80 LIJ 48. See also Raphael, “Caveats and Unit Trusts” (2007) 81 ALJ 881, who criticises the Schmidt decision on the basis that it was premised on a misunderstanding of the way in which modern unit trusts operate. Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 57; Forder v Cemcorp Pty Ltd (2001) 51 NSWLR 486; Buildev Development Pty Ltd v PIC Sales Pty Ltd [2004] NSW ConvR 56-​087. Note, however, that this does not extend to lodging a caveat over a servient tenement in relation to an easement in favour of the land being purchased: see Armidale Dumaresq Council v M &P (North Coast) Pty Ltd (2005) 64 NSWLR 1. Note also that if the terms of the option are subject to the person granting the option, fulfilling a condition only he or she can fulfil, no equitable interest arises in the optionee and thus no caveat can be lodged: Palm Gardens Consolidated Pty Ltd v PG Properties Pty Ltd [2009] SASC 311 (option contingent on licensing of premises by grantor). Re Elliott (1886) 7 LR (NSW) 271; Composite Buyers Ltd v Soong (1995) 38 NSWLR 286; Zafiropoulos v Recchi (1978) 18 SASR 5; Avco Financial Sevices v White [1977] VR 561 (equitable charge created under a contract of loan as security for repayment of loan); Allen’s Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202. In Queensland an equitable mortgagee cannot lodge a non-​lapsing caveat (see Land Title Act 1994 (Qld), s 122(2) and Circuit Finance Australia Ltd v Registrar of Titles [2006] 1 Qd R 204); protection for the interest is best acquired through possession of the certificate of title. Antar v Fairchild Development Pty Ltd [2008] NSWSC 638 (recent example of a caveat supporting an interest under an agreement for lease); Deanshaw v Marshall (1978) 20 SASR 146 (specifically enforceable agreement for extension of an easement); Permanent Trustee Australia Ltd v Shand (1992) 27 NSWLR 426 (profit à prendre); Four Oaks Enterprises Pty Ltd v Clark [2002] ANZ ConvR 440; [2002] TASSC 39 (agreement for a profit à prendre); cf Classic Heights Pty Ltd v Black Hole Enterprises Pty Ltd (1994) V ConvR 54-​506. This includes the claim of a purchaser under a conditional contract of sale. See Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419; Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney (1992) 27 NSWLR 140; Re Henderson’s Caveat [1998] 1 Qd R 632; Forder v Cemcorp Pty Ltd (2001) 51 NSWLR 486 (found that “the holder of an option to purchase a lot in an as-​yet unregistered strata plan has a caveatable interest in the whole of the land covered by the proposed strata plan”); Multi-​Span Constructions No 1 Pty Ltd v 14 Portland Street Pty Ltd (2001) 10 BPR 19,253 (similarly option to purchase in an unregistered strata plan is a caveatable interest). Compare earlier cases such as Re Bosca Land Pty Ltd’s Caveat [1976] Qd R 119, holding the other way. See Weir, “Caveats: The Conditional Contracts Conundrum” (1994) 2 APLJ 205; Liew, “Conditional Contracts and Caveatable Interests: A Mutual Exclusion” (1995) 14 U Tas LR 63; Butt, “Caveatable Interests 1: Options and Unregistered Strata Plans” (2001) 75 ALJ 592. See also s 122(3) of the Land Title Act 1994 (Qld), which provides that where vacant land is being subdivided, a caveat cannot be lodged over a proposed lot: see Scottsdale Homes v Gemkip [2008] QSC 326. Compare where there is an interest in a proposed lot in a community titles scheme. Ex parte Lord [1985] 2 Qd R 75. Note s 191 of the Land Title Act 1994 (Qld) and s 197 of the Land Title Act (NT), which provide that a vendor does not have an equitable lien because of the purchaser’s failure to pay part or all of the purchase price.

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interests42 and a solicitors’ costs agreement giving rise to an equitable charge. A contribution to the purchase of property on the belief that they would be entitled to live in that property was seen as a sufficient basis on which to lodge a caveat.43 Each of the transactions gives rise to an equitable interest in the land.44 In contrast, merely personal or contractual rights associated with land or interests in land, and not per se giving rise to proprietary rights in the land, are not caveatable rights.45 Thus, a licence to occupy land does not give rise to a caveatable interest.46 If a charge over the land is given to secure the performance of contractual obligations, however, the charge itself may give rise to a caveatable interest.47 It has been suggested that the grant of a right to lodge a caveat or an agreement between the parties that a caveat may be lodged may constitute a caveatable interest.48 The reasoning appears to be that there must have been some proprietary interest granted, such as a charge, or the right to lodge a caveat would not have been given.49 If the arrangement permitting a caveat to be lodged can be interpreted as implicitly creating a charge, for example, then a caveatable interest will be held to exist. It is clear that a caveat may be lodged only if a proprietary interest can be found in the arrangement; a simple agreement between the parties that a caveat may be lodged is insufficient.50 If the agreement under which the caveatable interest was granted comes to an end, usually the caveatable interest is also at an end.51 In other cases, the parties may agree that the person holding a properly created equitable interest will not lodge a caveat (a “no caveat” clause). In New Zealand the Court of Appeal enforced such a clause, refusing to strike it out on public policy grounds.52 In Australia it has

42 43 44

45 46

47

48 49 50

51 52

MJ Leonard Pty Ltd v Bristol Custodians Ltd (in liq) [2013] NSWSC 1734. Meiners v Gunn [2018] WASC 123. In all instances where an equitable interest is claimed pursuant to a contract for the sale of an interest in land, the implications of Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 (discussed at [8.145]) must be considered. See Bacon v O’Dea (1989) 25 FCR 495. See, however, n 29. See, for example, La Martina v Penney [1968] SASR 411. Query whether an interest in the proceeds of sale as opposed to a right to occupy, gives rise to a caveatable interest: cf Terry v O’Connell [2010] NSWSC 255; Peters v Lithgow Forge Pty Ltd [2010] NSWSC 283. Murphy v Wright (1992) NSW ConvR 55-​652; Coleman v Bone (1996) 9 BPR 16,235; Rising Developments Pty Ltd v Hoskins (1996) 39 NSWLR 157; Wilson v Graham (1997) 10 BPR 19,051; Capital Finance Australia Ltd v Karabassis (2003) 11 BPR 21,123; McMillan v Dunoon [2006] ANZ ConvR 87; [2005] VSC 440; Spunter Pty Ltd v Hall [2006] WASC 6. However, note, for example, s 18 of the Domestic Building Contracts Act 1995 (Vic), which provides that a domestic building contract does not give a builder a caveatable interest. Troncone v Aliperti (1994) NSW ConvR 55-​703. Wilson v Graham (1997) 10 BPR 19,051; Nguyen v Huy On (2004) NSW ConvR 56-​065. Tooth & Co Ltd v Barker (1960) 77 WN (NSW) 231; Neoform Developments & Interiors Pty Ltd v Town & Country Marketing Pty Ltd [2002] NSWSC 344; Dominion Lifestyle Tower Apartment Ltd v Global Capital Corporation Pty Ltd (2005) V ConvR 54-​696. Aged Care Services Pty Ltd v Kanning Services Pty Ltd (2013) 86 NSWLR 174 (agreement to lodge a caveat did create an equitable charge over the property, thus supporting the caveat); contrast Yaran Holdings Pty Ltd v Goldsmith 7 Pty Ltd [2014] WASC 171 (no intention to grant an interest in land, thus no basis on which to support the lodging of the caveat). Hocana Pty Ltd v Jamsapi Pty Ltd [2007] NSWSC 928 at [11]. Note, however, that termination will not always destroy the caveator’s interest: see McCosker v Lovett (1995) 7 BPR 14,507. Landco Albany Ltd v Fu Hao Construction Ltd [2006] 2 NZLR 174. [5.35]  301

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been held that such a clause does not prevent a person with a caveatable interest from lodging a caveat, 53 although the lodgement is a breach of contract.54 Some rights may, in particular circumstances, give rise to proprietary, and thus caveatable, interests. The pre-​emptive right, such as the right of first refusal to purchase, does not in itself give rise to an equitable interest. However, if the terms and conditions are such that it is possible to find an offer and acceptance, an enforceable contract for the sale of land (and, consequently, an equitable interest capable of supporting a caveat) may exist.55 The better view is that a negative covenant by a registered proprietor that he will not deal with the land (eg, until a loan is repaid) does not give rise to an interest in land capable of supporting a caveat.56 A spouse’s claim under matrimonial property law (Family Law Act 1975 (Cth), s 79) for an interest in the other spouse’s property is not per se a caveatable interest.57 If, however, the spouse bases his or her claim on an interest arising under a constructive trust, the position is different and the interest is caveatable.58 53 54

55

56 57

58

Lintel Pines Pty Ltd v Nixon [1991] 1 VR 287; Australian Property and Management Pty Ltd v Devefi (1997) 7 BPR 15,255 at 15,257; Betlehem v Keytown Constructions Pty Ltd [2007] WASC 38 at [19]. In an action to determine if such a caveat can be maintained, the court will take into account the breach:  Australian Property and Management Pty Ltd v Devefi (1997) 7 BPR 15,255 at 15,257; Betlehem v Keytown Constructions Pty Ltd [2007] WASC 38 at [19]. Eudunda Farmers’ Co-​operative Society Ltd v Mattiske [1920] SALR 309; Walker Corporation v W R Pateman (1990) 20 NSWLR 624; Pata Nominees Pty Ltd v Durnsford Pty Ltd [1988] WAR 365. See also Purich, “The Caveat: An Uncertain Instrument in an Exact System” (1982) 47 Saskatchewan Law Review 353. See also Pritchard v Briggs [1980] Ch 388; Transfield Properties (Kent St) Pty Ltd v Amos Aked Swift Pty Ltd (1994) 36 NSWLR 321; Beneficial Finance Corp Ltd v Multiplex Constructions Pty Ltd (1995) 36 NSWLR 510 (where it is suggested that once the owner decides to sell, an equitable interest, capable of supporting a caveat, exists. Note, however, that the court held that the right of pre-​emption per se does not give rise to an interest in land); Jonns v Tan (1999) NSW ConvR 55-​906 (where Santow J stated at [13] that “the balance of opinion, at single judge level in New South Wales favours the view that a triggered right of pre-​emption confers an equitable interest in land, though no Court of Appeal judgment has finally settled the issue”); see similarly Bob Jane T-​Marts v The Baptist Union of Victoria [1999] VSC 346; Sahade v BP Australia Pty Ltd (2005) NSW ConvR 56,113; Chipper v Octra Nominees Pty Ltd [2006] FCA 1633 (on appeal decision reversed but not on the issue of nature of right of pre-​emption: Octra Nominees Pty Ltd v Chipper [2007] FCAFC 92). Compare the English Court of Appeal decision in Dear v Reeves [2001] TLR 225 where a right of pre-​emption per se was held to be a proprietary interest. It was the property of the bankrupt and could pass to the trustee in bankruptcy. Redglove Projects v Ngunnawal Local Aboriginal Council (2004) 12 BPR 22,319; cf Troncone v Aliperti (1994) NSW ConvR 55-​703 at 60.019 per Mahoney JA. Re Weeks’ Caveat [1971] QWN 4; Re Pile’s Caveats [1981] Qd R 81; Elmant Pty Ltd v Dickson (2001) V ConvR 54-​647; Hayes v O’Sullivan (2001) 24 WAR 40; Bell v Graham [2000] VSC 142; Goldstraw v Goldstraw (2006) V Conv R 54-​712; [2002] VSC 491; Westpac Banking Corporation v Dimopoulos [2006] VSC 10; Reddacliffe v Strickland [2010] NSWSC 1028. Compare Ioppolo v Ioppolo (1978) 4 Fam LR 124; Gadsdon v Gadsdon [2003] WASC 48. See Butt, “Moot Point Caveat Caveator” (1980) 54 ALJ 166. See also Sonenco (No 77) Pty Ltd v Silvia (1989) 24 FCR 105. Note, however, that once an order is made under s 79 of the Family Law Act 1975 (Cth) and one spouse is ordered to transfer an interest to the other spouse, the spouse who is to receive the interest has a caveatable interest before formal transfer occurs: Official Trustee in Bankruptcy v Mateo (2003) 202 ALR 571 at 586–​587 per Wilcox J, at 599 per Branson J, at 606 per Merkel J. Hayes v O’Sullivan (2001) 24 WAR 40; Re Sabri; Ex parte Brien (1997) FLC 92-​732; Goldstraw v Goldstraw (2006) V Conv R 54-​712; [2002] VSC 491; Westpac Banking Corporation v Dimopoulos [2006] VSC 10. Zhuoying Yu v Kunshan Yi [2018] SADC 69. This appears to be the case even where there are Family Court proceedings on foot. Presumably this depends upon an acceptance of the view that a constructive trust arises from the date of the conduct giving rise to it: see Parsons v McBain (2001) 192 ALR 772, discussed at [5.270]. See, for example, Day v Gould [2006] QSC 252, where by inference the court accepted that a caveat could be lodged to protect a constructive trust arising under the Muschinski v Dodds (1985) 160

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If the right is a mere equity, such as a right to have a transaction set aside for fraud or duress, some authorities suggest the right is not caveatable.59 In Victoria a mortgagor’s right to have an improper mortgagee’s sale set aside has been held to be a mere equity and, as such, is not a right capable of supporting a caveat.60 In other cases, however, a mere equity has been viewed as a sufficient interest to be the subject of a caveat.61 [5.40]  A question arises as to whether a person may lodge a caveat against his or her own

registered title. Such a course of action may be necessary if, for example, the certificate of title has been lost or stolen and there is a danger that a dealing affecting the registered proprietor’s title may be lodged. In New South Wales, Queensland and the Northern Territory the legislation now specifically permits the registered proprietor to lodge a caveat.62 The position in the other jurisdictions depends on case law. Several authorities give general support to the notion that a registered proprietor may lodge a caveat against his or her own title.63 Many of these authorities, however, adopt the view that the registered proprietor must demonstrate a separate and distinct interest from the registered title in order to lodge the caveat.64 Most of the recent cases have arisen in the specific context of a registered proprietor wishing to lodge a caveat to prevent the completion of a mortgagee’s sale that the registered proprietor claims has not been conducted in good faith. In these cases there has not been a clear consensus as to whether the registered proprietor does have a right to so lodge a caveat.65 In Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672 the

59 60

61

62 63

64

65

CLR 583 principle. See also Youssef v Victoria University of Technology [2005] VSC 223 and generally [5.250] and [5.265]–​[5.275]. Query the situation where equitable estoppel principles are used: Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. See [5.250], [5.265]–​[5.275] and [8.230]–​[8.235]. Compare Bernstein v Georgakakis [2010] VSC 52 (matrimonial property proceedings on foot but court not satisfied on the facts that the husband had any existing beneficial interest in the property). Re Pile’s Caveat [1981] Qd R 81; Global Minerals Australia Pty Ltd v Valerica Pty Ltd (2000) 10 BPR 18,463 (also reported as Valerica Pty Ltd v Global Minerals Australia Pty Ltd (2001) NSW ConvR 55-​963). Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672; Vasilou v Westpac Banking Corporation (2008) 19 VR 214 at [121], where the Victorian Court of Appeal commented that the Swanston case may require a review before a full appeal court but, until overruled, it remained binding on Victorian courts. Re McKean’s Caveat [1988] 1 Qd R 524; Re Andel Pty Ltd & Century Car Care Pty Ltd (1989) Q ConvR 54-​315 (where it appeared to be accepted that the right was a full equitable interest); Mijo Developments Pty Ltd v Royal Agnes Waters Pty Ltd [2007] NSWSC 199 (where the court’s interpretation of the relevant s 122(1) (a) of the Land Title Act 1994 (Qld) provision, meant that the caveator only had to demonstrate a “right” in relation to land (see above in this paragraph); an equity is “clearly capable of being such a right” (at [34])). See generally [5.250], [5.265]–​[5.275] and [8.230]–​[8.235]. Real Property Act 1900 (NSW), s 74F(2); Land Title Act 1994 (Qld), s 122(1)(c); Land Title Act (NT), s 138(1) (c). See, for example, McEachern v Colton [1902] AC 104; Barry v Heider (1914) 19 CLR 197; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Daniell v Paradiso (1991) 55 SASR 395. Further, in practice, Registrars will accept a caveat from the registered proprietor in some circumstances. For example, in Victoria, the Registrar will accept such a caveat if the certificate of title is lost or there is a fear of fraud. See, for example, Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870; Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672; McEachern v Colton [1902] AC 104; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Shaw Excavations Pty Ltd v Portfolio Investments Pty Ltd (2000) 9 Tas R 444. It is clear, however, that, in the absence of a claim of bad faith on the part of the mortgagee, the mortgagor has no caveatable interest once the mortgagee has entered into a contract of sale: see Rockett v Evans [2008] [5.40]  303

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Victorian Court of Appeal held that the registered proprietor needed to show a separate and distinct interest in the land in order to lodge a caveat. In the view of the Court of Appeal, such a registered proprietor/​mortgagor had an equity which, although giving a right to seek equitable remedies, did not give rise to a proprietary interest in the land capable of supporting a caveat.66 The Court of Appeal relied upon the High Court decision in Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 in reaching the conclusion that the mortgagor did not have a proprietary interest separate and distinct from its registered title. This part of the judgment of the Court of Appeal is open to question. It is strongly arguable that each of the three judges in the High Court in the Latec case took the view that the rights of Hotel Terrigal Pty Ltd were indeed proprietary in character.67 In contrast, in Sinclair v Hope Investments Pty Ltd [1982] 2 NSWLR 870 Needham  J decided that the registered proprietor/​mortgagor does have the right to lodge a caveat to prevent the completion of a sale where there has been a fraudulent exercise of the power of sale.68 After a careful review of the authorities, Underwood J in Patmore v Upton (2004) 13 Tas R 95 held that the view of Needham J was the correct one. The possible requirement that a registered proprietor may only lodge a caveat to protect a separate and distinct interest in the land would result in a registered proprietor who has her or his certificate of title stolen being unable to lodge a caveat. Such a protection should be available to a registered proprietor in this position.69 The New South Wales, Queensland and Northern Territory Torrens statutes clearly support this view.

66

67

68 69

QSC 227. In McCourt v National Australia Bank Ltd [2010] WASC 121, Murphy J referred to the authorities but found it unnecessary to comment on whether a registered proprietor could lodge a caveat against his own property. Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672 was followed by Coldrey J in Commonwealth Bank v Kyriackou (2003) V ConvR 54-​674. See also the Victorian Court of Appeal decision in Byrne v St George Bank (1996) V ConvR 54-​543, where the correctness of the decision in the Swanston case was raised but not decided upon. See also Vasilou v Westpac Banking Corporation (2008) 19 VR 214 at [121] referred to in n 60. See [5.255]–​ [5.265]. Each of the judges suggested that the rights of Hotel Terrigal were capable of competing in a priority dispute with the later acquired equitable interest of MLC Nominees; that is, they clearly accepted the proprietary character of Hotel Terrigal’s rights. It is important to note, however, that the disputes arose at different times. In Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 the sale had been completed and Hotel Terrigal was no longer the registered proprietor. The only possible basis for any proprietary interest was its right to have the sale set aside because of fraud. When the case arose, issues as to proof of fraud and enforceability against a subsequent interest holder could be decided at the one time. In Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672 the registered proprietor claimed fraud by the mortgagee and was attempting to prevent the completion of the sale by the lodgement of a caveat. Practical reasons might suggest that the actual finding in the Swanston case was correct; that is, a registered proprietor/​mortgagor should not be in a position to interfere by the lodgement of a caveat, with the mortgagee’s sale, on an allegation of fraud. However, it is suggested that the authorities relied upon by the Court of Appeal in the Swanston case do not support the view that the differences in timing with respect to when the dispute arises lead to differences in the nature of the rights. Its conclusion that “a defrauded registered proprietor has less than a proprietary equitable interest” is not supported by authority. See Wright, “Does the Registered Proprietor Have a Caveatable Interest?” (1995) 69 ALJ 935; see also Rodrick, “The Response of Torrens Mortgagors to Improper Mortgagee Sales” (1996) 22 Mon LR 289 at 336ff; Meagher, Heydon and Leeming, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4th ed, LexisNexis, Sydney, 2002), p 151 for criticism of the Swanston decision. See also Re McKean’s Caveat [1988] 1 Qd R 524; Re Cross and National Australia Bank Ltd (1992) Qld ConvR 54-​433. Compare Re an Application by Haupiri Courts Ltd (No 2) [1969] NZLR 353. The High Court impliedly accepted such protection was available in Barry v Heider (1914) 19 CLR 197 and J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546.

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[5.45]  The relevant statutory provisions require only that the caveator “claims” an estate or

interest in the land. It is not a requirement that the interest is “established”. Further, it is not the duty of the Registrar to check the validity of the caveator’s claimed interest.70 It might be thought that the admixture of the above factors may lead to the lodgement of frivolous and vexatious caveats. A further provision, however, gives some protection against such caveats. In New South Wales, Victoria, Western Australia, Tasmania and the Australian Capital Territory any person who lodges a caveat without reasonable cause is liable to pay compensation to any person who suffers loss as a consequence of the caveat.71 It seems that if a caveator has an honest belief based on reasonable grounds that he or she has an interest sufficient to support a caveat, the caveator will not be held to have lodged the caveat “without reasonable cause”.72 “Reasonable cause” involves subjective and objective elements; the subjective element requires the existence of an honest belief in the caveator that he or she had a caveatable interest and the objective element requires the existence of reasonable grounds for that belief.73 The decision in Edmonds v Donovan (2005) 12 VR 513 is an example of a court taking a broad view of a party’s entitlement to lodge a caveat. Although the caveat was lodged by a company, it was clear in hindsight that the actual persons who were entitled to lodge the caveats (and who should have done so) were the directors of the company. At first instance Warren J held that the caveat had been lodged without reasonable cause and that compensation was payable. The Victorian Court of Appeal, however, took the view that it was “artificial” in the circumstances to differentiate between the company and its directors (at [96] per Charles JA) and held that the caveat had been appropriately lodged. It has been suggested that this finding “may not withstand strict legal analysis”.74 In Queensland and the Northern Territory the relevant provisions of the Torrens statutes reverse the onus of proof and provide there is a rebuttable presumption that the caveat was lodged without reasonable cause.75 The Queensland and Northern Territory legislation also 70 71

72

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4 7 75

See specifically Real Property Act 1900 (NSW), s 74Q; Land Titles Act 1925 (ACT), s 104A(2). Real Property Act 1900 (NSW), s 74P; Transfer of Land Act 1958 (Vic), s 118; Transfer of Land Act 1893 (WA), s 140; Land Titles Act 1980 (Tas), s 138; Land Titles Act 1925 (ACT), s 108. See Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589; Gustin v Taajamba Pty Ltd (1994) 6 BPR 13,393. The onus of proof is on the plaintiff to show that the caveator acted without reasonable cause. See generally Deputy Commissioner of Taxation v Corwest Management Pty Ltd [1978] WAR 129; Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106; Hooke v Holland [1984] WAR 15; Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589; Dykstra v Dykstra (1991) 22 NSWLR 556 at 557–​558; Collingridge v Sontor Pty Ltd (1997) 141 FLR 440; Carroll v Azolia Pty Ltd (unreported, Supreme Court of Western Australia, 19 January 1998; see [1998] ANZ ConvR 485); Lee v Ross (No 2) (2003) 11 BPR 20,991; Truefilm Pty Ltd v JR Investments Holdings Ltd (2004) NSW Conv R 56-​096; Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27. In some cases it has been suggested that an honest belief based on reasonable grounds may not be enough if the caveator has acted for an ulterior or improper purpose. See Young Rydalmere Credits Pty Ltd (1963) 80 WN (NSW) 1463 at 1472–​1473; Bedford Properties Pty Ltd v Surgo Pty Ltd [1981] 1 NSWLR 106 at 108; Commonwealth Bank of Australia v Baranyay [1993] 1 VR 589 at 600; cf Beca Developments v Idamenco (No 92) Pty Ltd (1990) 21 NSWLR 459 at 475 per Clarke JA, at 479 per Waddell AJA. Brogue Tableau Pty Ltd v Binningup Nominees Pty Ltd (2007) 35 WAR 27 at [80]–​[81]. (A client who lodges a caveat on the basis of legal advice (where the legal advice is later shown to be wrong) can have an “honest belief on reasonable grounds: that he or she has a caveatable interest”.) See Young, “Recent Cases” (2005) 79 ALJ 340 at 342. Land Title Act 1994 (Qld), s 130; Land Title Act (NT), s 146. Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), p 430 query the desirability of the reversal of the onus of proof. Note that the onus of proving that loss has been suffered as a result of the lodgment of a caveat still rests on the claimant for compensation. The history and import of s 130 are discussed in Weir, “Land Title Act 1994 (Qld) –​Statute for a New Millenium” (2000) 4 FJLR 185 at 195–​198. [5.45]  305

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differs from other jurisdictions in that it appears to provide that it must also be shown that the caveat was lodged for an improper purpose.76 While the word “improper” is actually only found in the heading of s 130, in Farvet Pty Ltd v Frost [1997] 2 Qd R 39 Demack J concluded that it should be construed as part of the section.77 By contrast in Re Brooks Caveat [2014] QSC 76, Henry J diverged from that view and considered that the reference to improper was only a shorthand expression of the adverse presumption that the caveator must demonstrate that the caveat was lodged with reasonable cause.78 In the absence of an appellate level decision, the matter remains unclear. In South Australia compensation will only be awarded to a person who sustains loss as a consequence of the caveat being lodged “wrongfully and without reasonable cause”.79 In Beca Developments v Idamenco (No 92) Pty Ltd (1990) 21 NSWLR 459 the New South Wales Court of Appeal interpreted the same phrase, which at that time appeared in the New South Wales provision.80 The court held that the person seeking an award of compensation under s 74P of the Real Property Act 1900 (NSW) has the onus of proving that the caveator (a) did not have a caveatable interest, (b) did not have an honest belief based on reasonable grounds that he or she had a caveatable interest and (c) deliberately lodged the caveat to infringe the rights of the registered proprietor or interested person. Presumably, similar reasoning could apply to the South Australian provisions. The interpretation severely restricts the right to recover compensation from the caveator.81 The amount of compensation payable does not require strict application of contractual and tortious concepts of causation (including issues of foreseeability). Rather, any loss realistically attributable to the wrongful lodgement can be claimed: Lee v Ross (No 2) (2003) 11 BPR 20,991. The issue of payment of compensation where a caveat is lodged with reasonable cause and later maintained when the reasonable cause no longer exists has been raised but not resolved in the above cases. In addition to the compensation provisions and the consequences where there is no reasonable cause for lodgement, Guirgis v JEA Developments Pty Ltd [2019] NSWSC 164 illustrates the need for licenced conveyancers to ensure that those caveating have a good and valid claim, to the best of the knowledge of the conveyancer. The purchaser, Guirgis, had entered into a contract to purchase a property. He was also in a family court dispute with his wife. His wife lodged a caveat against the property through a company of which she was involved (JEA Developments). The conveyancer, in lodging the caveat electronically, certified that to the best of her knowledge, the caveator had a good and valid claim. The conveyancer had not sought further information from the Caveator in relation to the underlying loan agreement that was said to support it.

76 77 78 79 80

81

Farvet Pty Ltd v Frost [1997] 2 Qd R 39. Although the legislation is not clear, the onus of establishing this condition is probably on the person claiming compensation. Section 35C(1) of the Acts Interpretation Act 1954 (Qld) provides that the heading is part of the section to which it relates. Re Brooks’ Caveat [2014] QSC 76 at [17]–​[18]. Real Property Act 1886 (SA), s 191(j). Section 74P of the Real Property Act 1900 (NSW) was amended in 1996 to remove the term “wrongfully”. See Mahendran v Chase Enterprises Pty Ltd [2013] NSWCA 280; Arkbay Investments Pty Ltd (in liquidation) (receivers and managers appointed) v Tripod Funds Management Pty Ltd [2014] NSWSC 1003. See Browne, “Caveats and Compensation Mk III” (Vol 31(8), 1993) LSJ 42.

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The court was concerned that the conveyancer had failed to exercise the standard of care required of a conveyancer, and did consider referring the matter to the relevant disciplinary body. In this case however, the contrite remorse shown by the conveyancer for lodging a caveat when there was no legal basis and her willingness to undertake remedial courses to gain a better knowledge of the caveat provisions ensured that she was not referred to the relevant authority, despite the “egregious” [41] nature of what occurred. More fundamentally though what this case demonstrates is how the introduction of e-​conveyancing has fundamentally altered the responsibility of ensuring that the interest claimed under the caveat has some basis. Whereas prior to e-​conveyancing, the client within the transaction verified that they had a good and valid claim, now the responsibility lies on the solicitor or conveyancer, who, as certifier, indicates that the claim made under the caveat does have some legal basis. Describing the claimed interest [5.50]  The Torrens statutes in all jurisdictions provide that caveats must be lodged in a particular

form and manner.82 The nature83 of the estate or interest claimed, a description of the land over which the estate is claimed and the facts upon which the claim is based must be set out in the caveat.84 Strict compliance is necessary and a caveat may be deemed defective for small, seemingly unimportant errors.85 On the other hand, a bona fide claim by a caveator should not be destroyed by a court because of technical difficulties with the form and content of the caveat.86 In New South Wales, when the provisions relating to caveats and to their formal requirements were revised

82

83

84

85 86

Real Property Act 1900 (NSW), s 74F(5); Transfer of Land Act 1958 (Vic), s 89(1); Land Title Act 1994 (Qld), s 121; Real Property Act 1886 (SA), s 191(a); Transfer of Land Act 1893 (WA), s 137; Land Titles Act 1980 (Tas), s 133(1), (2); Land Titles Act 1925 (ACT), s 104(2), (3); Land Title Act (NT), s 137. The issue of whether the quantum of the estate or interest claimed must be set out has given rise to uncertainty over the years. The statutory provisions do not seem to justify a requirement to do so: Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 233. A line of authority in New South Wales, however, confirmed that quantum of interest had to be set out in the caveat: see, for example, Palmer v Wiley (1906) 23 WN (NSW) 90; Kerabee Park Pty Ltd v Daley (1978) 2 NSWLR 222. (In New South Wales, different statutory provisions now apply, but, in relation to caveats lodged in respect of mortgages, charges and leases, quantum is still required: see Real Property Regulation 2008, cl 7, Sch 3.) In interpreting a similar statutory provision (the Western Australia provision) to that considered in the New South Wales cases, the High Court has held that quantum of interest does not have to be stated by the caveator: Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407 at 422–​23 per Mason CJ, Dawson and McHugh JJ. This approach has also been adopted in Queensland: Global Capital Industries Pty Ltd v Dela Property Developments Pty Ltd [2006] 1 Qd R 501. In Tasmania and the Australian Capital Territory it has been doubted that it is necessary to specify quantum: Smith v Longden (1997) 7 Tas R 194; Gasiunas v Meinhold (1964) 6 FLR 182 at 185–​186. Whalan has suggested that the statutory provisions do not justify a requirement that quantum is set out: Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 233. Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222; George v Biztole Corporation Pty Ltd (1995) V ConvR 54-​ 519; Cruz v Osborne [1999] WASC 8. For example, where lodged to protect a lease, the caveat should set out the duration of the leasehold estate (Re Jones (1935) 35 SR (NSW) 560); where lodged to protect an interest as tenant in common, the caveat should set out the share claimed (Re Fairlie (1959) 76 WN (NSW) 475; Sullivan v McMahon [1999] WASC 84). Where the claim is based on bad faith in the mortgagee’s exercise of the power of sale, the allegation must be a clear statement expressed “distinctly and positively”: see McCourt v National Australia Bank Ltd [2010] WASC 121 at [23]. Palmer v Wiley (1906) 23 WN (NSW) 90; Beca Developments Pty Ltd v Idameneo (No 92) (1990) 21 NSWLR 459. Hooper v Australia & New Zealand Banking Ltd (1996) 5 Tas R 398; Sullivan v McMahon [1999] WASC 84; Four Oaks Enterprises Pty Ltd v Clark [2002] ANZ ConvR 440; [2002] TASSC 39; Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287. [5.50]  307

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and changed,87 a section was included to provide that a failure to comply strictly with the formalities is to be disregarded by the courts.88 The caveat should not be cast in terms wider than is necessary to protect the interest of the caveator.89 However, it is now clear that a caveator claiming an interest in part of the land can lodge a caveat over the whole if the particular portion cannot at the time be identified because, for example, it has not been excised from the larger lot by subdivision.90 Effect of caveat [5.55] A caveat effectively operates as an injunction to the Registrar by restraining the

Registrar from registering any dealing except with the caveator’s consent.91 In jurisdictions where the caveator can give consent to the registration of the dealing, it appears that the caveat does not lapse: see, for example, s 90(1)(b) of the Transfer of Land Act 1958 (Vic). However, when the dealing to which the caveator has consented has been registered, then, in the absence of fraud or an agreement to the contrary, the registered interest will not be subject to the interest claimed by the caveator. Certain interests, however, are not overridden by registration (see [4.200]–​[4.310] on specific statutory exceptions to indefeasibility) and these interests remain after registration whether or not they are “protected” by a caveat. In South Australia and Western Australia there appear to be no specific provisions providing for a caveator to consent to a dealing. However, in these jurisdictions, “permissive” or “conditional” caveats may be lodged: see [5.65]. The Registrar is prevented from registering any dealing prohibited by the caveat until the caveator has had an opportunity to establish his or her claim. Although it is not mandatory in all jurisdictions, the caveat is noted on the Register, but not on the certificate of title. As it is noted on the Register, the caveat may have the effect of operating as notice to the world of the caveator’s claimed interest, but its primary purpose is as a direction to the Registrar. The Registrar gives notice to the registered proprietor that a caveat has been lodged.92

87 88

9 8 90

91

92

Real Property Act 1900 (NSW), s 74F(5). Real Property Act 1900 (NSW), s 74L. A technical defect was excused under s 74L in Windella (NSW) Pty Ltd v Hughes (1999) NSW ConvR 55-​926. See similarly FTFS Holdings Pty Ltd v Business Acquisitions Australia Pty Ltd [2006] NSWSC 846 (failure to state the amount of the charge “cured” by s 74L). Note, however, the comment suggesting that the requirements under the Real Property Act 1900 (NSW) remain very detailed and are similar to the requirements developed by the courts, and the reference to Jones v Baker (2002) 10 BPR 19,115, where the court stated that non-​compliance with formal requirements may sometimes be such that it cannot be disregarded. Butt notes that, despite s 74L, caveators should take care to ensure substantial compliance because under s 74Q the Registrar-​General has a duty to ensure that the caveat “apparently complies on its face with the requirements”. See Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.1030]. See, for example, McCourt v National Australia Bank Ltd [2010] WASC 121. Re Henderson’s Caveat [1998] 1 Qd R 632. Davies JA held that equity recognised the caveator’s interest as extending over the whole of the land until subdivisional approval was obtained (at 642). See similarly Lintel Pines Pty Ltd v Nixon [1991] 1 VR 287 and Forder v Cemcorp Pty Ltd (2001) 51 NSWLR 486. Compare earlier cases holding otherwise: Roclin Investments Pty Ltd v Makris (1974) 7 SASR 485; Nichols Constructions Pty Ltd v Henry [1995] ANZ ConvR 192; Re Bosca Land Pty Ltd’s Caveat [1976] Qd R 119. Real Property Act 1900 (NSW), s 74H(1)(a); Transfer of Land Act 1958 (Vic), ss 90(1)(b), 91(1); Land Title Act 1994 (Qld), s 124(1), (2)(b); Land Titles Act 1980 (Tas), s 137(1); Land Titles Act 1925 (ACT), s 107A(1)(b); Land Title Act (NT), s 140(1), (3)(b). Real Property Act 1900 (NSW), s 74F(6); Land Title Act (NT), s 139; Transfer of Land Act 1958 (Vic), s 89(3); Land Title Act 1994 (Qld), s 123; Real Property Act 1886 (SA), s 191(b); Transfer of Land Act 1893 (WA),

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[5.60]  The Registrar is restrained from registering only those dealings that affect the estate

or interest of the caveator.93 Thus it may be argued that a caveat lodged by an equitable mortgagee should not prevent the registration of a transfer to a purchaser from the first registered mortgagee who has exercised his or her power of sale. The second equitable mortgage is carved from the registered proprietor’s notional “equity of redemption” and has no priority over the registered mortgage. A sale by the registered mortgagee does not affect the interest of the equitable mortgagee.94 Nevertheless, in Forster v Finance Corporation of Australia Ltd [1980] VR 63 it was held, that such a caveat by a second equitable mortgagee effectively prevented registration of a transfer from the registered mortgagee.95 An amendment to the Transfer of Land Act 1958 (Vic) ensures that a caveat protecting a second unregistered mortgage does not prevent the registration of a transfer by the registered mortgagee who has exercised his or her power of sale.96 In the other jurisdictions statutory provisions are in place that would prevent a caveat lodged by a second unregistered mortgagee having the effect of restraining the registration of a transfer.97 A corollary is that the caveator cannot argue successfully for a caveat to be maintained or extended if the caveat is attempting to prohibit the registration of dealings to which the caveator has no right to object.98 [5.65]  Apart from the exception referred to at [5.60], there are some other situations where

the Registrar is empowered to register a dealing despite the existence of a caveat on the title. These exceptions vary in detail from jurisdiction to jurisdiction, but generally concern matters such as registration of transmissions,99 vesting orders, discharges of mortgages and transfers pursuant to writs.100 Further, except in Queensland and the Northern Territory, any registrable

93 4 9 95 96 97

98

99

100

s 138(1); Land Titles Act 1980 (Tas), s 133(3)(b); Land Titles Act 1925 (ACT), s 105(1). See NRMA Insurance Ltd v Martin (1988) 84 ACTR 1. This is specifically provided for in New South Wales, Queensland and the Northern Territory: see Real Property Act 1900 (NSW), s 74H(1)(b); Land Title Act 1994 (Qld), s 124(2)(e); Land Title Act (NT), s 140(3)(e). See MacCallum, “Dilemmas for Torrens System Mortgagees” (1981) 13 MULR 248 at 250. Discussed in MacCallum, “Dilemmas for Torrens System Mortgagees” (1981) 13 MULR 248. See now Transfer of Land Act 1958 (Vic), s 91(2A). See Nichols v Go-​Tell Nominees Ltd (1997) V ConvR 54-​573. Real Property Act 1900 (NSW), s 74H(5)(g); Land Title Act 1994 (Qld), s 124(2)(c); Real Property Act 1886 (SA), s 136(2); Land Titles Act 1980 (Tas), s 137(3)(c); Land Titles Act 1925 (ACT), s 104(4)(c); Land Title Act (NT), s 140(3)(c). Query Transfer of Land Act 1893 (WA), s 141A. See Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222; Lewenberg v Direct Acceptance Corporation Ltd [1981] VR 344; Nichols v Go-​Tell Nominees Ltd (1997) V ConvR 54-​573. See also Butt, “Caveat Ineffective to Stop Sale by Mortgagee” (1998) 72 ALJ 743. Dunecar Pty Ltd (in liq) v Colbron (2001) 40 ACSR 342; His Grace Metropolitan Petar v Macedonian United Society of Western Australia Incorporated [2003] WASC 15; Business Australia Capital Mortgage Pty Ltd v Randwick Nominees Pty Ltd (2004) 11 BPR 21,649. Compare Guardian Loans Pty Ltd v FTFS Holdings Pty Ltd [2009] NSWSC 1163 discussed in Caveats and the Rights of Prior Mortgagees (2010) 84 ALJ 77. This varies from jurisdiction to jurisdiction. There is provision for the registration of transmissions based on particular facts where there is a caveat on title in the s 74H(5)(a) of the Real Property Act 1900, ss 90(1)(a) and 91(1) of the Transfer of Land Act 1958 (Vic), s 142 of the Transfer of Land Act 1893 (WA) (very limited circumstances) and s 137(3)(g) of the Land Titles Act 1980 (Tas). Whalan suggests that the practice of registering transmissions despite the existence of a caveat where there is no statutory provision enabling such registration may not be justified: see Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 240. See generally Real Property Act 1900 (NSW), s 74H(5); Transfer of Land Act 1958 (Vic), ss 90(1), 91(1); Land Title Act 1994 (Qld), s 124(2); Real Property Act 1886 (SA), s 136; Land Titles Act 1980 (Tas), s 137(3); Land Titles Act 1925 (ACT), s 104(4), (5); Land Title Act (NT), s 140(3). [5.65]  309

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dealing lodged for registration before the lodgement of a caveat is not affected by the caveat –​ registration of the dealing proceeds despite the caveat.101 Sometimes an instrument may be lodged for registration but may not be in registrable form. In these circumstances, a question arises as to whether the subsequent lodgement of a caveat prevents registration of such an instrument. In New South Wales, the relevant provision states clearly that the instrument must be in registrable form for the registration to proceed despite the caveat.102 There are some provisions that allow for “permissive” or “conditional” caveats. For example, in Victoria, South Australia and Western Australia the caveator may lodge a caveat forbidding the registration of any dealing unless such dealing shall be expressed to be subject to the claim of the caveator.103 Where the registered proprietor takes the interest subject to the rights noted in the caveat by so providing in the dealing, the registered proprietor is subject to those rights.104 [5.70]  Generally, when a dealing is lodged for registration the Registrar cannot proceed to

register it if there is a caveat on the title restraining the registration of the dealing. In all jurisdictions except Queensland, South Australia and the Northern Territory the Registrars must, however, notify the caveator that a dealing has been lodged for registration.105 The caveator then has a set time, varying from 14 to 30 days, to agree to the registration of the dealing or to commence proceedings to establish the right to maintain the caveat or else the caveat will lapse. Effectively, the caveator must, within the specified time period, obtain a court order extending the caveat until the rights of the competing parties are settled in a fully argued court action. In determining whether or not to grant an extension, it seems the court applies broadly the same principles used on application for removal.106 Thus the court

101

Real Property Act 1900 (NSW), s 74H(4); Transfer of Land Act 1958 (Vic), s 91(2); Real Property Act 1886 (SA), s 191(c); Transfer of Land Act 1893 (WA), s 139(2); Land Titles Act 1980 (Tas), s 137(2)(a); Land Titles Act 1925 (ACT), s 107A(2). In these circumstances, it is open to the caveator to go to court and seek an injunction restraining registration of the dealing. The caveator would need to prove the priority of his or her interest in order to succeed. See Williams v Marac Australia Ltd (1985) 5 NSWLR 529 (injunction is against Registrar-​General). 102 Real Property Act 1900 (NSW), s 74H(4). 103 Transfer of Land Act 1958 (Vic), s 90(1)(d) (caveat does not lapse where the transfer or dealing is expressed to be subject to the rights of the caveator); Real Property Act 1886 (SA), s 191; Transfer of Land Act 1893 (WA), s 137(1). 104 Coles KMA Ltd v Sword Nominees Pty Ltd (1986) 44 SASR 120; Andrews v Superannuation Fund (1985) LSJS 153. Query the position in other jurisdictions where there is no specific provision permitting a dealing to be expressed to be subject to the rights of the caveator. 105 In New South Wales the registered proprietor initiates the matter. Section 74I(1) of the Real Property Act 1900 (NSW) provides that where a dealing has been lodged, the registered proprietor may require the Registrar-​General to serve a lapsing notice. See Dimos v Willetts [2000] 2 VR 170, where the Victorian Court of Appeal held that the Land Titles Office could send notice of a proposed registration of a dealing to the solicitor’s firm, rather than personally to the caveator. 06 Colbran and Jackson, Caveats (Lawbook Co, Sydney, 1996), p 428ff. For a recent example, see Williamson v 1 Scarano [2010] NSWSC 975, where an application to extend a caveat (claiming an equitable interest under a constructive trust or as an equitable chargee) under s 74K(2) of the Real Property Act 1900 (NSW) was refused on the basis that the evidence did not reveal a serious issue to be tried and, moreover, the balance of convenience favoured removal. (The only evidence as to the equitable interest was that presented by the caveator’s affidavit.) See also Auzhair Supplies Pty Ltd (in liq) v Gerace [2014] NSWCA 313 where application was successfully made to extend the operation of the caveat in circumstances where the applicant was seeking to apply for special leave to appeal to the High Court. The applicant claimed an equitable interest

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considers if there is a serious issue to be tried and whether the balance of convenience favours retention of the caveat.107 The extension is granted only for a period of time sufficient to ensure that the fully argued case can be heard by a court.108 A caveat which is defective in form will not be extended.109 [5.75]  In Queensland and the Northern Territory, a caveat against dealings does not simply

remain on the title until an instrument is lodged for registration. Unless the caveat is lodged by the registered owner or with the consent of the registered owner or in certain other circumstances,110 the caveator must take proceedings in the Supreme Court to establish his or her claim within three months of lodging the caveat. This is the case in relation to a caveat lodged to protect an equitable mortgage, even where it is lodged with the consent of the registered proprietor.111 Alternatively, if the caveatee serves a notice on the caveator requiring the caveator to start a proceeding in the Supreme Court to establish the interest claimed in the caveat, the caveator must commence such a proceeding within 14 days. If such proceedings are not taken the caveat lapses.112 In South Australia, the position is more open-​ended. The registered proprietor may seek to have the caveat removed. The Registrar then gives the caveator 21 days in which to obtain a court order for extension of the caveat.113 If no such order is obtained the caveat lapses.

107

108

109

110 111 112

113

as charge pursuant to a loan arrangement between the parties and the court considered that there was still a dispute of substance between the parties. If the caveator has no possible interest in the land and any further action by the caveator would be frivolous or vexatious, no extension would be granted. Note s 90(2) of the Transfer of Land Act 1958 (Vic) and s 138(4) of the Transfer of Land Act 1893 (WA), which provide that the court grants the stay if the caveator provides an undertaking or security or lodges a sum set by the court sufficient to indemnify persons who may suffer loss as a result of the continuing presence of the caveat on the title. See Dralter Pty Ltd v Channel Land Co Pty Ltd (1988) V ConvR 54-​324 (if the caveator is impecunious, an effective security cannot be given). There is a requirement to balance the competing claims of the registered proprietor and the caveator: Reschke v Trevor Reschke Nominees Pty Ltd [2019] SASCFC 27. Note s 74LA of the Real Property Act 1900 (NSW) which provides that if a caveat is extended for a particular period of time and no further order for extension is made before the expiration of that time, the caveat lapses and no further extension is permitted. See Bastian v Haydon [2010] NSWSC 1267. Jandric v Jandric [1999] WASC 22; Westpac Banking Corporation v Dunn [2011] WASC 7. Note, however, in these circumstances, the court may grant an injunction (where the requirements for the grant of injunction are satisfied) restraining registration of a dealing in lieu of making orders extending the operation of a caveat: Midland Brick Co Pty Ltd v Welsh (2006) 32 WAR 287; Westpac Banking Corporation v Dunn [2011] WASC 7. Land Title Act 1994 (Qld), s 126; Land Title Act (NT), s 142. Circuit Finance Australia Ltd v Registrar of Title [2006] 1 Qd R 204. Land Title Act 1994 (Qld), s 126(2), (4); Land Title Act (NT), s 142(3), (5). Where proceedings were instituted by the caveator but the proceedings had come to an end (the claim had not been served and a judge dismissed an application to renew the claim as the matter needed to be heard in a different court), the Queensland Court of Appeal found that in such circumstances, the caveat did not automatically lapse. Fresh proceedings were anticipated and the judge at first instance was not in error in refusing to order the removal of the caveat: Allen’s Asphalt Pty Ltd v SPM Group Pty Ltd [2010] 1 Qd R 202. See Re Dallyn Investments Pty Ltd [1989] 1 Qd R 121 for an interpretation of the previous Queensland provision requiring action “not later than 3 months from the lodgment of the caveat”. Real Property Act 1886 (SA), s 191(e), (f). See Galvasteel Pty Ltd v Monterey Building Pty Ltd [1974] 10 SASR 176.

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Methods by which a caveat may be removed from title [5.80]  In some jurisdictions, once a caveat against dealings has been removed or lapsed, the

caveator cannot lodge another caveat based on the same facts against the title without an order of the court, or in some cases, the consent of the registered proprietor.114 In Queensland, South Australia, and the Northern Territory the prohibition on relodgement applies in all circumstances (lapsing, withdrawal, removal);115 in New South Wales, Victoria116 and Western Australia117 a further caveat can be lodged without a court order or consent of the registered proprietor where the caveat was voluntarily withdrawn; and in the Australian Capital Territory the lodgement of successive caveats is only prevented where the first caveat was removed by the Registrar-​General in accordance with s 107(2).118 In determining whether a second caveat can be lodged, the court should consider whether there is a serious issue to be tried justifying a second caveat, and whether the balance of convenience favours maintaining the status quo. That is, the court uses the principles it uses in determining whether a current caveat should be removed or extended.119 In Victoria, there is no specific provision permitting relodgement by order of the court and s 91(4), the section prohibiting relodgement, applies where the caveat has lapsed or been removed by order of the court.120 A caveator in this position wishing to prevent the registration of further dealings

114

115

116

117

118 119 120

Real Property Act 1900 (NSW), s 74O(2)(a)(b); Transfer of Land Act 1893 (WA) ss 138(4), 138D(1). Query the position in Victoria: s 91(4) of the Transfer of Land Act 1958 (Vic) appears to be an absolute prohibition. See Costello v Official Trustee in Bankruptcy (1998) V ConvR 54-​579 (second caveat lodged by trustee in bankruptcy over same interest earlier caveated by the bankrupt, ordered removed under s 91(4) of the Transfer of Land Act 1958 (Vic). The result would probably be the same under the amended s 91(4) as the first caveat lapsed –​it was not withdrawn.); McCulloch v Fern (2000) NSWSC 729 (court emphasised that a second caveat could not be lodged without an order of the court when the claim was based on the same facts and in respect of the same “estate, interest or right”. Held that the facts and the estate were the same, even though the first caveat claimed an interest under a resulting trust and the second claimed an interest under a constructive trust); Layrill Pty Ltd v Furlap Constructions Pty Ltd (2002) V ConvR 54-​659 (the principle reiterated that a second caveat cannot be lodged if it is in respect of the same interest by the same person); McCourt v National Australia Bank (No 2) [2010] WASC 151. Land Title Act 1994 (Qld), s 129(1), (2) (note, however, that under s 129(3) the provision does not apply if the original caveat is a caveat prepared and registered by the Registrar under s 17; Real Property Act 1886 (SA), s 191(k)); Land Title Act (NT), s 145. Compare the Land Titles Act 1980 (Tas), where successive caveats seem only to be prohibited with respect to caveats against applications to bring land under the Act: s 14(4). See also s 134 and note the comments of Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 264. Real Property Act 1900 (NSW), s 74O; Transfer of Land Act 1958 (Vic), s 91(4) as amended by the Land Legislation Amendment Act 2009 (Vic) for the specific purpose of ensuring that the bar on the relodging of a caveat applies only to a caveat removed by order of the court, and not to one that is withdrawn. Transfer of Land Act 1893 (WA), s 138D(2). This provision applies only to caveats which are caveats under s 138A and attract the simpler procedure (ss 138B–​138D) for a registered proprietor to get a caveat removed by application to the Registrar. Various categories are excluded from s 138A (eg, a caveat lodged by a beneficiary claiming under a will or settlement: s 138A(b)), but an ordinary caveat against dealings claiming an interest in the land is a caveat for the purposes of s 138A. If the caveat is not a s 138A caveat, the caveat cannot be renewed in respect of the same estate or interest except subject to the Register at the time of the renewal: s 138(4). Land Titles Act 1925 (ACT), s 107C. Re McKean’s Caveat [1988] 1 Qd R 524; Landlush Pty Ltd v Rutherford [2003] 1 Qd R 236; Cini v Pets Paradise Franchising (SA) Pty Ltd [2009] SASC 7. R & L Bell Pty Ltd v Casboult (2003) 6 VR 271; Zurcas v Zurcas [2008] VSC 379. Compare Re Leighton Properties (Qld) Pty Ltd [1990] 2 Qd R 230 (on repealed Queensland legislation).

312 [5.80]

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would need to go to court and seek an injunction restraining the Registrar from registering the dealing.121 Withdrawal [5.85]  A caveator may withdraw the caveat at any time.122

Application for removal of caveat [5.90]  In all jurisdictions an application123 may be made to the court seeking removal of

a caveat.124 The provisions vary as to who can make such applications.125 For example, in Victoria any person adversely affected by a caveat may make an application for its removal. The court may make such order as it thinks fit.126 In determining whether or not to remove a caveat, the court uses the same tests as those applicable to an application for an interlocutory injunction.127 Thus, the court must determine first, if there is a serious question to be tried and, secondly, whether the balance of convenience favours the removal

121

This appears to be possible: see, for example, the comments in Halaga Developments Pty Ltd v Grime (1986) 5 NSWLR 740. 122 Real Property Act 1900 (NSW), s 74M(1)(a); Transfer of Land Act 1958 (Vic), s 89(1); Land Title Act 1994 (Qld), s 125; Real Property Act 1886 (SA), s 191(h); Transfer of Land Act 1893 (WA), s 137(1B); Land Titles Act 1980 (Tas), s 133(5), (6); Land Titles Act 1925 (ACT), s 104B; Land Title Act (NT), s 141. 123 Where the caveator makes application to the court for maintenance or extension of a caveat (eg, after having been served with a notice that a dealing has been lodged –​a “lapsing notice” –​or where required to do so under a provision such as s 138C(1) of the Transfer of Land Act 1893 (WA)), the considerations to be applied by the court are the same as those discussed here: see, for example, Interview Holdings Pty Ltd v Registrar of Titles [2008] WASC 144 at [39]. See Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.1030]–[12.1060] for a more detailed exposition of the New South Wales provisions and Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), pp 423–428 for a more detailed exposition of the Queensland provisions. 24 In New South Wales the application is made for an order that the caveat be “withdrawn”: Real Property Act 1 1900 (NSW), s 74MA. 125 Real Property Act 1900 (NSW), s 74MA –​for an illustration of this provision, see Hanson Constructions Materials Pty Ltd v Roberts [2016] NSWCA 240; Transfer of Land Act 1958 (Vic), s 90(3); Land Title Act 1994 (Qld), ss 127, 128; Real Property Act 1886 (SA), s 191(d); Transfer of Land Act 1893 (WA), s 138(2); Land Titles Act 1980 (Tas), s 135; Land Titles Act 1925 (ACT), s 105(2); Land Title Act (NT), ss 143, 144. In NRMA Insurance v Martin (1988) 84 ACTR 1 it was held that a registered mortgagee is a “registered proprietor” of an interest in the land and was thus entitled to make application to have a caveat removed. 126 For example, where an application for removal is made and the caveat is not in proper form, the court has the power to order an amendment of the caveat if it considers it appropriate in the circumstances: S & D International Pty Ltd (in liq) v Malhotra [2006] VSC 280; Depas Pty Ltd v Dimitriou [2006] VSC 281. 127 Eng Mee Yong v Letchumanan [1980] AC 331; Re Jorss’ Caveat [1982] Qd R 458; Burman v AGC (Advances) Ltd [1994] 1 Qd R 123. See also Martyn v Glennan [1979] 2 NSWLR 234; Australian Natives’ Association Friendly Society v Peball Pty Ltd (1993) V ConvR 54-​482; Hooper v ANZ Banking Group Ltd (1996) 5 Tas R 398; MacMichael v NHR Forster Pty Ltd (1998) 8 NTLR 16 (although provisions in Northern Territory did not change substantively, the case refers to the old provision s 191IV of the now repealed Real Property Act (NT)); Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd (1999) 9 BPR 17,533; Naidoo v RM Naidoo Pty Ltd [2000] WASC 100; Goodwin v Gilbert [2000] QSC 309; Schmidt v 28 Myola St Pty Ltd (2006) 14 VR 447. See Butt, “Removing Caveats” (1994) 68 ALJ 524; cf Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42, which suggests that a caveator demonstrating an arguable case of a serious question to be tried is sufficient. But cf the later Western Australian case Naidoo v RM Naidoo Pty Ltd which states that the nature of the obligation on the caveator is as set out in the Eng Mee Yong case.

[5.90]  313

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of the caveat.128 In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 the High Court held that the first limb required a court to find that a prima facie case existed.129 The High Court described the level of proof required to satisfy the prima facie test in this context as not meaning “that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”.130 In caveat cases, where the court is satisfied on the first test, the nature of most of these proceedings means “the balance of convenience falls rather heavily in favour of the caveator”.131 If it is clear that there were no proper grounds for lodging the caveat or that the caveatable interest has since been lost, the court will order the removal of the caveat.132 The proper grounds for lodging a caveat are to protect an existing interest; it has been held that “the lodgement of a caveat for an ulterior or collateral purpose [or as a ‘bargaining chip’] constitutes a serious misuse of the of the relevant statutory provisions”.133 In a case where a dealing is awaiting registration and an application for removal of caveat has been made, the court will order the removal of the caveat if the caveator clearly does not have an interest which is enforceable against the registered interest holder who has executed the registrable

128

Although the balance of convenience is a factor to be considered in applications for the removal of caveats, it seems that interlocutory removal would be unusual where the first criterion is satisfied: Custom Credit Corp Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42; Commonwealth Bank of Australia v Garon Pty Ltd [1999] WASC 170; Kitay v Strathfield Holdings Ltd (1998) 27 ACSR 716. See Butt, “Extending Caveats” (1999) 73 ALJ 790. 129 In contrast to the lower threshold test of a “serious issue to be tried” adopted in American Cyanamid Co v Eticon Ltd [1975] AC 396, where Lord Diplock discarded the prima facie case as a threshold requirement and indicated that as long as the claim was not vexatious or frivolous then there was “a serious question to be tried”. Compare Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618. 30 In Piroshenko v Grojsman [2010] VSC 240 Warren CJ held applications concerning extension or removal 1 of caveats must be determined in light of the High Court’s pronouncements in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 on the appropriate bases for the granting of interlocutory injunctions. Her Honour referred to her earlier decision in Schmidt v 28 Myola Street (2006) 14 VR 447, where she had used “serious issue to be tried” and, although satisfied the result would not have been different by an application of the O’Neill test, held that the High Court’s formulation should now be followed. See also Cini v Pets Paradise Franchising (SA) Pty Ltd (2008) 102 SASR 177 at [46]. Compare Interview Holdings Pty Ltd v Registrar of Titles [2008] WASC 144. 31 Cini v Pets Paradise Franchising (SA) Pty Ltd [2008] SASC 287 at [70]; Pua Hor Ong v Wu You Yang Pty Ltd (2008) 1 103 SASR 9 at [66]; Chong v Chanell (No 2) [2009] NSWSC 1066. Compare Navarac Pty Ltd v Moondancer Holdings Pty Ltd [2009] WACA 95 (where the court held that if the caveator’s interest is a security interest with a small value compared to the overall value of the property, the balance of convenience may not favour the retention of the caveat); see also Davies v Davies (No 2) [2010] WACA 151 (where the caveator’s claim for a constructive trust was apparently weak and the caveator had failed to pursue the claim over a long period of time, the balance of convenience favoured removal). 132 See, for example, Gonsalves v Debreczini (1999) 9 BPR 17,163. If the caveat is defective in form, on an application for removal where the court is satisfied there is a serious question to be tried and the balance of convenience favours the caveator, the court may give the caveator an opportunity to apply to court for an order that the caveat be amended (caveator will be required to give undertakings as to damages): see Cini v Pets Paradise Franchising (SA) Pty Ltd [2008] SASC 287 at [73]. 133 Goldstraw v Goldstraw (2006) V Conv R 54-​712; [2002] VSC 491 at [39]; Luther v Milner [2009] VSC 595 at [30]; Love v Kempton [2010] VSC 252.

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instrument.134 This may arise in the case where there is a registered mortgage followed by an equitable mortgage protected by a caveat.135 However, if it can be demonstrated that on the balance of convenience the caveat should remain on title at least until the matter can be fully litigated, the court will not order removal of the caveat.136 Although there is some doubt, the better view is that the caveator carries the onus of proof. On an application for removal, the caveator must justify the maintenance of the caveat.137 Lapse of caveat [5.95]  This is discussed under the effect of a caveat: see [5.55]–​[5.75].

Removal by Registrar [5.100] The methods of removal of a caveat described at [5.90] do not provide a simple

method for a registered proprietor to get a caveat removed from his or her title. In cases where it is clear the caveator has no caveatable interest, it is important that the registered proprietor has an effective way of securing the removal of the caveat. An application may be made to the Registrar seeking removal of the caveat.138 The form and content of the application vary from jurisdiction to jurisdiction.139 The Registrar gives notice to the caveator and, if no response is received within a set time, the caveat is removed. If a speedy removal is required, it may be necessary to use the court procedure as, in all cases, removal by the Registrar involves allowing the caveator a set time to respond before removal. It appears that it is not intended that the Registrar should decide borderline cases under this provision; thus, in a case where the caveator’s response to the Registrar’s request did not comply strictly with the statutory requirements for such a response, it was held the Registrar could take a broad view and permit the caveat to remain on the title.140 134 Further, if it is clear that there will be no value left after the claims of prior interest holders have been satisfied, the caveat will be removed: Toma Sevices Pty Ltd v Kusido Hospitality & Property Group Pty Ltd [2008] NSWSC 492. 135 See also Lewenberg v Direct Acceptance Corporation Ltd [1981] VR 344; Nichols v Go-​Tell Nominees Ltd (1997) V ConvR 54-​573. See Butt, “Caveat Ineffective to Stop Sale by Mortgagee” (1998) ALJ 749. Compare Zombolas v LRG Credit & Finance Pty Ltd (1988) V ConvR 54-​302. 136 McMahon v McMahon [1979] VR 239; [1981] Qd R 81. Sometimes the parties may agree for the substantive matter to be decided at the hearing of application for removal of the caveat. 137 Re Little; Ex parte Thorne’s Bankstown Estate Ltd (1929) 29 SR (NSW) 401; Lewenberg v Direct Acceptance Corporation Ltd [1981] VR 344; Commercial Bank of Australia v Schierholter [1981] VR 292; Smith v Callegari (1988) V ConvR 54-​300; Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42; Verebes v Verebes (1995) 6 BPR 14,408; Pindan Pty Ltd v Sunny’s Redevelopment Pty Ltd [2001] WASC 104. See Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.1070]–[12.1100], where he discusses the issue as to whether the same tests apply in an application under s 74K of the Real Property Act 1900 (NSW) (extension of caveat). 138 Real Property Act 1900 (NSW), s 74J; Transfer of Land Act 1958 (Vic), s 89A; Land Title Act 1994 (Qld), s 128; Real Property Act 1886 (SA), s 191(e); Transfer of Land Act 1893 (WA), ss 138B–​138D, 141A; Land Titles Act 1925 (ACT), s 107; Land Title Act (NT), s 144; Land Titles Act (Tas), s 136A. 139 Real Property Act 1900 (NSW), s 74J; Transfer of Land Act 1958 (Vic), s 89A; Land Title Act 1994 (Qld), s 128; Real Property Act 1886 (SA), s 191(e); Transfer of Land Act 1893 (WA), ss 138B–​138D, 141A; Land Titles Act 1925 (ACT), s 107; Land Title Act (NT), s 144. Land Titles Act (Tas), s 136A. 140 Dharmalingham v Registrar of Titles (2006) V ConvR 54-​718.

[5.100]  315

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PRIORITY BETWEEN UNREGISTERED INTERESTS Equitable interest and equitable interest Applicable principles and theoretical bases [5.105] Although Sir  Robert Torrens probably envisaged a system where only registered

interests141 would be enforceable and other rights would be enforceable in contract only,142 the Torrens statutes, which contained a number of provisions contemplating the existence of unregistered interests, were not consistent with such a view.143 One of the results of Torrens’ view was that the statutes did not contain wide-​ ranging and specific principles for the settlement of disputes between unregistered interest holders.144 When faced with resolution of such disputes, the courts opted to use the principles governing disputes between equitable interest holders of unregistered land. [5.110]  It has often been stated that equity applies the maxim “qui prior est tempore potior est

jure” to decide priority disputes between holders of equitable interests. In reality, the position is more complex. In deciding a dispute between equitable interests, the court conducts a search for the better equitable interest by considering all the circumstances of the case, including the conduct of the parties. In the language of Rice v Rice (1853) 2 Drew 73; 61 ER 646,145 if all other things are equal, the first in time is accorded priority. As is discussed in Chapter 2, this suggests that the date of acquisition of the interest is used to determine the dispute only where the circumstances and conduct of the parties do not provide a means of according priority to one.146 In other decisions, and a number of Torrens system cases concerning competitions between equitable interests, the principle has been expressed in a way which suggests that priority is to be determined primarily by the dates of acquisition of interests; first in time is only to lose priority if there is some conduct on the part of the first equitable interest holder which would merit postponement of the interest.147

141

For principles relating to the resolution of a dispute between (a) a prior registered interest and a subsequent unregistered interest, see Barry v Heider (1914) 19 CLR 197, discussed at [2.440] and generally [2.410]–​ [2.445]; (b) a prior un-​registered interest and a subsequent registered interest, see [4.180]–​[4.415]; (c) a prior equity and a subsequent equitable interest, see Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265, discussed at [5.255]–​[5.275]. 142 O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), p 261. 43 Provision was made for the lodging of caveats and trusts. See [4.85]. 1 144 See O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 261–​262. There are some exceptions: see Real Property Act 1900 (NSW), s 43A and Transfer of Land Act 1958 (Vic), s 34 (similar provision in other jurisdictions). 45 See also Heid v Reliance Finance Corporation Ltd (1983) 154 CLR 326 at 342–​343 per Mason and Deane JJ. 1 146 See Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 276 per Kitto J, where his Honour endorsed Kindersley V-​C’s test; Heid v Reliance Finance Corporation Ltd (1983) 154 CLR 326 at 333, 339 and 348, where Mason and Deane JJ approved Kitto J’s interpretation of the principle; see also AG(CQ) Pty Ltd v A & T Promotions Pty Ltd [2010] QCA 83. 147 Abigail v Lapin [1934] AC 491; Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 333 per Gibbs CJ; Wu v Glaros (1991) 55 SASR 408; Elderly Citizens Home of SA Inc v Balnaves (1998) 72 SASR 210; Kardiasmenos v Pioneer Management Pty Ltd [2005] NSWSC 778. The issue is discussed in Rodrick, “Resolving Priority Disputes Between Competing Equitable Interests in Torrens System Land –​Which Test?” 316 [5.105]

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[5.115]  There has been considerable dispute and uncertainty as to the underlying basis for

the granting of priority to a later equitable interest holder. In a number of decisions it has been suggested all such findings have their basis in the doctrine of estoppel; that is, the holder of the first equitable interest should be estopped from asserting the priority of her or his interest because her or his words or conduct have induced the holder of the second equity to act to her or his detriment.148 While many cases of postponement may be justified pursuant to the doctrine of estoppel, it seems that not all can be.149 An estoppel by representation requires a representation by words or conduct upon the faith of which the representee acted to his or her detriment. In many instances, where the dispute arises because of the fraud of a third party, it is difficult to find a “representation” by the holder of the first equitable interest. The following fact situation provides an example. A, the registered proprietor, creates an equitable mortgage in B, who is entitled to take the certificate of title but fails to do so. Subsequently, A fraudulently uses the certificate of title to create an equitable mortgage in C, who is induced to believe that this mortgage will be the first and only security over the land. The “representation” is made by A, the third party, and it is straining the interpretation of the term “representation” to conclude that the representation can be attributed to B.  B did not give authority actual or implied for A  to make such a representation. As Mason and Deane JJ remarked in Heid v Reliance Finance Corporation Ltd (1983) 154 CLR 326 at 341: “While the conduct of the holder of the first equity may, in such a case, be blameworthy, the operative representation was neither made nor authorised by him”. Further, detriment means that there must be a material disadvantage and the mere alteration of position by entry into a contract is insufficient in itself to constitute detriment.150 Some judges and commentators have taken the view that a more generalised principle may be at the base of such decisions. This is the principle described above, and involves a general evaluation of which equity is the better one. Within such a principle, however, it seems that the fraudulent or negligent conduct of the holder of the first equity becomes the central issue. It seems unlikely that “the mere fact of greater diligence on the part of the subsequent interest holder in protecting its interest should give it priority”.151 Mason and Deane JJ in Heid’s case took the view that “elements of both negligence and estoppel [are] found in the statements of general principle” (at 341–​342) and adopted Sykes’ broad test, which includes both notions in the test for deciding a priority conflict between equitable interests. Sykes suggests that the court approaches the matter by “inquiring whose is the better equity, bearing in mind the conduct of both parties, the question of any negligence on the part of the prior claimant, the effect of any representation as possibly raising an estoppel

148 149 150 151

(2001) 9 APLJ 172. Rodrick suggests that in some recent Torrens cases there has been support for a return to the Rice v Rice (1853) 2 Drew 73; 61 ER 646 formulation: see Rodrick at 176ff. See AG (CQ) Pty Ltd v A & T Promotions Pty Ltd [2010] QCA 83; Psal Pty Ltd v Raja [2016] WASC 295. See, for example, Rimmer v Webster [1902] 2 Ch 163; Gibbs CJ in Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 340. Capell v Winter [1907] 2 Ch 376; Rice v Rice (1853) 2 Drew 73; 61 ER 646; Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 340 per Mason and Deane JJ. Jacobs v Platt Nominees Pty Ltd [1990] VR 146 at 153; IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440; Mimi v Millenium Developments Pty Ltd (2004) V ConvR 54-​687. AG (CQ) Pty Ltd v A & T Promotions Pty Ltd [2011] 1 Qd R 306 at [37]. Compare Lapin v Abigail (1930) 44 CLR 166 at 186 per Isaacs J; Barnes v James (1902) 27 VLR 749. [5.115]  317

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and whether it can be said that the conduct of the first or prior owner has enabled such a representation to be made”.152 Although the test as stated is a mix of the principles of estoppel and negligence, in other parts of the joint judgment it is submitted that the emphasis is on a comparison of the equities and thus, by definition, on the possibly negligent conduct of the holder of the first equity. Mason and Deane JJ in the Heid case illustrate such an emphasis by using the language of negligence, rather than estoppel. Under the broad principle enunciated by Mason and Deane JJ in the Heid case, more is required than a simple causal connection between the conduct of the holder of the equity and the acquisition of the interest by the holder of the second equity. It appears that the court should concern itself only with particular types of conduct in the holder of the first equity –​ conduct pursuant to which it is reasonably foreseeable that a later equitable interest will be created and pursuant to which the holder of the second equity would have taken its interest assuming that no first equity existed. The use of such terms as “reasonable foreseeability” and “breach of duty” in the joint judgment is the use of “negligence-​based language” and is an indicator of the drift away from the pure estoppel rationale as the basis for resolving conflicts between the holders of equitable interests.153 In IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550154 much earlier, similar language of “reasonable foreseeability” had been used.155 In the Victorian decision of Jacobs v Platt Nominees Pty Ltd [1990] VR 146 the Full Court accepted the dichotomy of views expressed by the High Court in the Heid case and indicated its view that priority disputes may be settled according to either of these principles. In some cases, estoppel by representation may be the more appropriate principle and in others the broad principle suggested by Mason and Deane JJ may be more appropriate. A number of cases may be equally well decided under an “estoppel” or a “negligence” approach. In fact, in the Jacobs case the Full Court analysed each of the principles and attempted to apply each of them to the facts. As it was a case in which the failure to caveat was the only possible omission, the court took the view that the application of estoppel by representation was inapposite. In AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1 Qd R 306, the Queensland Court of Appeal had to consider in some detail the priority rule for contests involving competing equitable interests and reviewed the various theoretical bases for the approaches taken by the courts. The case is discussed in more detail at [5.200]. The reasoning of the court is replete with the discourse of foreseeability, reasonableness, prudence, risk and deficiency. This is consistent with the notion that the concept of negligence lies at the heart of the “postponing conduct” model and is supportive of the Mason and Deane JJ formulation in the Heid case.

52 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 2002), p 404. 1 153 Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 at 342–​343. A number of subsequent cases on equitable priorities appear to have approved the Mason and Deane JJ formulation: see, for example, Person-​to-​Person Financial Services Ltd v Sharari [1984] 1 NSWLR 745; Cash Resources Australia Pty Ltd v BT Securities Ltd [1990] VR 576; Avco Financial Services Ltd v Fishman [1993] 1 VR 90. For a discussion of the judgment, see Long, “Finding the Better Equity?: The Maxim Qui Prior Est Tempore Potior Est Jure and the Modern Law Relating to Equitable Priorities” (1996) 3 Deakin LR 147. 154 Discussed at [5.160] and [5.240]. 155 Since Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326, this approach has been reinforced in a number of cases: see, for example, AGC (NZ) Ltd v CFC Commercial Finance Ltd [1995] 1 NZLR 129; FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552. 318 [5.115]

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In essence, however, the matter is one of semantics. In cases where it is possible to say that A (the holder of the first equity), should not be postponed to B (the holder of the second equity), because it was not “reasonably foreseeable” that A’s conduct would lead to the creation of a second equity, it would also be possible to find that A’s conduct did not amount to a representation of an unencumbered estate, such that she should be estopped from asserting the priority of her interest over B. It seems that, under either formulation, the burden of proving the later interest should prevail over the earlier interest is on the holder of the later interest.156 [5.120]  The Victorian Court of Appeal in Moffett v Dillon [1999] 2 VR 480 found that there

was a distinct and independent rule which was to be applied to disputes between holders of equitable interests. Both Brooking  JA and Buchanan  JA stated that a subsequent equitable interest cannot prevail over an earlier interest if the holder of the later interest had notice of the earlier interest.157 Their Honours took the view that this factor was not just “a consideration to which regard is to be had in determining whether one of the equities is better than the other” (at 492 per Brooking JA and 506 per Buchanan JA (agreeing with Brooking JA)). If existing, notice decides the case and no enquiries as to the relative strength of the equitable interests should be made. Ormiston JA took the more traditional view that “notice” was one of the matters to be taken into account. In his Honour’s view, the correct approach is to apply the general rule set out by the High Court in Heid v Reliance Finance Corporation Ltd (1983) 154 CLR 326 and this requires determining whether there is any postponing conduct on the part of the first equitable interest holder. If there is no such conduct, then the issue of notice in the holder of the subsequent interest is strictly irrelevant. The approach of the majority is attractive in its simplicity for its ease of application.158 The decision of the Full Federal Court in Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566; [2010] FCAFC 91 is also consistent with it. Dowsett J (at [86]), citing Moffett v Dillon, expressed his understanding that a search for the better equity only arises when the holder of the subsequent equitable interest does not have notice of the earlier interest. Moore and Stone  JJ (at [74]) made the point that as notice would defeat the interest of the holder of a subsequent legal interest, it must necessarily do the same for the holder of a subsequent equitable interest. It may not, however, be wholly consistent with the High Court’s approach in the Heid case and a further High Court decision may be required before the issue is resolved.159 Further, the application of the principle of notice is not

156 There was some concern that the approach of Mason and Deane JJ of “comparing” the equities may have suggested a more basic change to the rule governing conflicts between equitable interests –​a change to the burden of proof. Ormiston JA in Moffett v Dillon [1999] 2 VR 480 rejected this view. 157 At 492 per Brooking JA and at 506 per Buchanan JA; cf Ormiston JA at 503. Brooking JA accepted that in very unusual cases there could be exceptions where the holder of a later interest with notice could prevail (see, eg, Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266; Wu v Glaros (1991) 55 SASR 408), but these would concern situations where the holder of the earlier interest had induced a belief in the holder of the later interest that the earlier equitable interest no longer existed: at 493. See also Performance Capital Mortgage Pty Ltd v Motive Finance Leasing Pty Ltd [2010] NSWSC 429 at [35]–​[40], where the holder of the prior equitable interest was held to be guilty of postponing conduct by withdrawing a caveat that protected its interest. This act induced in the holder of the subsequent equitable interest the belief that the earlier interest no longer existed. 158 McConvill, “Equity in the Torrens System” (2001) 8 APLJ 191 at 196. 159 See generally Rodrick, “Resolving Priority Disputes Between Competing Equitable Interests in Torrens System Land –​Which Test?” (2001) 9 APLJ 172. By inference, Nettle J in IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440 preferred the view of Ormiston JA. In a dispute between two equitable interest [5.120]  319

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always simple.160 The doctrine of notice encompasses actual, constructive and imputed notice and it seems that all are applicable to this type of dispute.161 As the discussion above shows, “what constitutes notice is a point of some nicety”.162 [5.125]  The operation of the equitable rule governing a priorities dispute between equitable

interests is also discussed in Chapter 2. It is intended here to analyse factors arising under the Torrens system that affect the way in which these principles are applied. Most important of these factors is the caveat: see [5.130]. The impact of the caveat and other relevant Torrens factors [5.130]  The relevance of the caveat in disputes between holders of unregistered interests has

been considered in many cases. However, its relative importance in priority disputes has varied markedly over the years and from case to case. Perhaps such a situation is inevitable in view of the widely varying fact situations in which disputes between holders of equitable interests may arise. In 1987, the Law Reform Commission of Victoria suggested that, irrespective of the fact situation, caveats should be used as a determinative factor in priorities disputes.163 Such an approach would possibly provide more certainty in the settlement of priority disputes. It would, however, give the caveat a role and importance in the operation of the Torrens system which was probably not intended and it may have unexpected consequences. The equitable interest of a person who holds the equitable interest pursuant to an informal arrangement would become even more precarious than it is at present. The holder of such an interest may be unaware that he or she holds an interest and thus would be clearly unaware of the need to lodge a caveat.164

holders, Nettle J applied the general test set out in Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 and investigated the issue of notice only as a subsidiary matter. 160 See [2.490]–​[2.550] as to the principles relating to “notice”. 61 See Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266; IGA Distribution Pty Ltd v King & Taylor Pty 1 Ltd [2002] VSC 440. See also the definition of “notice” in the general law statutes (eg, Property Law Act 1958 (Vic), s 199) and the High Court approach in Garcia v National Bank of Australia Ltd (1998) 194 CLR 395. See below [5.190]. 62 Moffett v Dillon [1999] 2 VR 480 at 501 per Ormiston JA. See, for example, IGA Distribution Pty Ltd v King & 1 Taylor Pty Ltd [2002] VSC 440, where Nettle J considered in detail the three forms of notice before finding the holder of the subsequent equitable interest had notice of the prior interest on the basis of imputed notice. 63 VLRC, Priorities, Report No 22 (1989), pp 10–​12. See also Robinson, “Caveatable Interests –​Their Nature 1 and Priority” (1970) 44 ALJ 351; Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), Ch 5; Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict Between Purchasers and Prior Interest Holders” (1997) 21 MULR 460 at 487–​489, where the authors make reference to the position in Singapore and some Canadian provinces where the legislation provides that the lodgement of a caveat affects priorities; McCrimmon, “In Protection of Equitable Interests under the Torrens System: Polishing the Mirror of Title” (1994) 20 Mon LR 300; Griggs, “Torrens Title –​Arise the Registered and Unregistered, Befall the Legal and Equitable” (1997) 4 Deakin LR 35. Compare McEniery, “A Dedicated Means of Giving Notice of Unregistered Interests under Torrens” (2006) 12 APLJ 244. 164 It has been suggested that protection of some of those adversely affected by the proposal (eg, spouses and de facto partners occupying land with their partners) could be achieved by creating an exception to indefeasibility of title. See Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict Between Purchasers and Prior Interest Holders” (1997) 21 MULR 460 at 489. 320 [5.125]

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The introduction of electronic conveyancing has engendered discussion and comment on the way in which the new technology could be used to provide a more conclusive Register. In particular, the idea of encouraging the “recording” of unregistered interests, by granting automatic priority to interests which are recorded over interests which are not so recorded, has been mooted and has been introduced into some overseas jurisdictions.165 Such an outcome could be achieved by a transformation of the caveat system or by the introduction of an alternative recording system. In the past, the ideal of all interests being reflected in the Register was considered unrealistic because of the expense and complication, but the advent of new technology and the utilisation of electronic conveyancing now makes the ideal a possibility.166 Under such a scheme, the position of those holding interests under informal arrangements who are unaware of their rights remains a problem. Various solutions have been suggested. The English position of protecting the interests of persons in actual occupation of the land may provide a solution.167 The nature of disputes [5.135]  Some knowledge of the more usual of the situations involving competitions between

equitable interests is important in giving a basis and substance to the ensuing discussion of the relevant principles and authorities. Disputes may very often arise between holders of unregistered mortgages. An unregistered mortgagee who takes possession of the certificate of title may be confident of claiming priority over the interest of any subsequently created unregistered mortgage.168 The possession of the certificate of title protects the first mortgagee as against a subsequent mortgagee even where the former has not lodged a caveat. This is because reasonable conduct on the part of the subsequent mortgagee requires that party to inform her or himself as to the physical whereabouts of the certificate of title in order to ensure that it has not been deposited as a security for another loan.169 The position may be different if the dispute is between the holders of second and third unregistered mortgages. If the first mortgagee has possession of the certificate of title, the second mortgagee may need to use an alternative means, such as the lodgement of a caveat, to protect her or his interest.170 Similarly, if the dispute is between an equitable

165

See, for example, Singapore’s Land Titles Act 1993 (Sing), s 49. See also the position in Canada and England discussed in O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 265–​274. 166 O’Connor, “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), p 275. 67 Such a solution is not without other problems. These would need to be fully addressed. See O’Connor, 1 “Information, Automation and the Conclusive Land Register” in Grinlinton (ed), Torrens in the Twenty-​first Century (LexisNexis, Wellington, 2003), pp 269–​271. 68 J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546. See VLRC, Sale of Land, 1 Report No 20 (1989), p 27, where it was argued that duplicate certificates of title (now certificates of title in most jurisdictions) should be removed from the system. The Commission argued that there was no need for duplicate certificates of title except to facilitate unregistered mortgages which are secured by the deposit of the duplicate. The Commission had suggested elsewhere that all holders of equitable interests, including equitable mortgagees, should protect their interests by caveat: see VLRC, Priorities, Report No 22 (1989), p 12. 169 In some jurisdictions it is no longer mandatory for the registered proprietor to receive a paper certificate of title. Where there is no certificate of title, these issues will logically be dealt with differently. 70 Person-​to-​Person Financial Services Pty Ltd v Sharari [1984] 1 NSWLR 745. Note the position in Queensland. 1 Under s 42(2) of the Land Title Act 1994 (Qld), the registered owner cannot obtain a certificate of title to the [5.135]  321

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mortgage and subsequent equitable interest created under a contract of sale, the possession of the certificate of title by the mortgagee may not provide complete protection.171 Although a purchaser may view a copy of the certificate of title, under common conveyancing practice the purchaser would not necessarily view the certificate or inquire about its whereabouts at the time of entering the contract. In these circumstances the lodgement of a caveat by the mortgagee may ensure priority. [5.140] A priority dispute between unregistered interest holders that tends to become very

common in times of rapidly increasing prices is that between purchasers of the same land. A vendor who enters into a contract of sale may discover some weeks later that he or she could obtain a much higher price and may proceed to “forget about” the first contract and enter into a contract of sale in favour of another purchaser. Although in some cases protection for the deposit moneys of these purchasers is provided by legislation requiring the vendor’s agent to place the deposit in a trust account,172 the issue as to which purchaser is entitled to the land remains to be resolved by comparing their equitable interests. The relevance of the failure to caveat, by the first purchaser, the holder of the first equitable interest, has varied from jurisdiction to jurisdiction and within jurisdictions from time to time.173 To be assured of protection as against a subsequent purchaser of the same land, a purchaser under a contract of sale should lodge a caveat, or possibly, a priority notice. [5.145]  A further priority dispute concerns the situation where a person claiming the earlier

equitable interest is in possession of the land, either alone or together with the holder of the legal estate. The basis of the equitable interest may vary. For example, it could arise pursuant to a tenancy or pursuant to a resulting or constructive trust. An issue arises as to whether possession alone is sufficient to provide protection for the equitable interest as against a subsequent equitable interest holder such as a mortgagee. Alternatively, is it incumbent upon the holder of the earlier equitable interest to lodge a caveat in order to ensure a full protection? Under the general law, it seems that possession per se would provide protection. In relation to Torrens land, where the equitable interest arises pursuant to a tenancy or other transaction that would be protected under the express statutory exceptions to indefeasibility of title, it is suggested that the possession per se would ensure that the earlier equitable interest prevails over the later equitable interest. The holder of a subsequent equitable estate could not be placed in a better position than the holder of a subsequent legal or registered estate. Where, however, the earlier equitable interest arises pursuant to a transaction that is not so specifically protected, the position is less clear and possession may not provide the necessary protection. It seems that the holder of such an interest should lodge a caveat in

lot if the lot is subject to a registered mortgage unless the mortgagee consents. However, where there is no such mortgage, the registered owner may request a certificate of title (s 42(1) and by s 75(1)) an equitable mortgage may be created by leaving a certificate of title with the mortgagee. Thus, in disputes between equitable mortgagees the principles enunciated above could apply in Queensland (s 75(2) equitable mortgages may be created other than by the means set out in s 75(1)). See similarly the position in the Northern Territory, Land Title Act (NT), ss 44(1), (2) and 77. 171 See [8.285]–​[8.295]. Provisions relating to disclosure by a vendor have cut across and perhaps reduced the significance of general principles here. 172 See, for example, Sale of Land Act 1962 (Vic), ss 24, 25, 27. 73 See Osmanoski v Rose [1974] VR 523. Compare Jacobs v Platt Nominees Pty Ltd [1990] VR 146. See Person-​ 1 To-​Person Financial Services v Sharari [1984] 1 NSWLR 745; cf Ryan v Nothelfer (1983) NSW ConvR 55-​119. 322 [5.140]

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order to strengthen his or her position in relation to subsequently created equitable interests. Of course, in some cases, possession may provide the requisite degree of protection.174 Further, it has been suggested in at least one case that a person who holds an equitable interest under a trust in the full sense (such as a resulting trust) may not be as readily expected to lodge a caveat as a person who holds an equitable interest as, for instance, equitable mortgagee or purchaser, where it might be more readily expected that a caveat would be lodged pending the completion or resolution of the transaction.175 The lodgement of a caveat is dependent upon the person who can so lodge knowing that he or she has an interest in the land and knowing that protection is available. As discussed at [4.95], this may often not be the case. However, this lack of knowledge, does not in itself, improve the position of the unregistered interest holder. The priority disputes referred to above concern circumstances where the registered proprietor has, directly or indirectly, created inconsistent interests in the land. A further important area where priority disputes between holders of unregistered interests may arise is the “arming conduct” scenario. An example of this situation is where a registered proprietor, without receiving the purchase price, signs a transfer of the property and a receipt acknowledging payment of the purchase price and hands these documents, together with the certificate of title to the “purchaser”. If the purchaser registers the transfer and then uses the documents to create an equitable interest in a third party, an issue may arise as to the enforceability of the original registered proprietor’s now equitable right against the third party’s equitable interest. The relevance of the caveat to this fact situation is indirect, at best. The conduct of the original registered proprietor is “postponing” in itself and the only possible role the caveat may play is possibly to neutralise the earlier conduct.176 A further consideration in this area is how these matters will be resolved where no paper based certificate of title exists. With certificates now longer issued in a number of jurisdictions, a dispute between two interests where one party has not been misled by the presence of a certificate of title will raise the question of whether the first in time party has in any way “armed” another to create a further interest. The relevant authorities [5.150]  It is intended here to review the most important cases and to attempt to reach some

tentative conclusions. In doing this though, it must be remembered that conveyancing practice and processes will alter as a result of e-​conveyancing. The consequent of this is that, hopefully, priority disputes will significantly lessen, and/​or the factual matrix of any disputes will alter. The use of priority notices, and the failure to lodge these, may well become a significant factor in determining priority by the courts. Quite possibly the lessons learned in relation to failure to lodge a caveat and its effect on priority might well be applied where the key matrix is the failure to lodge a priority notice. In Butler v Fairclough (1917) 23 CLR 78 Griffith CJ took the view that a caveat has the effect of giving notice to the world that the caveator has an equitable interest in the land. His Honour held that there was a positive duty on the holder of an equitable interest to lodge

174 175

Taddeo v Catalano (1975) 11 SASR 492; Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266. Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266 at 285–​286 per McPherson JA, referring to the decision in Shropshire Union Railways and Canal Co v The Queen (1875) LR 7 HL 496 and to the judgment of Dixon J in Lapin v Abigail (1930) 44 CLR 166 at 205. 176 See generally [5.170]. [5.150]  323

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a caveat. In a dispute between two equitable interests where the holder of the first interest fails to caveat and the holder of the second has searched the Register, the failure would be considered to be postponing conduct such that priority in time would be displaced. In the language of Rice v Rice (1853) 2 Drew 73; 61 ER 646, this would be a case where all other things were not equal. Griffith CJ placed great importance on the caveat in the issue of priority between unregistered interests. The strong view of Griffith CJ has been criticised177 and has not been wholly accepted in later cases.178 [5.155] In Abigail v Lapin [1934] AC 491 the Lapins were the registered proprietors of certain

pieces of land. Although there was considerable dispute as to the facts, it was found by the court that the Lapins had executed transfers of the land in favour of Mrs Heavener, but that the transfers were executed by way of security for costs owed by the Lapins to Mrs Heavener. They were not intended as absolute transfers and the Lapins were to have a right to redeem upon repayment. Mrs Heavener became the registered proprietor and subsequently created a mortgage over the land in favour of Abigail.179 The dispute between the Lapins and Abigail was between two equitable interests:  the Lapins’ right to redeem and the subsequent equitable mortgage of Abigail. The Privy Council held in favour of Abigail on the ground that the Lapins had armed Mrs Heavener with the means of dealing with the estate as the absolute legal and equitable owner. They had provided Mrs Heavener with the indicia of title and armed her to go “into the world under false colours [as the absolute owner]” (at 506).180 Abigail had been misled and entered the mortgage on the basis of Mrs Heavener’s representations that she was the unencumbered owner. Although the Lapins had not made a direct representation to Abigail, the Lapins had placed Mrs Heavener in a position to make the representation and were thus bound by the natural consequences of their acts. The conduct of the holders of the first equitable interest, the Lapins, led the Privy Council to displace the priority the Lapins would usually have enjoyed as “first in time”.181 The Lapins did not lodge a caveat when their right to redeem came into existence and had not done so by the time Abigail took its interest. There was no evidence to show that Abigail had searched the Register before taking its interest and thus no evidence to show that it had relied upon the Lapins’ failure to caveat. The Privy Council considered that the Lapins’ failure to caveat was relevant, but in a subsidiary way. According to the Privy Council, had the Lapins lodged a caveat, it would have “disarmed” Mrs Heavener and neutralised their earlier arming conduct. The failure to caveat was the final factor in the postponement of the Lapins’ prior interest. Although the non-​ lodgement of the caveat was a relevant factor in the decision, the comments of the Privy Council in relation to the importance of the caveat in a priority dispute 177 See Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 2002), pp 463–​471. Compare Sackville, “Competing Equitable Interests in Land under the Torrens System” (1971) 45 ALJ 396 and Sackville, “Competing Equitable Interests in Land –​A Postscript” (1972) 46 ALJ 344. 178 Compare Osmanoski v Rose [1974] VR 523. 179 Abigail lodged a caveat and later lodged the mortgage for registration. In the meantime, the Lapins had lodged a caveat which prevented the registration of Abigail’s mortgage. This led to the dispute. 180 The Privy Council relied on and quoted from Dixon v Muckleston (1872) LR 8 Ch 155 at 160. 181 Compare Wu v Glaros (1991) 55 SASR 408, where on the facts it was held that the holders of the prior equitable interest had done nothing to cause a belief in the mind of the holder of the subsequent equitable interest that, at the time of negotiating the subsequent equitable interest, the prior one was no longer in existence. See similarly Clarey v Permanent Trustee Co Ltd [2005] VSCA 128. 324 [5.155]

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placed less importance on the caveat than the comments of Griffith CJ in Butler v Fairclough (1917) 23 CLR 78. The Privy Council did not state that there was a positive duty to caveat and, in the circumstances, had no need to address the issue of whether a mere failure to lodge a caveat would be a sufficient omission to lead to postponement. Nevertheless, the Privy Council clearly took the view that depending upon the circumstances a failure to caveat could be an important factor. Two majority members of the High Court in the same case implied that a failure to caveat per se would be sufficient postponing conduct.182 On the facts, Abigail’s failure to search meant there had not been the necessary reliance upon the absence of a caveat.183 [5.160]  The implication of the Privy Council decision in Abigail v Lapin [1934] AC 491 was

that a failure to caveat by the holder of the first equitable interest may be a relevant factor in a priority dispute and must be considered in light of the circumstances of each case. In most subsequent decisions, relating to competitions between equitable interests this view has been adopted. The courts have tended to consider factors such as whether it is reasonable to lodge a caveat in the circumstances and whether it is common practice to lodge a caveat in the circumstances in order to determine whether a failure to caveat is to be viewed as postponing conduct. Thus, in IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550,184 where the Courtenays, the purchasers, expected the transfer in their favour to be lodged for registration by the mortgagee, their failure to caveat to protect their equitable interest arising under the contract of sale was held not to constitute postponing conduct. They had followed established conveyancing practice in not lodging a caveat in the circumstances and in permitting the mortgagee to lodge the transfer for registration. In J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 the failure to caveat did not constitute postponing conduct in the circumstances. In this case, there was a priority dispute between two equitable mortgagees, the bank’s interest being first in time and J & H Just’s interest being second in time. The bank did not lodge a caveat to protect its interest, but it took possession of the duplicate certificate of title as a means of protecting its security. When J & H Just was negotiating to take an equitable mortgage, Josephson the registered proprietor informed it that the duplicate certificate of title was with the bank for safekeeping. The High Court held that at least in these circumstances, where the subsequent equitable interest was another mortgage, the bank had adequately protected its interest by taking the duplicate certificate of title and that the failure to lodge a caveat could not be viewed as postponing conduct. Again, it was established conveyancing practice for a mortgagee not to lodge a caveat where the duplicate certificate had been retained as security. Further, the court was of the opinion that it would be common practice for a prospective mortgagee, such as J & H Just, to ensure in a case where it would not be holding the duplicate, that the duplicate was not lodged with another party as security for another loan.185 If the

182 Lapin v Abigail (1930) 44 CLR 166 at 183 per Knox CJ, at 188–​190 per Isaacs J. 183 Compare the judgment of Dixon J in Lapin v Abigail (1930) 44 CLR 166 at 205–​206. Dixon J would have been reluctant in any circumstances to hold that a failure to caveat results in postponement. 184 See also Person-​to-​Person Financial Services Pty Ltd v Sharari [1984] 1 NSWLR 745; Avco Financial Services Ltd v White [1977] VR 561. 185 Consider also NWC Finance v Borsellino (No 2) [2016] NSWSC 1338. In this matter Mr and Mrs Borsellino owned three properties Mr Borsellino became bankrupt and on a title search of ‘Stephen Guiseppi Borsellio’, no properties were located. The Borsellinos’ then entered into a loan agreement with NWC Finance. This [5.160]  325

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subsequent equitable interest had arisen pursuant to a contract of sale, the result may not necessarily have been the same.186 In Kardiasmenos v Pioneer Management Pty Ltd [2005] NSWSC 778 the competition was between a prior equitable interest under a resulting trust and a subsequent equitable mortgage and arose in circumstances where the prior equitable interest holder had possession of the certificate of title, but the equitable mortgagee gained possession of it on creation of the mortgage. The court held that in normal circumstances, the handing over of the title deeds in this way would result in loss of priority, but, on the facts, the holder of the prior interest succeeded. The title deeds had been procured in an underhanded way and delivered to the mortgagee and the court was “far from persuaded that [the mortgagee] was not aware of what was happening” (at [309]). There was no reason for priority in time to be lost. [5.165]  The discussion at [5.160] does not suggest that the courts in Abigail v Lapin [1934]

AC 491 and J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 were applying different principles in relation to the importance of the caveat in priority disputes between the holders of unregistered interests. However, Barwick CJ (with whom McTiernan, Windeyer and Owen JJ expressed agreement) in the J & H Just case, after demonstrating that it was not mandatory for the Registrar-​General in New South Wales to make notations of caveats on title,187 stated that the failure to lodge a caveat by the first equitable interest holder should not be a relevant factor in deciding priority between the holders of equitable interests. In the view of his Honour, the fact that it was not mandatory for the Registrar-​General to note the caveat on title made it clear that caveats were not intended to operate as notice to the world. Barwick CJ took the view that the Privy Council’s statements in Abigail v Lapin about the consequences of a failure to lodge a caveat were obiter dicta.188 There is a retreat towards the end of the judgment where Barwick CJ suggests that in some circumstances a failure to lodge a caveat may combine with other circumstances to justify a conclusion that the conduct of the prior interest holder should lead to postponement. In turn, this suggests that it may be possible to reconcile the cases even if in a strained manner. Nevertheless, a basic difference remains, for in one decision the caveat as such is providing a form of notice to the world and, in the other, it is seen simply as a direction to the Registrar. In the subsequent High Court decision of Breskvar v Wall (1971) 126 CLR 376, Barwick CJ (with whom Owen and Windeyer JJ agreed) reiterated his views. McTiernan (at 393–​394),

entity took security over the three properties, and in undertaking title searches, no caveats were located. Subsequent to this, the Official Trustee in Bankruptcy became aware of the ownership of the three properties. With both parties having equitable interests, NWC claimed that it was entitled to priority of repayment due to the disentitling conduct of the Trustee in Bankruptcy –​particularly the Trustee’s failure to caveat and failure to search under alternate names. NWC indicated that there was nothing more that it could have done to protect its position. The New South Wales Court held in favour of the Trustee in Bankruptcy. As the Trustee was unaware of the properties, the failure to caveat could be explained, and there was no duty to conduct title searches under multiple names. 186 See, however, the comments in Jacobs v Platt Nominees Pty Ltd [1990] VR 146; see [5.180]. 87 See now Real Property Act 1900 (NSW), s 74G. 1 188 A further reason for the decision had been provided by the Privy Council in Abigail v Lapin [1934] AC 491. A principal is bound by the actions of the agent who exceeds his or her authority but acts within his or her apparent authority: see Abigail v Lapin [1934] AC 491 at 507–​509. See also Brocklesby v Temperance Permanent Building Society [1895] AC 173; Perry-​Herrick v Attwood (1857) 2 De G & J 21; 44 ER 895. The Privy Council made it clear, however, that this was not its primary reason for the decision. It is difficult, therefore, to justify the view of Barwick CJ. 326 [5.165]

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Menzies (at 413) and Gibbs JJ (398–​399), however, relied upon the Privy Council’s formulation in Abigail v Lapin and may be seen as supporting the view that a failure to lodge a caveat is a factor which must be taken into consideration. Walsh J (at 409) supported more strongly the notion of the relevance of the caveat in a priority dispute. In Black v Garnock (2007) 230 CLR 438 at 470–​471 Callinan J disagreed with Barwick CJ’s views in the J & H Just case and held that the lodgement of a caveat does provide notice to the world of a claimed equitable interest, in addition to its operation as a direction to the Registrar.189 [5.170]  The comments of at least two and arguably all of the High Court justices in Heid v

Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 lend more support to the view of the caveat adopted in Abigail v Lapin [1934] AC 491. Heid signed a contract of sale and transfer of his land in favour of Connell Investments and gave Gibby, an employee of Connell Investments, an authority to collect the duplicate certificate of title. Although the transfer acknowledged receipt of the purchase moneys, Heid had not received the whole of the moneys and thus held an equitable lien over the land. Subsequently, Connell Investments became the registered proprietor and created an equitable mortgage in favour of Reliance Corporation. In an ensuing priority dispute between the equitable interests of Heid and Reliance Corporation, Heid’s prior interest was postponed. According to Gibbs CJ and Wilson J, the conduct of Heid enabled Connell Investments to represent itself as the unencumbered owner and Reliance had thereby suffered detriment. Heid’s failure to lodge a caveat was not in itself fatal to his case but the lodgement of the caveat would have neutralised the earlier arming conduct and disarmed Connell Investments.190 As in cases such as IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 and J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546, an argument was raised by Heid that his conduct in handing over the signed transfer to Gibby (purportedly his solicitor and the transferee’s solicitor) before settlement was in accord with established conveyancing practice and that, therefore, was not conduct which should result in the postponement of his interest. As it transpired, Gibby was not a solicitor at all. The court held that while it may be in accord with common practice and unexceptional practice to hand an executed transfer acknowledging receipt of the moneys before settlement to one’s own independent solicitor, it was not acceptable conduct to hand such a document to an employee of the transferee, even if the employee was a solicitor. Further, it would probably be unacceptable to hand such a document to a solicitor acting for both parties even where the solicitor was not an employee of either party. [5.175]  In some cases, the failure to lodge a caveat by the holder of the prior equity may be

the only possible postponing conduct. The Victorian decision of Osmanoski v Rose [1974] VR 523191 was such a case. The registered proprietor contracted to sell his land to Osmanoski and subsequently he contracted to sell the same land to Rose. Thus, Osmanoski and Rose both held equitable interests in the land and, in a priority dispute between them, Rose argued that 189 Compare the judgment of Gleeson CJ (at 442), who quoted the relevant passage from Barwick CJ’s judgment with apparent approval. 190 Note the argument by Heid that no estoppel existed because he had followed established conveyancing practice in handing over the signed transfer acknowledging receipt of moneys to the transferee before settlement, was rejected on the facts. Gibby was not a solicitor at all and further he was an employee of the transferee. 191 See also Dralter Pty Ltd v Channel Land Co Pty Ltd (1988) V ConvR 54-​324 per O’Bryan J. [5.175]  327

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Osmanoski should lose priority in time because of his postponing conduct in failing to lodge a caveat. Rose had searched the Register and relied upon the clear title of the vendor before entering the contract. Gowans  J upheld the argument of Rose relying upon the principle set out by the Privy Council in Abigail v Lapin [1934] AC 491. His Honour attempted to reconcile all the decisions concerning a failure to lodge a caveat and reached the conclusion that all supported the view that a failure to lodge a caveat may be a postponing factor. In commenting on J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546, Gowans  J pointed to the different fact situation, to the different caveat provisions in Victoria pursuant to which it is mandatory for the Registrar to note caveats on title and to the retreat in the judgment of Barwick CJ in the J & H Just case. Osmanoski v Rose was a case where, in the circumstances, a failure to caveat was sufficient to constitute postponing conduct. It is suggested that on these facts a similar result would have been reached in New South Wales and possibly the other jurisdictions.192 It is important to note, however, that Gowans J did not intend to lay down as a general proposition that a mere failure to caveat is sufficient to postpone the earlier equity. [5.180]  In Victoria the Full Court decision in Jacobs v Platt Nominees Pty Ltd [1990] VR

146 cast serious doubt on the decision and ramifications of Osmanoski v Rose [1974] VR 523. A priority dispute again arose between the holders of equitable interests arising under separate contracts of sale. More specifically, the holder of the first equity held under an option to purchase which had been exercised. The failure to caveat by the holder of the earlier equity, Jacobs, was found to be reasonable and Jacobs retained her natural priority in time. Reference has been made earlier to the Full Court analysing the priority dispute in the Jacobs case on the estoppel by representation principle and alternatively, on the broader principle enunciated by Mason and Deane JJ in the Heid case: see above [5.115]. When the facts were analysed by using the estoppel by representation principle, it was found (at 159)  that the idea of a representation having been made by Jacobs was “wholly inapposite”. According to the Full Court, the purpose of the caveat is not to give notice to the world at large and thus, it is difficult to view a failure to lodge a caveat as a “representation” of the equitable interest holder.193 In addition, although the evidence supported the existence of a normal practice of lodging caveats to protect options immediately upon the grant of the option, this was not invariably done. The evidence also demonstrated that neither was there an invariable practice pursuant to which purchasers searched the title before entering a contract of sale. Further, the 1982 amendments to the Sale of Land Act 1962 (Vic) requiring a vendor to provide information regarding encumbrances and rights affecting the land, results in a purchaser expecting to discover information concerning restrictions over the land from the vendor in the required statement rather than from a caveat. Thus the Full Court (at 159) reasoned, these statutory obligations of the vendor “further weakened the force of any argument as to the creation of any assumption” about a failure to lodge a caveat.194

192

See Person-​To-​Person Financial Services Pty Ltd v Sharari [1984] 1 NSWLR 745; Finlay v R & I Bank of Western Australia (1993) NSW ConvR 55-​686; Australian Guarantee Corp (NZ) Ltd v CFF Commercial Finance Ltd [1995] 1 NZLR 129. 193 Relying on J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546. 194 As to vendors’ statements in other States, see [8.275]–​[8.295]. 328 [5.180]

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In view of all of the above factors, the Full Court was of the opinion that it is difficult to regard the holder of an equitable interest under a contract of sale as having made a representation as to the state of the title merely pursuant to a failure to lodge a caveat. Even if a representation had been proven, there was no evidence of detriment, the entry into the contract being insufficient.195 In considering the second possible method of resolving the priority dispute, the Full Court relied upon the joint judgment of Mason and Deane JJ in the Heid case. As has been discussed earlier,196 the judgment reiterated the general principle that priority in time will decide the matter if all other things are equal. Consideration must be given primarily to the conduct of the first equitable interest holder and aspects of estoppel and negligence are relevant to such an analysis. In the Jacobs case, the evidence supported the contention of Jacobs that it was reasonable in the circumstances for her not to lodge a caveat. This was because on the facts it was inconceivable that her mother (a director of the company which was the registered proprietor and vendor) would be a party, in any way, to a sale to a third party in breach of the option.197 In the language of the joint judgment (at 160) in the Heid case: “It was … not reasonably foreseeable that her failure to lodge a caveat exposed herself or others to a risk of later sale”.198 This conclusion is strengthened by the finding referred to above that there was not an invariable practice that a purchaser searches the title before entering a contract. In Re S & D International Pty Ltd (in liq) (No 4) (2010) 79 ACSR 595; [2010] VSC 388, however, the Jacobs case was distinguished. The competition was between a prior equitable mortgagee (ANZ) and a subsequent equitable chargee. The prior interest holder had not registered its registrable mortgage or lodged a caveat and the subsequent chargee had relied on a title search (and was otherwise unaware of the prior interest) and had acted to its detriment. In the circumstances, the court held that the failure to lodge a caveat was by itself sufficient to defer priority. [5.185] There are many situations where, quite apart from the issue of the lodgement or

non-​lodgement of a caveat, there has been postponing conduct by the holder of the prior equitable interest. Cases such as Abigail v Lapin [1934] AC 491, Breskvar v Wall (1971) 126 CLR 376, Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326 and Re S & D International Pty Ltd (No 4) [2010] VSC 388; (2010) 79 ACSR 595 all involved situations where the conduct of the holder of the prior equitable interest enabled another party to hold out that he or she had an unencumbered title. The issue of the relevance of the caveat in these circumstances is important. If the view is taken that an effect, even if an indirect effect, of the lodgement of a caveat is to give notice to the world, the lodgement of a caveat may be sufficient to neutralise the earlier postponing conduct. That is, in the language of estoppel, there would

195 Presumably a loan of money by a mortgagee would constitute a detriment (which money could not be recouped except by exercising the security over the land). 196 Discussed at [5.115]. 197 This happened because at an earlier time the mother had signed a document giving her son the power to sign company documents on her behalf. See also Elderly Citizens Home of SA Inc v Balnaves (1998) 72 SASR 210. 198 Note that detriment or loss, other than entry into the contract, is not essential under the Mason and Deane JJ principle. Nevertheless, it is a relevant circumstance: see Jacobs v Platt Nominees Pty Ltd [1990] VR 146 at 152. [5.185]  329

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be no representation and, in the language of negligence, there would be no conduct by which it would be reasonably foreseeable that a subsequent equity may be created.199 In contrast, if the view (expounded strongly in J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 and Jacobs v Platt Nominees Pty Ltd [1990] VR 146) is taken that the sole purpose of the caveat is to give a direction to the Registrar, it could not be said that the caveat has a “disarming” effect. In a practical sense, however, even on this view, the lodgement of a caveat may serve a useful purpose. If the holder of the subsequent equity does actually search before taking his or her interest and finds a caveat protecting a prior equity, the holder of the prior equity would not lose his or her natural priority in time. If the holder of the subsequent equity has notice of the prior equity before taking his or her interest, neither the estoppel principle nor the broad principle incorporating elements of both estoppel and negligence would lead to postponement.200 Although it is not settled, it seems that actual, constructive or imputed notice would suffice to prevent the holder of second interest succeeding.201 [5.190] There remains considerable doubt as to whether the caveat can constitute even

indirectly a notice to the world of a claimed equitable interest. There is no clear consensus as to the importance of the caveat in a priority dispute. The High Court decision in Black v Garnock (2007) 230 CLR 438, although not a case decided by an application of equitable priority rules, provides strong encouragement to the holder of an equitable interest to lodge a caveat. A  contract of sale between vendor and purchaser was executed. Previous to this, creditors of the vendor had obtained a judgment against the vendor. A writ of execution was issued and, two hours before settlement of the sale, the writ of execution in favour of the judgment creditor was recorded on the title by the Registrar-​General. Unaware of the writ, the purchaser proceeded with the settlement, but the transfers could not be registered. The purchaser sought an injunction to restrain the execution of the writ. The majority of the High Court refused the injunction on the basis that the correct interpretation of the relevant statutory regime202 was that the Sheriff’s right to sell the vendor’s interest was subject only to encumbrances recorded on the title when the writ was recorded on title.203 The court specifically held, however, that if the purchaser had lodged a caveat in relation to its equitable interest under the contract of sale, any purchaser from the Sheriff would have been unable to obtain registration of a transfer (at 454 per Gummow and Hayne JJ, at 471 per Callinan J). The decision is likely to lead to caveats being lodged routinely to protect equitable interests. In such circumstances, the failure to caveat may assume an even greater importance in the settlement of priority disputes between equitable

199 200

Abigail v Lapin [1934] AC 491. IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550; Taddeo v Catalano (1975) 11 SASR 492; Moffett v Dillon [1999] 2 VR 480. 201 Platzer v Commonwealth Bank of Australia [1997] 1 Qd R 266; IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440. See the High Court’s views on constructive notice in Garcia v National Australia Bank Ltd (1998) 194 CLR 395. 202 Compare Secure Funding Pty Ltd v Doneley [2010] QSC 91, where the court distinguished Black v Garnock (2007) 230 CLR 438 on the basis of a different statutory regime in relation to writs in Queensland. See Lumb, “The Impact of Enforcement Warrants on Unregistered Transferees in Queensland” [2010] APLB 121. 203 Gummow, Hayne and Callinan JJ. This was despite the fact that the purchasers had an existing interest in the land (an equitable interest under the contract of sale) and the writ of execution did not in itself give rise to an interest. Compare the judgments of Gleeson CJ and Crennan J. 330 [5.190]

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interest holders. Callinan J was particularly vociferous in what he saw as the importance of the caveat. His honour stated:204 It used to be the practice of careful conveyancers, acting for persons acquiring registrable estates or interests in Torrens title land, to lodge with the officials in charge of the Register, a caveat as soon as the agreement for the relevant dealing was made, in pre-​emptive protection of their clients’ prospective legal estates or interests pending completion of their agreements and registration of the instruments perfecting them. It was a further practice of those conveyancers to effect the actual settlement of the agreement by the exchange of all relevant instruments and funds at that office, simultaneously with a search of the Register, to verify that no other such caveat or record of dealing had been lodged as might obstruct, delay or detract from the registration of their clients’ instruments to perfect their estates or interests. The questions raised in this case would be unlikely to have arisen had those salutary practices not fallen into disuse, whether by reason of electronic recording of dealings or otherwise, although it is difficult to understand why some comparable prudent practice could not equally, and perhaps more easily, have been adopted here to accommodate electronic lodgment, searching and recording. The questions are as to the effect of the registration of a writ of execution, and the rights of purchasers whose transfer of Torrens title land was lodged subsequent to that. [5.195] What has emerged from the many cases is that common conveyancing practice, in relation to lodgement of caveats, searching practices and other relevant matters, may often be vital in the resolution of disputes between equitable interest holders. If it is common conveyancing practice to lodge a caveat to protect the particular equitable interest involved, a failure to do so by the first interest holder is more likely to be considered a relevant omission, which, if relied upon by the holder of the second interest, may lead to postponement.205 For instance, in Victoria it has been common conveyancing practice to lodge a caveat in relation to the purchaser’s interest under a contract of sale, whereas this is not the case for a simple cash contract of sale in New South Wales.206 Even then, the circumstances of a particular case may suggest that the “usual” practice would not be followed and the failure to caveat may not be viewed as an omission in such circumstances.207 If the common practice is to protect a particular interest by means other than lodging a caveat,208 the failure to caveat would not usually be viewed as an omission.209 Further, in order to determine if the second interest holder has been misled, it may be important to determine if it is common practice to search the register before taking the particular type of interest. [5.200] Although the discussion at [5.195] suggests that the issue of lodgement or non-​

lodgement of a caveat is a relevant consideration, in one way or another, to the resolution of disputes between holders of equitable interests, it is possible for this to be an irrelevant consideration. For example the Queensland Court of Appeal in AG(CQ) Pty Ltd v A&T

204 205

206 207 208 209

Black v Garnock (2007) 230 CLR 438 at [52]–​[53]. See Osmanoski v Rose [1974] VR 523; Re S & D International Pty Ltd (in liq) (No 4) (2010) 79 ACSR 595; [2010] VSC 388 (the evidence was that it was common practice for banks to lodge caveats in relation to unregistered mortgages and the usual practice of the mortgagee in the case and the bank had offered no explanation for failing to follow the practice). See Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.1190]. Jacobs v Platt Nominees Pty Ltd [1990] VR 146. For example, first equitable mortgagee who takes possession of certificate of title. Compare the situation in jurisdictions where no certificate of title is automatically issued. J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546. [5.200]  331

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Promotions Pty Ltd [2011] 1 Qd R 306 considered in some detail the priority rule for contests involving competing equitable interests and, in particular, what conduct of the holder of the earlier interest will lead to the later interest being awarded priority. The case involved Torrens title land, but the parcel in respect of which the relevant priority context arose, had not been created as a separate lot. As no folio had issued for the specific parcel of land, it was not possible to lodge a caveat in respect of an unregistered interest in the proposed lot only. A company (AG(CQ)) was the registered proprietor of two parcels of land that were to be amalgamated and then subdivided into a number of proposed lots. Mr Ikin had provided services to AG(CQ) in acquiring the two original parcels. Under the terms of a Success Fee Deed between himself and AG(CQ), Ikin was entitled to a cash payment from AG(CQ) (which was paid) and the transfer of one of the proposed lots to be created by the subdivision within 14 days of the registration of the relevant survey plan. Prior to the creation of the proposed lot that was to be transferred to him, Ikin granted a mortgage over the lot in favour of another company, A&T Promotions, to secure Ikin’s obligations as guarantor of indebtedness owed to A&T Promotions by a company controlled by Ikin. Ikin provided A&T Promotions with a copy of the Success Fee Deed and made certain warranties in respect of his rights under it. He also undertook to assign to A&T Promotions those rights if called on to do so. Approximately six months after granting the mortgage to A&T Promotions, in order to secure the repayment of advances made by AG(CQ), Ikin granted a mortgage over the proposed lot to AG(CQ), which remained the registered proprietor of the parcels of land out of which the proposed lot was to be created. As a part of the transaction, AG(CQ) retained the transfer instrument for the proposed lot (with the title details left blank) from itself to Ikin. A&T Promotions did not call for an assignment of Ikin’s rights under the Success Fee Deed, and did not advise AG(CQ) of its mortgage, until after these events had occurred. The proposed lot was eventually created, but AG(CQ), did not transfer it to Ikin. The court concluded that the subsequent equitable interest of AG(CQ) was better than the earlier equitable interest of A&T Promotions. In failing to take the “sensible and obvious” step of giving AG(CQ) notice of its interest under the Success Fee Deed and in the proposed lot, A&T Promotions had failed to act “as a prudent lender”. The omissions of A&T Promotions “led directly” to AG(CQ) taking a later unregistered mortgage in the reasonable belief that Ikin had not dealt with his interest in the proposed lot.210 Additionally, the court relied on other deficiencies in the conduct of A&T Promotions. Before granting a mortgage securing his obligations to A&T Promotions, Ikin had twice defaulted in respect of those obligations. It was, accordingly, “entirely foreseeable” that he would attempt to use his interest in the proposed lot to raise more money elsewhere and it was not reasonable for A&T Promotions simply to trust him not to do so. Also, A&T Promotions should have taken steps to secure possession of the incomplete transfer document executed by AG(CQ) in favour of Ikin. For as long as that document remained outside A&T’s possession, there was the danger that, once the proposed lot had been created, Ikin could use the transfer to create further interests in favour of others who were unaware of A&T Promotions’ interest.211 The court’s reasoning supports the Mason and Deane JJ’s formulation (in Heid v Reliance Finance Corporation Ltd (1983) 154 CLR 326) of the test to be applied. 210 211

AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1 Qd R 306 at [44]. AG(CQ) Pty Ltd v A&T Promotions Pty Ltd [2011] 1 Qd R 306 at [41], [43].

332 [5.200]

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Finally, the lodgement of a caveat and registration of a mortgage subject to that caveat does not disturb the normal order of priorities. In Commonwealth Bank of Australia v Psevdos [2015] SASC 66, the plaintiff bank made a loan to a registered proprietor of land. Subsequently the registered proprietor granted another mortgage to Psevdos. The Psevdos mortgage was made subject to the earlier mortgage. Psevdos lodged a caveat claiming an equitable interest in the land. Upon becoming aware of this, the Commonwealth Bank mortgage was amended to be subject to the caveat of Psevdos, which then enabled the registration of the Commonwealth Bank mortgage. The Commonwealth Bank sought to argue that its equitable mortgage was first in time, that there was no postponing conduct and that Psevodos had notice of its mortgage. Psevdos argued that priority should be given to its mortgage, as it was lodged earlier and the registration of the CBA mortgage was subject to the prior caveat lodged by the defendant. Parker J. accepted that the CBA mortgage had priority. In considering Lapin v Abigail (1930) 44 CLR 166, J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 and Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326, his honour accepted that there was no neglect by the CBA that would warrant postponement, the mere fact that they failed to lodge a caveat was not of itself postponing conduct and Psevdos had notice of the CBA’s prior equitable interest (paraphrased from [24]). Effect of notice [5.205] The principle set out in Moffett v Dillon [1999] 2 VR 480 (see [5.120]) requires a further consideration of the way in which the doctrine of notice (discussed at [2.490]–​[2.550]) operates within the parameters of the Torrens system. It had been indicated in several cases that, where notice is in issue, the relevant statutory provisions in the general property statutes provide the applicable principles for determining whether or not notice exists.212 For example, in Finlay v R & I Bank of Western Australia Ltd (1993) 6 BPR 13,232 at 13,242 Windeyer J assumed that the New South Wales provision did so apply. By contrast, however, in Farah Constructions Pty Ltd v Say-​Dee Pty Ltd (2007) 230 CLR 89 at 147 fn 170 the High Court stated the New South Wales provision did not apply to Torrens title land because it was inconsistent with the Real Property Act 1900 (NSW).213 Their Honours did not explain how the Conveyancing Act 1919 (NSW) provision is inconsistent with the Real Property Act 1900, but presumably the inconsistency is with s 43(1), the effect of which is to render the holder of a registered interest in Torrens title land immune from a prior unregistered interest simply because he or she had actual or constructive notice of the prior interest before taking his or her own.214 In Farah v Say-​Dee the dispute concerned whether a registered proprietor was subject to an (alleged) interest that, if it existed, was unregistered. In such a context, one can identify an inconsistency between: (a) the Conveyancing Act 1919 provision, the tenor of which is to provide that in certain circumstances a purchaser is affected by notice of an earlier interest (albeit that the provision narrows those circumstances from the ones that would have pertained at common law); and (b)  the Torrens title regime which provides that, except in limited circumstances, a purchaser once registered is not affected by notice of an earlier unregistered 212 Taddeo v Catalano (1975) 11 SASR 492; IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440. 213 Their Honours did so because s 6(1) of the Conveyancing Act 1919 (NSW) provides that where one of its provisions is inconsistent with the Real Property Act 1900 (NSW), the provision does not apply to Torrens title land, unless the provision expressly provides otherwise. Section 164 does not expressly provide that it apples to Torrens title land. 214 See [4.110]. [5.205]  333

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interest. However, it is submitted that there is no inconsistency between the Conveyancing Act 1919 provision (which limits the reach of constructive notice) and any provision of the Real Property Act 1900 where the priority contest is between two unregistered interests.215 Indeed, it is because the Real Property Act 1900 does not establish a regime for dealing with such disputes that the courts have had to resort to the general law priority rules. To conclude, when account is taken of the context in which the High Court made the statement in Farah v Say-​Dee, it should not be seen as prohibiting the application of the statutory notice provisions outlined above to priority contests between unregistered interests in Torrens title land.216 Indeed, as there were presumably sound policy reasons that underpinned the enactment of these provisions in England and several Australian jurisdictions in the first place, there appears to be no justification for denying their application to Torrens title land, given the comparatively small proportion of old system land remaining. [5.210] If it is assumed that notice comprises actual, constructive and imputed notice, the

application of the Moffett v Dillon [1999] 2 VR 480 rule requires an examination of the inquiries and inspections which ought reasonably to have been made by the person taking the second equitable interest. A failure to make such reasonable inquiries results in the purchaser deemed to have constructive notice of prior interests he or she could have discovered had the inquiries been undertaken. In Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566; [2010] FCAFC 91 the Barnhart v Greenshields principle that possession of the land by a person other than the vendor is notice of the interest that the possessor has in the land, was accepted.217 In fact, Moore and Stone JJ (at [74]) assumed, without discussion, that this principle extended, as against the mortgagee of the purchaser, to the occupation of a vendor who was to receive a lease back from the purchaser. By contrast, Dowsett J (at [110]), who did consider the issue, thought that the principle did not apply to the vendor’s continuing occupation under such an arrangement.218 Protection between settlement and registration [5.215] The courts have interpreted the “paramountcy” and “notice” provisions in such a

manner as to make it clear that it is only upon actual registration that the registered proprietor 215 Similarly, where an interest is registered, but is to be treated as unregistered (either legal or equitable) for the purposes of a priorities dispute (see eg, Perpetual Trustee Co Ltd v Smith (2010) 186 FCR 566; [2010] FCAFC 91) See also Real Property Act 1900 (NSW), s 43A. 216 The only authority cited by the High Court in Farah Constructions Pty Ltd v Say-​Dee Pty Ltd (2007) 230 CLR 89 in regard to the question of whether s 164 applied to Torrens title land was the belief of Windeyer J in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 at 92–​93 that it did, which their Honours characterised as an assumption made without the point having been argued. However, like Farah v Say-​Dee, Bursill was a case that concerned whether a registered proprietor was bound by another interest. Neither case concerned a priority contest between unregistered interests. This being so, there is nothing to indicate that their Honours turned their minds to the issue addressed by another Windeyer J in Finlay v R & I Bank of Western Australia Ltd (1993) NSW ConvR 55-​686. 217 The concept of notice is discussed further at [2.490]–​[2.550]. See also Commonwealth Bank of Australia v Psevdos [2015] SASC 66 where notice of an earlier interest was one of the aspects that led to the interest first in time having priority. This case is discussed further at [5.200]. 218 The issue of “reasonable inquiries” in relation to title searching in this context would again require reference to common conveyancing practice. For example, in relation to a person taking the subsequent equitable interest under a contract of sale, it may not be reasonable to expect a search of the Register for outstanding interests before entry into the contract and acquisition of the interest. Legislation now requires the vendor to provide information concerning the land and its title to prospective purchasers and purchasers are expected and intended to be able to rely on this information at the time of entry into the contract: see, for example, Sale of Land Act 1962 (Vic), s 32. 334 [5.210]

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gains indefeasibility of title.219 The period between settlement of the transaction and actual registration can be precarious. First, a purchaser is liable to lose priority for his or her interest to a prior equitable interest. (Of course, upon actual registration of the transfer, the purchaser is not subject to any prior unregistered interests even if he or she had notice of them.) Secondly, and of more concern is where a certificate of title no longer has to be produced for a dealing to be registered. This raises the prospect that a subsequent dealing will be registered first. Some protection is provided for the purchaser in jurisdictions that require production of a certificate of title for registration. The purchaser who takes possession of the certificate of title at settlement, as is the usual practice, can rely on this possession knowing that no other dealing will normally be registered in the meantime. This practical protection is not available where a certificate of title has not been issued. Again, as we increasingly engage in an electronic workspace for conveyancing and the abolition of paper-​based forms and certificates, new rules may emerge to resolve these disputes, or more optimistically, disputes of this nature will be less likely to occur. [5.220]  Various attempts have been made to give purchasers some further protection in the

hiatus between settlement and registration. With respect to the problem of prior equitable interests, s 43A(1) of the Real Property Act 1900 (NSW) provides: For the purpose only of protection against notice, the estate or interest in land under the provisions of this Act, taken by a person under a dealing registrable, or which when appropriately signed by or on behalf of that person would be registrable under this Act shall, before registration of that dealing, be deemed to be a legal estate.220

Although there has been some dispute surrounding the interpretation of this provision,221 its meaning and import now appear to be settled.222 The protection afforded to a purchaser after settlement but before registration is the same as the protection afforded to a bona fide purchaser of a legal estate under the general law.223 Thus, if the purchaser of Torrens land is a bona fide purchaser for value without notice of prior equitable interests,224 he or she is not subject to those interests. As the section provides, the purchaser is deemed to have a legal estate. Section 43A has also lost much of its practical significance with the introduction of eConveyancing. With no real gap between settlement and registration, the capacity of the section to operate is largely eliminated.

219 Templeton v The Leviathan Pty Ltd (1921) 30 CLR 34. 220 See similarly Land Titles Act 1925 (ACT), s 60. 221 Compare, for example, the judgments of Kitto J at 573 and Taylor J at 584 in IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550. Kitto J was of the view that the dealing is deemed to be registered, so that notice of an earlier unregistered interest gained before settlement would not result in a loss of priority. By contrast Taylor J was of the opinion that the dealing is regarded as the equivalent of a general law legal interest. In this scenario notice would see a loss of priority. 222 See, for example, Meriton Apartments Pty Ltd v McLaurin and Tait (Developments) Pty Ltd (1976) 133 CLR 671; Williams v Marac Australia Ltd (1985) 5 NSWLR 529; Black v Garnock (2007) 230 CLR 438 at 450; Weller v Williams [2010] NSWSC 716. See Aitken, “Protection before Registration: Operation of s 43A, Real Property Act” (2010) 48(8) LSJ 68. 223 The fact that the protection extends only to the purchaser for value was recently confirmed in Westpac Banking Corporation v Ollis [2008] NSWSC 824. 224 Section 43A(2) of the Real Property Act 1900 (NSW) provides that notice from registers other than the Torrens register is immaterial. See Finlay v R & I Bank of Western Australia Ltd (1993) NSW ConvR 55-​686. See also Taleb v National Australia Bank Ltd (2011) 82 NSWLR 489 at 502. In this matter the dealing was denied the protection of s 43A as it was unstamped at settlement, and by the time it was stamped a caveat had been lodged preventing its registration. [5.220]  335

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[5.225]  In order for s 43A of the Real Property Act 1900 (NSW) to operate there must, of

course, be a priority dispute between two parties holding interests in land. The dealing under which the purchaser takes must be a “registrable” dealing,225 lodged within a reasonable time of settlement,226 and one under which the purchaser takes directly from the registered proprietor. Thus, if A, the registered proprietor, executes a transfer in favour of B and B grants a mortgage in registrable form in favour of C, B (not C) can take advantage of s 43A(1). The dealing in favour of C is not immediately registrable as it requires first that the dealing in favour of B be registered.227 There is, however, some measure of protection for a person in C’s position. The protection is provided by applying the principle in Wilkes v Spooner [1911] 2 KB 473228 to that person. If B is a bona fide purchaser for value without notice and can thus enjoy the protection of s 43A(1) before registration, C, a person claiming through the purchaser B, can shelter behind the protection s 43A(1) affords B.229 This is the case even if C has notice of prior equitable interests. C “succeeds” to the protection afforded to B. If B has taken through a void instrument, it is arguable that B does not obtain the protection of s 43A(1) between settlement and registration. Although B would obtain an indefeasible title in the absence of fraud once registered, there is authority to support the view that registration of such an instrument may be prevented at the behest of the true proprietor.230 If B cannot gain the protection of s 43A(1) in these circumstances, neither can C for there is no protection to which she can “succeed”. If the transferor dies after executing the transfer, and in all other respects the transaction is completed,231 it seems the transfer remains registrable, although there is authority suggesting that the document ceases to be operative.232 An example of the operation and importance of s 43A can be seen in the decision of Barlin Investments Pty Ltd v Westpac Banking Corporation (2012) 16 BPR 30,672. The registered proprietor granted an unregistered mortgage over their land to secure a loan. The unregistered mortgagee initially lodged a caveat, but for reasons that were not clear, this caveat was later withdrawn. The registered proprietor then sold to a new purchaser (P1) with funding provided to this individual by way of a mortgage from the St. George Bank. The new purchaser and the bank relied on the title that showed no other relevant interest. The title and mortgage

225 This would normally require possession of the certificate of title (or the ability to seek its production successfully): Finlay v R & I Bank of Western Australia Ltd (1993) NSW ConvR 55-​686. It has been suggested that even an unstamped transfer may be registrable: see Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 at 581. Compare Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.1300]. 226 Finlay v R & I Bank of Western Australia Ltd (1993) NSW ConvR 55-​686; Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 at 581. 227 Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW) 568. 228 This decision is discussed at [2.555]. 229 Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW) 568. Comapre Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286; Rands Developments Pty Ltd v Davis (1975) 133 CLR 26. See Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), pp 575–576. 230 Mayer v Coe (1968) 88 WN (Pt 1) NSW 549 at 548; Jonray (Sydney) Pty Ltd v Partridge Bros Pty Ltd (1969) 89 WN (Pt 1) (NSW) 568 at 574. 231 For example, if the transfer has not been handed to the transferee before the death of the transferor, the transfer is not registrable: JA Westaway & Son Pty Ltd v Registrar-​General (1996) 7 BPR 14,773. See also McVey v Dennis (1984) 73 FLR 45. 232 Watt v Lord (2005) 62 NSWLR 495; cf Wang v Copko [2008] NSWSC 736, holding that where a transferor dies before registration, the document ceases to have effect. 336 [5.225]

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documents were lodged for registration, but were not given a distinctive reference number. Rather, they were presented to the title office as part of a bulk lodgement.233 The unregistered mortgage on learning of this, then lodged a caveat. P1 then sold the property to a second purchaser (P2), with this second transaction financed by way of a mortgage in favour of the Westpac Bank (at all relevant times the documents remained unregistered). Bell J held that on normal priority rules, P1 and the St. George Bank would prevail over the unregistered mortgagee –​the withdrawal of the caveat was postponing conduct. Nevertheless, and putting aside s  43A for the moment, the unregistered mortgagee would prevail over P2 and the Westpac Bank; they had notice of the interest of the unregistered mortgagee. However, s 43A operated to prioritise P2 and Westpac. As P1 had no notice of the interest of the unregistered mortgage, and P2 and Westpac took through P1, they could claim the successive benefit of the operation of the legislation. [5.230]  There are a variety of statutory provisions in which an attempt is made to provide

some solution to the problems which may arise because of the time lag between settlement and registration. The specific concern in Queensland was to find alternative post-​settlement protection for the purchaser or mortgagee who no longer had the security of physical possession of the certificate of title after settlement. A system providing for priority notices (previously known as settlement notices) was set up when the Land Title Act 1994 (Qld) was introduced.234 Part 7A provides for the deposit of priority notices by persons who have an interest in a lot pursuant to a transfer or a mortgage.235 A  priority notice prevents the registration of a dealing lodged after the notice236 and, with some differences, is intended to operate in the same way as a caveat.237 It is a less expensive alternative. Subject to a small number of exceptions, the priority notice will prevent registration of other instructions for a set period (often 60 days), or until it is withdrawn, removed or cancelled. A similar process is being introduced in other jurisdiction as part of the national e-​conveyancing reforms.238 There are similar provisions in Western Australia, but they appear to be little used.239 The stay order can provide for a stay of 48 hours. It has been argued that there is no good reason for the failure to use the stay order procedures. Although the period is limited to 48 hours, in most instances this is sufficient to provide the required protection.

233

As to concerns in relation to the practice of bulk lodgment, see the discussion by Entwisle, “Bulk Lodgment and Protection from Later Lodged Caveats” (2013) 87 ALJ 210. 234 Land Title Act 1994 (Qld), ss 138–​149. 235 Land Title Act 1994 (Qld), s 140. 236 Land Title Act 1994 (Qld), s 141. Note that the settlement notice does not stop registration of an instrument lodged before the notice: s 141(2). Compare the caveat provision: s 124(2). 237 It can be lodged as soon as a purchaser has entered into an enforceable contract of sale: see JNJ Investments Australia Pty Ltd v Sunnyville Pty Ltd (2006) Q Conv R 54-​650. 238 For example, see Transfer of Land Act 2014 (Vic), ss 91C–​91J; Real Property Act 1886 (SA), Pt 13A; Real Property Act (NSW), Pt 7B; Tasmania has long had priority notices: Land Titles Act 1980 (Tas), s 52. 39 Transfer of Land Act 1893 (WA), ss 146–​150. Calzada, “The Stay Order Procedure in Victoria and Western 2 Australia: Dead Letter Law or Negligent Disregard of Available Provisions?” (1998) 6 APLJ 244. Note that in Victoria the stay order procedure, formerly available under ss 92–​93 of the Transfer of Land Act 1958 (Vic), can no longer be used. The provisions were repealed in 2009 on the basis that they would have little application or relevance when electronic conveyancing is introduced (“they do not contemplate modern methods of communication”) and that they have been rarely used; Victorian Parliamentary Debates, 2 September 2009, Legislative Assembly, Mr Batchelor, p 2984. [5.230]  337

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Other statutory provisions affecting priority between unregistered interests [5.235]  The Torrens legislation in each jurisdiction contains a provision that has the potential

to affect priority between the holders of unregistered interests. In fact, it has been argued that this provision, and not the general equitable principles, was intended to be used to resolve such priority disputes under the Torrens system.240 The relevant provisions vary in detail from jurisdiction to jurisdiction.241 Section 34 of the Transfer of Land Act 1958 (Vic), for example, provides:

(1) Save as otherwise expressly provided every instrument lodged for registration shall be registered in the order in which and as from the time at which it is produced for that purpose, and instruments purporting to affect the same estate or interest shall be entitled to priority as between themselves according to order of lodgment for registration and not according to the date of the instrument or any other factor….



(3) If two or more instruments which affect the same land are lodged and are awaiting registration, the Registrar may register those instruments in the order which will give effect to the intentions of all the parties, as expressed in or apparent to the Registrar from those instruments.

Pursuant to s  34(1), the person who first lodges a registrable instrument for registration has priority. Priority is not to be decided according to the date of the dealing or “any other factor” (which phrase presumably includes equitable principles), but according to the date of lodgement for registration. Thus, issues as to conduct would be irrelevant unless the conduct constituted fraud. In Queensland and the Northern Territory there is a further specific provision conferring a right to registration where an instrument has been executed and lodged together with any other necessary accompanying documents.242 It might be argued that the s  34 provision can only affect priorities where both or at least one of the competing parties have lodged documents for registration. This would leave unaffected by s 34 priority disputes between the holders of unregistered interests where neither party had lodged documents for registration. This may occur where, for instance, the parties hold their interests pursuant to contracts of sale or mortgages not in registrable form. Even

240

241

242

Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), pp 51–​56; Robinson, “Caveatable Interests –​Their Nature and Priority” (1970) 44 ALJ 351. See also IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 at 568 per Dixon CJ. Real Property Act 1900 (NSW), s 36(5) but see s 36(4); Transfer of Land Act 1958 (Vic), s 34(1); Land Title Act 1994 (Qld), ss 177, 178, 183; Real Property Act 1886 (SA), ss 56; Transfer of Land Act 1893 (WA), s 53; Land Titles Act 1980 (Tas), s 48; Land Titles Act 1925 (ACT), s 48(4), (5); Land Title Act (NT), ss 180, 181, 186. Section 48(1A) of the Tasmanian Act specifically provides for the actual moment when a dealing is deemed to have been lodged; this is the time when the dealing is recorded as being lodged in the Land Titles Office “when a record is made in a device for processing or storing information approved under s 33(3)(b) or s 143A(3)(b)”. See also amended s 48(3), which provides that where two or more dealings are lodged at different times, the person who lodges the second dealing must advise of the order of registration. Pursuant to s 48(4), if there is a conflict in the intentions of the parties, registration occurs in order of lodgement. Note also the provisions allowing for variation in priority order between registered mortgages: Real Property Act 1900 (NSW), s 56A; Transfer of Land Act 1958 (Vic), s 75B; Land Title Act 1994 (Qld), s 77; Real Property Act 1886 (SA), s 56(3); Land Titles Act 1980 (Tas), s 76; Land Titles Act 1925 (ACT), s 92A; Land Title Act (NT), s 79. Land Title Act 1994 (Qld), s 183; Land Title Act (NT), s 186. Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Thomson Reuters, Sydney, 2015), p 450 take the view that s 183 does not confer a right to registration which overrides general equitable principles.

338 [5.235]

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this scenario, however, is denied by Robinson, who fashions a coherent and logical argument to demonstrate the applicability of s 34 to this type of dispute.243 An important qualification concerns the intention of the parties. If the intentions of the parties as the order in which the dealings should be registered are apparent to the Registrar from the dealings, the Registrar registers the dealings in that order.244 [5.240]  Despite the potential of these types of provisions to resolve more simply at least some

priority disputes between unregistered interests, the provisions have been largely ignored by the courts and their possible importance minimised. Once it had been accepted that equitable interests could exist under the Torrens system, the courts very quickly adopted the view that disputes between the holders of equitable, unregistered interests should be decided by the application of general equitable principles. The New South Wales equivalent to s 34(1)245 was considered briefly in IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550, a case involving a competition between the holders of unregistered instruments, both of whom had lodged dealings for registration. The dispute arose in the following way. The transfer in favour of the holders of the first equitable interest, the Courtenays, was lodged for registration but, before registration, was invalidly withdrawn by the mortgagee’s solicitor. The Courtenays subsequently lodged a caveat and this caveat prevented the registration of the dealing in favour of the holder of the second equitable estate. The High Court used the general equitable principle set out in Rice v Rice (1853) 2 Drew 73; 61 ER 646 to decide the dispute.246 On the facts it was found that there had not been any postponing conduct by the Courtenays, the holders of the first equitable estate  –​they had followed established conveyancing practice in leaving the transfer in their favour to be lodged by the mortgagee’s solicitor. Further, the holder of the second equitable estate had been aware of the existence of the first estate when taking the subsequent interest. Kitto and Taylor JJ both took the view that the general equitable principle was the appropriate one to decide the dispute. Taylor  J remarked (at 558)  that, in determining a dispute between two equitable interests, “it is immaterial which was first lodged for registration”. In contrast, it is arguable that Dixon CJ supported a wider scope for the operation of the statutory priority provision. His Honour commented (at 568):247 I agree that no conduct on the part of the Courtenays … occurred [pursuant to which the holder of the second equitable interest was misled] into adopting any prejudicial step. But I am not disposed to think that under the Torrens system a priority giving a right to registration under the statute can be lost on equitable grounds of such a character.

Despite the possible implications that may be drawn from this brief statement by Dixon CJ248 and the convincing arguments of Robinson, the weight of authority supports the view that priority 243 244

Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), p 57. Real Property Act 1900 (NSW), s 36(4); Transfer of Land Act 1958 (Vic), s 34(3); Real Property Act 1886 (SA) s 56(3); Land Titles Act 1980 (Tas), s 48(2), (3), (4); Land Titles Act 1925 (ACT), s 48(4), (5). 245 Formerly Real Property Act 1900 (NSW), s 36(1); see now s 36(4), (5). 246 Sections 43 and 43A of the Real Property Act 1900 (NSW) were also considered in detail. 47 See Sackville, “Competing Equitable Interests in Land under the Torrens System” (1971) 45 ALJ 396 at 2 408–​414. See also Vincent, “Some Practical Reflections on Courtenay v Austin” (1964) 38 ALJ 204. 248 It has been suggested that the view of Dixon CJ, based as it was on a “statutory right to registration” (see Brunker v Perpetual Trustee Co Ltd (1937) 57 CLR 555), has been discredited in light of the High Court decision in Corin v Patton (1990) 169 CLR 540: see Edgeworth, Butt’s Land Law (7th ed, Thomson Reuters, Sydney, 2017) at [12.1230], fn 984. [5.240]  339

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disputes between unregistered interest holders are to be determined by an application of the general equitable principles.

Equity and subsequent equitable interest The nature of the equity [5.245]  Apart from legal interests and equitable interests, it appears to be accepted that there

is a third somewhat ill-​defined category of proprietary interests.249 Interests falling within this category are called “equities”. The term “an equity” or “a personal equity” is sometimes used to connote the right to bring an action to obtain equitable remedies against a defendant. Such a right is, however, a personal right only and is incapable of assignment or of enforcement against a third party. In certain circumstances the courts have been prepared to enforce some categories of these rights against third parties and, where this has happened, “the equity” or the “mere equity”, as it has become known,250 has thereby assumed a proprietary character.251 Equities that have so assumed such a proprietary character are nevertheless “at the bottom of a hierarchy of proprietary interests consisting of legal interests, equitable interests and equities”.252 In other words, the sphere of enforceability of the equity is less than that of either the legal interest or the equitable interest. Before stating the priority rule, some of the possible proprietary interests existing as equities are set out at [5.250]–​[5.265]. [5.250] One proprietary interest that is clearly defined is the equity of rectification. If a

written lease, for instance, does not reflect the actual agreement between the parties to it, the right of the parties to have the document rectified is an equity.253 [5.255]  A further possible example of an equity which is proprietary in nature is the right

of a grantor to have a conveyance set aside because of the fraud of the grantee.254 Similarly, 249

See, for example, Skapinker, “Equitable Interests, Mere Equities, ‘Personal’ Equities and ‘Personal Equities’ –​ Distinctions with a Difference” (1994) 68 ALJ 593; Wright, “The Continued Relevance of Divisions in Equitable Interests to Real Property” (1995) 3 APLJ 163; Neave and Weinberg, “The Nature and Function of Equities” (1978–​1980) 6 U Tas R 24 (Pt I) and 115 (Pt II). 250 See, however, Valerica Pty Ltd v Global Minerals Australia Pty Ltd (2001) NSW ConvR 55-​ 963, where Windeyer J used the term “mere equity” to refer to a personal claim not giving rise to a proprietary interest. 251 Meagher, Heydon and Leeming, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4th ed, LexisNexis, Sydney, 2002), p 143; Neave and Weinberg, “The Nature and Function of Equities” (1978–​80) 6 U Tas LR 24 (Pt I) and 115 (Pt II). Compare Skapinker, “Equitable Interests, Mere Equities, ‘Personal’ Equities and ‘Personal Equities’ –​Distinctions with a Difference” (1994) 68 ALJ 593 at 593, who argues that the mere equity is not proprietary in nature. 52 Neave and Weinberg, “The Nature and Function of Equities” (1978–​80) 6 U Tas LR 24 (Pt I) and 115 (Pt II) 2 at 24. See also Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409; Shawyer v Amberday (2001) 10 BPR 18,869; Westpoint Corp Pty Ltd v Registrar of Titles [2004] WASC 189, suggesting that where the assistance of a court of equity is required for relief, the “interest” can only ever be an equity. Compare Pelenoy Pty Ltd v Donovan Oates Hannaford Mortgage Corporation Ltd [2004] NSWSC 4, where the court stated that the fact a party is dependent on a court of equity for relief does not automatically mean the right is a mere equity (contract for mortgage and advance of moneys). As Barrett J stated, if this were the case “there could never be an equitable interest as such, since all such interests are, of their nature, the product of equity’s willingness to provide relief in personam” (at [34]). See similarly Westpac Banking Corporation v Ollis [2008] NSWSC 824 at [77]–​[78]. 53 Smith v Jones [1954] 1 WLR 1089; 2 All ER 823; CMG Equity Investments Pty Ltd v Australia and New Zealand 2 Banking Group (2008) 65 ACSR 650 at [32]. Comapre Downie v Lockwood [1965] VR 257. 54 Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265; Re McKean’s Caveat [1988] 1 Qd R 2 524; Andel Pty Ltd v Century Car Care Pty Ltd (1989) Q ConvR 54-​315. But cf Valerica Pty Ltd v Global Minerals 340 [5.245]

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rights to have transactions set aside for mistake and undue influence have been defined as such equities. In Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 the nature of this right was the subject of a detailed analysis by the High Court. Latec was the registered mortgagee of Torrens system land owned by Terrigal. When Terrigal failed to maintain the mortgage repayments, Latec exercised the mortgagee’s power of sale and sold to Southern, a wholly owned subsidiary of Latec. The court was satisfied that Terrigal had a right to have the sale set aside because of the fraud of Latec and Southern. Latec had shown a lack of good faith by opting for a very high reserve, by arranging a very short advertising period for the auction and by selling subsequently to Southern at a price well below the reserve. Southern, Latec’s subsidiary, was a party to this fraud. The problem was that, before Terrigal had proceeded to have the sale set aside, Southern had created an equitable interest in MLC Nominees. The conflict was one between the right of Terrigal and the equitable interest of MLC Nominees. Much of the reasoning in the decision concerned the nature of the interest of the right to have a transaction set aside because of fraud. Menzies J noted that there were two different lines of authority in relation to this issue. The first line, illustrated in the case of Stump v Gaby (1852) 2 De GM & G 623; 42 ER 1015, reflects the view that the right constitutes a full equitable interest in land. In Stump v Gaby the issue was whether the right to have a sale set aside because of fraud was capable of being devised. In holding that it was, the court held the right to be an equitable interest. As Menzies J remarked, the Stump v Gaby analysis concentrates upon and assumes the result of the eventual avoidance or setting aside of the conveyance.255 When such a claim is upheld, the purchaser holds the legal estate on trust for the defrauded vendor. (ie, the vendor holds a full equitable interest.) The second line of authority illustrated in Phillips v Phillips (1861) 4 De GF & J 208; 45 ER 1164 involved, as did the Latec case, a priority dispute between the holder of the right to have a transaction set aside and the holder of a subsequent full equitable interest. In Phillips attention was directed to the nature of the right before a court has made an order upon it. That is, before the party has gone to court to get the transaction set aside, what is the nature of the right? What is the nature of the right to sue in these circumstances? It was held that the right is a mere equity at this stage and subject to defeat by the purchaser of a subsequent equitable interest for value without notice. Menzies J attempted to reconcile the two lines of authority by suggesting that there is room for the application of each principle in the appropriate circumstances. As the facts concerned a priorities dispute, Menzies J adopted the Phillips line of authority and held the right to be a mere equity. Kitto J also held that Terrigal’s right was a mere equity and that MLC Nominees’ subsequent equitable interest was not subject to it because MLC Nominees was a bona fide purchaser of the equitable estate for value without notice. Kitto J concluded that the right contained two separate parts. His Honour took the view that Terrigal’s right to have a transaction set aside because of fraud, that is the right to sue in these particular circumstances, is a mere equity. However, if there had been a court order setting aside the sale, Kitto  J took the view that

255

Australia Pty Ltd (2001) NSW ConvR 55-​963, where Windeyer J took the view that a claim to set aside a transfer on the ground of fraud was an in personam right incapable of supporting a caveat (which required an existing proprietary interest in the land). Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 290. [5.255]  341

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Terrigal’s right would then have ripened into a full equitable interest. The sale would not have been set aside literally; rather, Southern, the registered proprietor, would have been required to hold title subject to the equitable right of Terrigal to regain the legal title upon repayment of the mortgage moneys. Terrigal would be seen as having an interest akin to the equity of redemption (a full equitable interest) under general law land.256 Taylor  J held the interest of Terrigal to be a full equitable interest. However, where the equitable interest was one which required the “assistance of a court of equity to remove an impediment to … title as a preliminary” to assertion of the interest, Taylor  J held that the holder of the equitable interest lost priority to a subsequently created equitable interest where the holder of the later interest was a bona fide purchaser of the equitable interest for value without notice.257 The use of this priority rule in a dispute between equitable interests is peculiar. If the dispute is in reality one between equitable interests, it is suggested that the priority rule which should have been used is the principle of all other things being equal first in time prevails.258 Nevertheless, Taylor J reached the same result as Menzies and Kitto JJ. In Breskvar v Wall (1971) 126 CLR 376 the High Court, without undertaking a detailed review of the authorities, took the view that the right to have a sale set aside because of fraud was an equitable interest. Detailed analysis of the nature of the right was unnecessary in the circumstances because even when put at its highest as a full equitable interest, the right of the Breskvars was inferior to the right of the subsequent equitable interest holder. The priority rule applicable between equitable interests ensured that in view of the conduct of the Breskvars, the holders of the first equitable interest, their natural priority in time would be lost: see [4.130] and [5.165]. In contrast to the Latec and Breskvar cases, but in a different context, that of caveating of rights under the Torrens system, the Victorian Court of Appeal took a different view in Swanston Mortgage Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672. The court held that the right of a mortgagor to prevent the completion of a voidable sale was not an existing equitable interest in the land, or indeed any type of proprietary interest. Although valid distinctions can be drawn, the Swanston case is difficult to reconcile with the Latec and Breskvar cases.259

256

257 258 259

Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 275. See also Re Pile’s Caveats [1981] Qd R 81, which emphasised the difference between, on the one hand, an equity to set aside a sale because of fraud which may or may not eventually result in an acquisition of an equitable interest and, on the other hand, an existing equitable interest. Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 286. Rice v Rice (1853) 2 Drew 73; 61 ER 646. In Swanston Mortgage Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672 the mortgagor/​registered proprietor claimed that the mortgagee had exercised its power of sale fraudulently. The question for the court concerned the mortgagor’s right to lodge a caveat to prevent completion of the sale to the purchaser. Purporting to rely on Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265, the court took the view that no caveat could be lodged as the right of the mortgagor was not proprietary in nature. Similar views expressed in obiter in Renwarl Pty Ltd v Birky (1998) V ConvR 54-​578 and Swanston was applied in Commonwealth Bank of Australia v Kyriackou [2003] V ConvR 54-​543. This interpretation of Latec is difficult to justify: see Wright, “Does the Registered Proprietor Have a Caveatable Interest?” (1995) 65 ALJ 935; Rodrick, “The Response of Torrens Mortgagors to Improper Mortgagee Sales” (1996) 22 Mon ULR 289 at 336ff; Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict Between Purchasers and Prior Interest Holders” (1997) 21 MULR 460 at 474–​475. See [5.40] for further discussion of the Swanston case. See also Valerica Pty Ltd v Global Minerals Australia Pty Ltd (2001) NSW ConvR 55-​963, where Windeyer J stated (at [11]) that “as a matter of principle a claim to set aside a transfer on the ground of fraud, is a claim in personam which may result in a proprietary interest in land, but is not a claim for

342 [5.255]

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[5.260]  Where there has been no postponing conduct by a person who has a right to have a

sale set aside because of fraud, the nature of such a person’s right may be very important if a subsequent equitable interest has been created before the sale has been set aside. Although the High Court decision in Breskvar v Wall (1971) 126 CLR 376 is more recent than its decision in the Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265, it is suggested that the majority view in the Latec case would prevail. The right asserted is one that involves going to court to seek equitable remedies. While the result of such court action may result in the acquisition of a full equitable interest, it is submitted that the right to seek such a remedy is not in itself a full equitable interest from the time of the fraudulent conduct. In Westpac Banking Corporation v Ollis [2008] NSWSC 824 at [77] Einstein J said: “The critical difference … is between an ‘equity’ –​an in personam right in equity –​which requires the intervention of the court to flower into a full equitable estate, and an equitable interest which does not because it already consists of such estate”. [5.265] The interest which the Court of Appeal recognised in the defendant in Inwards v

Baker [1965] 2 QB 29 has been described as an equity of acquiescence.260 It arises through the operation of the doctrine of proprietary estoppel.261 In this case the son expended money building a bungalow on his father’s land, with his father’s encouragement, in the expectation of being able to live on the land indefinitely. When the father died, the father’s successor in title, Inwards, sought to eject the son. It was held that the facts gave rise to an equity in the son, which, in the circumstances, should be satisfied by permitting the son to remain on the property indefinitely. The son’s right would also have been enforceable against a purchaser with notice. Where the circumstances are such as to give rise to this equity, a court has a wide discretion as to the relief to be given to the person asserting the equity.262 That is, the court, in its discretion, must decide how to “satisfy” the equity. Satisfaction of the equity may not necessarily take the form of the grant of a proprietary right. Although there is no clear authority on point, it appears that a person who fits within the criteria for this type of equity and who becomes involved in a priority dispute with a third party before he or she has been to court to have the equity declared and “satisfied” may only rely upon having a mere equity in the priority dispute. This is so even if the court would have been prepared to satisfy the equity as against the original owner of the land who actually encouraged the expenditure, by ordering a transfer of the whole beneficial estate. The equity is a right to go to court to seek a remedy. It seems if the court sees fit to grant a remedy resulting in the grant of an interest,

such an interest”. In Patmore v Upton (2004) 13 Tas R 95 Underwood J referred to the articles of Wright and Rodrick and declined to follow the Court of Appeal decision in the Swanston case, stating “that insofar as Swanston is authority for the proposition that the equitable interest of a mortgagor in the case of a voidable sale by a mortgagee, not yet completed, is insufficient to create an equitable interest in land, it should not be followed. Until the contract is completed there is no conveyance to set aside and thus no impediment to the mortgagor asserting an equity of redemption” at [61]. See also Vasilou v Westpac Banking Corporation (2008) 19 VR 214. 260 See Neave and Weinberg, “The Nature and Function of Equities” (1978–​1980) 6 U Tas LR 24 (Pt I) and 115 (Pt II) at 25. It may be, however, that the equity of acquiescence is a full equitable interest from the outset. 261 See [8.195]–​[8.235], where proprietary and promissory estoppel are discussed in detail. Inwards v Baker [1965] 2 QB 29 is mentioned here simply as an example of the way in which an “equity” may arise from the application of the estoppel principles. 62 See, for example, Pascoe v Turner [1979] 1 WLR 431, where the person asserting the equity was awarded 2 the full fee simple estate in the disputed land. [5.265]  343

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such as a life estate or a fee simple, it would do so on the basis that such an interest arose as from the time of the court order. It has even been argued that, until relief is granted, the rights arising pursuant to proprietary estoppel principles should be regarded as personal in nature only and thus incapable of being involved in a priorities dispute concerning proprietary interests.263 [5.270] Often, the facts which give rise to the equity described at [5.265] may also be

analysed in terms of the constructive trust based on unconscionable conduct:  see [9.120]–​ [9.150]. The law in this area remains in a developing phase. Before the landmark decision of the High Court in Baumgartner v Baumgartner (1987) 164 CLR 137,264 the constructive trust appeared to operate as an institution in a recognised class of cases.265 Although its imposition necessarily contained a remedial function at least indirectly, where the facts fell within the recognised class, a constructive trust was imposed irrespective of intention and gave rise to an equitable interest as from the time of the conduct giving rise to it. Examples of the traditional constructive trust include mutual wills and breach of fiduciary duty.266 The more modern common intention constructive trust also seems to fall within this category.267 Thus, pursuant to the orthodox view, the equitable interest “exists”; the constructive trust is not a remedy with its existence being dependent upon the court’s desire. The decision in the Baumgartner case, however, demonstrates a willingness to confer a clearly remedial function on the constructive trust. A  constructive trust was imposed to prevent the unconscionable assertion of sole legal title. In the Baumgartner case and in two other High Court cases, Muschinski v Dodds (1985) 160 CLR 583 and Giumelli v Giumelli (1999) 196 CLR 101, the remedial and highly discretionary nature of rights arising pursuant to the trust and the need to protect the position of third parties have been emphasised.268 Thus, for example, it was suggested by Deane J that the enforceability of rights arising under a constructive trust may not be operative until the date the court so decrees they will be operative.269 In Re Sabri (1996) 137 FLR 165 at 178 Chisholm J

63 Hepburn, “Reconsidering the Benefits of Equitable Classification” (2005) 12 APLJ 157 at 160. 2 264 Discussed at [8.135]–​[8.165]. 265 Compare Muschinski v Dodds (1985) 160 CLR 583 at 613–​615 per Deane J, where his Honour argues that the constructive trust is, in a broad sense, an institution and a remedy. For a discussion of this issue, see O’Connor, “Happy Partners or Strange Bedfellows: The Blending of Remedial and Institutional Features in the Evolving Constructive Trust” (1996) 20 MULR 735. 266 See, for example, Meagher, Heydon and Leeming, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4th ed, LexisNexis, Sydney, 2002), p 157ff on breach of fiduciary duty. 267 This is despite its name and its reliance upon a finding of common intention: Hohol v Hohol [1981] VR 221; Parsons v McBain (2001) 192 ALR 772. 268 See Varma v Varma [2010] NSWSC 786 at [515]–​[517]. 269 Muschinski v Dodds (1985) 160 CLR 583 at 615 per Deane J. See O’Connor, “Happy Partners or Strange Bedfellows: The Blending of Remedial and Institutional Features in the Evolving Constructive Trust” (1996) 20 MULR 735, where different interpretations of the judgment of Deane J are mooted. O’Connor argues that Justice Deane’s attempt to separate the timing of the imposition of the trust and the trust’s consequences is flawed. She states (at 753): [t]‌he distinction between the retrospectivity of the trust, and the prospectivity of its consequences, is illusory. The exposition of Deane J straddles two inconsistent doctrines: the claim to judicial discretion with respect to the trust’s operative date contradicts the doctrine that the trust exists as a real entity prior to judicial decree.

344 [5.270]

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emphasised that there was no “absolute or fixed” rule as to when the interest under a constructive trust arises.270 The comments of Deane J take up the debate concerning the function of the constructive trust.271 A  detailed discussion and analysis of this debate is not undertaken here. From a property law perspective, however, some analysis of the nature of the rights existing under such trusts is necessary. It is arguable that a person who seeks the exercise of the court’s discretion in his or her favour on the basis that it would be unconscionable for the legal title holder to retain sole title does not hold an equitable interest under a constructive trust in the period of time before the court has made its decision. Such a person may be viewed as holding an equity –​a right to go to court to seek an equitable remedy in relation to the property in question.272 There is even support for the view that this “equity”, when characterised as a right to go to court to establish a beneficial interest, is not proprietary in nature at that stage.273 The better view, however, is that this equity would be more than a personal right. It would be a right akin to the right of a person to have a sale set aside because of fraud. If the legal title holder has created a further interest (whether legal or equitable) in a third party before the court has declared a constructive trust, a priority dispute could arise. The person seeking the imposition of the constructive trust on the basis of unconscionable conduct may have only an equity with which to enter the dispute.274 Note that in some cases the person seeking the imposition of the constructive trust will be in possession of the land and such possession will provide notice of the interest to the holder of a subsequent equitable or legal interest. This suggestion above is but one of a variety of ways in which such cases could be analysed. The tension between the remedial function and the institutional features of the constructive trust, particularly in relation to effects on third parties, has been well documented.275 Although the Australian courts have not yet developed a clearly defined approach, generally the post Muschinski and Baumgartner cases have not provided support for the analysis suggested above.276 Rather, the preponderance of cases support a view that there does not need to be a court order “before equity will recognize the prior existence of a constructive trust”.277 In

270

271

272

273

274 75 2

76 2 277

See, however, Clout v Markwell [2001] QSC 091, where it was held, relying on Deane J in Muschinski v Dodds (1985) 160 CLR 583, that where the basis of the constructive trust is a common intention, the equitable interest arises at the time of the common intention. The debate is discussed by Goulding J in Chase-​Manhattan Bank v Israel-​British Bank (London Ltd) [1981] Ch 105. In particular, his Honour considered the divergence between the English and American views of the constructive trust. In the US a constructive trust is viewed as a remedy. Without deciding the point, Muir J in Ikeuchi v Liu (2001) 160 FLR 94 (QSC) suggested this as a possibility. See Dal Pont, “Timing, Insolvency and the Constructive Trust” (2004) 24 Aust Bar Rev 3; cf Levine, “Does Equity Treat as Done that which Ought to be Done?” (1997) 5 APLJ 74. Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409; Swanston Mortgage Ltd v Trepan Investments Pty Ltd [1994] 1 VR 672. Compare Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265; Ruthol Pty Ltd v Mills (2003) 11 BPR 20,793; Patmore v Upton (2004) 13 Tas R 95. Compare the view of Goulding J in Chase-​Manhattan Bank v Israel-​British Bank (London Ltd) [1981] Ch 105. See, for example, Dal Pont, “The High Court’s Constructive Trust Tricenarian: Its Legacy from 1985–​2015” (2015) 36 Adelaide Law Review 459; Dal Pont, “1984–​2014: The Life of the (Non-​constructive) Trust in the High Court” (2015) 36 Adelaide Law Review 179; Tey, “Constructive Trusts: Deciphering and Distinguishing ‘Institutional’ and ‘Remedial’ ” (2011) 23 Singapore Academy of Law Journal 250. See, for example, Re Jonton Pty Ltd [1992] 2 Qd R 105; Kidner v Dept of Social Security (1993) 18 AAR 545. Muschinski v Dodds (1985) 160 CLR 583 at 614 per Deane J; Giumelli v Giumelli (1999) 196 CLR 101 discussed at [8.205]–​[8.235].

[5.270]  345

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Re Jonton Pty Ltd [1992] 2 Qd R 105, for example, the court held that a full equitable interest under the constructive trust existed from the time of the conduct which generated it; the right was not just a mere equity prior to the court declaring that the trust existed.278 Similarly, in Re Sabri (1996) 137 FLR 165 the wife’s equitable interest under a constructive trust was said to have arisen from the time of the husband’s unconscionable conduct giving rise to the trust. Consequently the trust arose prior to the period of “relation-​back” under bankruptcy legislation and the husband’s trustee in bankruptcy took subject to the equitable interest. Chisholm J in Re Sabri reiterated the view of Deane J in Muschinski v Dodds that the law is flexible on the issue of when the equitable interest arises. In Parsons v McBain (2001) 192 ALR 772 the court found that the constructive trust279 was not simply a remedy which came into existence when so decided by a court; rather, it is a substantive right which comes into being at the time of the conduct which gives rise to its imposition.280 The priority rule [5.275]  If the conflict is held to be one between a prior mere equity and a subsequent equitable

interest, the holder of the prior equity loses priority to a bona fide purchaser of the subsequent equitable interest who takes without notice of the equity.281 In Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265, discussed at [5.255], two of the three High Court judges held that MLC Nominees, the bona fide purchaser of the equitable interest for value without notice of the prior equity in Terrigal, was not subject to the interest of Terrigal.282 Although the matter was not specifically raised in the Latec case, presumably “notice” in this context includes actual, constructive and imputed notice.283 The Latec principle was applied by the New South Wales Court of Appeal in Ruthol Pty Ltd v Mills (2003) 11 BPR 20,793.284

278 279

See also Zobory v FCT (1995) 95 ATC 4215; Muschinski v Dodds (1985) 160 CLR 583 at 614 per Deane J. Note that in this case the constructive trust was a common intention constructive trust and it seems to have been generally accepted that, in this type of constructive trust, the beneficial interest arises at the time of the conduct. 280 The court overruled the decision of Re Osborn (1989) 29 FCR 547. See also Jabbour v Sherwood [2003] FCA 529 and Varma v Varma [2010] NSWSC 786 at [507]–​[514]. 81 Smith v Jones [1954] 1 WLR 1089; 2 All ER 823; Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 2 113 CLR 265; Double Bay Newspapers Pty Ltd v AW Holdings Pty Ltd (1996) 42 NSWLR 409 (query the finding in the Double Bay Newspapers case that a claim which depends on success under the doctrine of part performance is a mere equity); Westminster Bank Ltd v Lee [1956] Ch 7; CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd (2008) 65 ACSR 650 at [32]; Shawyer v Amberday Pty Ltd (2001) 10 BPR 18,869. 282 It is arguable that one of the two judges, Kitto J, decided the case on the basis that the mortgagor had delayed bringing the action for too long a period and so should not prevail against MLC. 283 For a full discussion of notice, see [2.490]–​[2.550]. There has been some doubt cast on the application of constructive notice in this type of dispute: see CIBC Mortgages plc v Pitt [1994] 1 AC 200 and Shawyer v Amberday Pty Ltd (2001) 10 BPR 18,869. In the Shawyer case, Bryson J commented at [12] that “[there] is the difficulty of imputing constructive notice of an equity unless there is a course of inquiry which can be established as reasonable by evidence or by judicial knowledge of the conduct of conveyancing business, or banking business or other business … Unless there is a sound positive reason affecting the conscience of the person [with the later equitable interest] that person is … exempt from an earlier mere equity”. 284 Per Sheller JA and Meagher JA. See also Palmer J at first instance: Mills v Ruthol Pty Ltd (2002) 10 BPR 19,381. Compare Cripps AJA, who found no need to differentiate on the facts between an equity and an equitable interest. 346 [5.275]

Torrens Priorities  Chapter  5

Future directions [5.280] It has been argued that the division of equitable interests into categories which

include full equitable interests, mere equities and, possibly, personal equities is unhelpful, confusing, artificial and possibly unjustified in view of the diverse and inconsistent pattern of the authorities.285 The “label” given by the courts to the type of right or interest tends to vary with the context in which the matter is decided.286 Further, in relation to priority disputes, fairer results may ensue from an application of the flexible principle in Rice v Rice (1853) 2 Drew 73; 61 ER 646287 than from an application of technical divisions which have not been universally applied. As Wright states: [b]‌y the use of the Rice v Rice test to determine priority, which makes time of the creation of the first interest the last matter to examine, the search for the “better equity” can be undertaken and this search should not be confused or complicated by the use of labels such as mere equity, personal equity or equitable estate.288

The law in this area remains in a state of flux. The use of “labels” as a means of dividing equitable interests into different types of rights has not been discarded. Nevertheless, there are judicial statements which suggest that there is support for the view that a more flexible approach is to be encouraged.289 In Breskvar v Wall (1971) 126 CLR 376, for instance, the High Court determined what could have been labelled a priority dispute between a prior mere equity and a subsequent equitable interest, by the use of the principle in Rice v Rice.

285 See Wright, “The Continued Relevance of Divisions in Equitable Interests to Real Property” (1995) 3 APLJ 163. See also Skapinker, “Equitable Interests, Mere Equities, ‘Personal’ Equities and ‘Personal Equities’ –​ Distinctions with a Difference” (1994) 68 ALJ 593; Meagher, Heydon and Leeming, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4th ed, LexisNexis, Sydney, 2002), pp 143–​152; Wright, “Does the Registered Proprietor Have a Caveatable Interest?” (1995) 69 ALJ 935. Compare Hepburn, “Reconsidering the Benefits of Equitable Classification” (2005) 12 APLJ 157 at 158, who argues that classification remains a worthwhile objective. She is critical of the decision in Mills v Ruthol Pty Ltd (2002) 10 BPR 19,381, where the judges in the New South Wales Court of Appeal failed to properly explain the characterisation of the equitable right with which they were dealing: at p 163. By inference, it is clear that they treated the right as a mere equity which was proprietary in character (a right to go to court to assert their right to exercise an option to purchase), but the failure to analyse and discuss the nature of the right is regrettable. 286 Wright, “The Continued Relevance of Divisions in Equitable Interests to Real Property” (1995) 3 APLJ 163 at 170–​171. See, for example, Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 at 290 per Menzies J; Blacklocks v JB Developments (Godalming) Ltd [1982] Ch 183. 287 Discussed at [2.565]–​[2.580]. 288 Wright, “The Continued Relevance of Divisions in Equitable Interests to Real Property” (1995) 3 APLJ 163 at 178. See also generally Hughson, Neave and O’Connor, “Reflections on the Mirror of Title: Resolving the Conflict Between Purchasers and Prior Interest Holders” (1997) 21 MULR 460. 289 Compare recent statements where the Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265 priority rule (bona fide purchaser of equitable interest for value without notice of prior equity, wins the dispute) has been accepted: Mills v Ruthol Pty Ltd [2002] 10 BPR 19,381 (reversed on appeal but Court of Appeal assumed the correctness of the rule in Ruthol Pty Ltd v Mills) and Westpac Banking Corporation v Ollis [2008] NSWSC 824. [5.280]  347

CHAPTER 6

Public Lands and Land Rights of Indigenous Peoples [6.05] [6.15]

THE ROLE OF THE STATE IN LAND DEALINGS............................................................. 349 LEASES BY PUBLIC AUTHORITIES................................................................................. 350 [6.15] Leases of urban land..................................................................................... 350 [6.35] Leases of rural land....................................................................................... 352 [6.95] Comparison of freehold and leasehold tenure................................................. 357 [6.140] PRINCIPLES APPLICABLE TO CROWN TENURE............................................................. 360 [6.140] Nature of the interests.................................................................................. 360 [6.150] Rights dependent on statute.......................................................................... 361 [6.165] Scope of an established relationship............................................................... 363 [6.170] Registration and alienation........................................................................... 365 [6.185] LAND HELD FOR PUBLIC PURPOSES............................................................................ 366 [6.185] Nature of the public interest in public land..................................................... 366 [6.200] Dedication of public land.............................................................................. 367 [6.205] Trusts for public purposes.............................................................................. 369 [6.210] INDIGENOUS PEOPLE AND PROPERTY LAW................................................................ 369 [6.210] Original settlement....................................................................................... 369 [6.245] Relations between indigenous peoples and land.............................................. 372 [6.270] Limited statutory land rights......................................................................... 376 [6.315] RECOGNITION OF NATIVE LAND RIGHTS................................................................... 380 [6.340] NATIVE TITLE LEGISLATION......................................................................................... 383 [6.390] VALIDATION OF GOVERNMENT ACTIONS.................................................................. 386 [6.415] EXTINGUISHMENT OF NATIVE TITLE........................................................................... 388 [6.430] INDIGENOUS LAND CLAIMS UNDER THE NATIVE TITLE ACT...................................... 390 [6.450] Nature of rights of enjoyment........................................................................ 391 [6.470] Identity of title holders.................................................................................. 393 [6.485] Continuity of use.......................................................................................... 394 [6.495] CONCLUSIONS........................................................................................................... 395

THE ROLE OF THE STATE IN LAND DEALINGS [6.05]  While interests in land discussed in this text are primarily those of private individuals, the

role of the state is significant both as a regulator and landholder. First, the state is the original source of private title; secondly, it is the residuary holder of land granted on limited tenure; thirdly, it is the holder of land retained for public purposes or unwanted by private individuals; fourthly, it is the holder of parts of land reserved from grants to individuals –​these reservations have led to separate legal regimes for minerals and water; and, fifthly, it is the regulator of the development and use of private land. In Australia, the establishment of the States (then colonies) preceded federation and the creation of the Commonwealth of Australia as a legal entity and potential landholder. Consequently, public interests in land within the boundaries of the States are held by the States and after federation, the Commonwealth acquired land within the Northern Territory by transfer from South Australia, and land within the Australian Capital Territory by transfer from New South Wales, as well as external territories. [6.05]  349

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As well as land used for commercial or residential purposes, much land is retained for public purposes. Land such as coastal areas, rivers and lakes has been kept in public ownership. In addition, all States and Territories have established extensive national parks and public ownership has again been regarded as essential for such parks. Land is held for public purposes on a more modest scale in public parks and gardens –​often vested in local government. As well as holdings for conservation purposes, government land is used for government activities such as schools, hospitals and roads. For what may be an accident of late 19th century philosophy, forestry has been regarded in Australia and in many western countries as a government, rather than a private commercial activity, and during the 20th century most forest land was held by State governments. [6.10] Although public land may be formally dedicated to particular purposes, such as

highways, recreation areas and national parks, the state remains the nominal and beneficial owner of that land.1 Members of the public have the right to pass freely along public highways and across other public land to the extent of the provisions creating the public purpose for the land. However, members of the public do not as a result acquire any right that may be described as an estate or interest in the land.2 It is possible that, beyond a mere statement of public purpose, the setting aside of land may be in such binding terms that a charitable trust for that purpose is created. More commonly, this trust will be imposed when land is transferred from an individual to the state for a purpose.3 If a trust is created, members of the public may be able to take legal action to enforce that trust.4 As well as enforcement of a purpose, members of the public may wish to prevent alienation. Alienation of parklands has been a concern from early settlement, partly as a reaction to the enclosure movement in England in the 18th century whereby land previously available for public use was transferred into private hands.5 Again, there is no power to prevent alienation in the absence of a trust.6

LEASES BY PUBLIC AUTHORITIES Leases of urban land [6.15]  Most urban land in Australia has been granted to private persons by freehold tenure.

Although the Crown retains a reversionary interest in such land, that interest is, for almost any conceivable purpose, purely nominal and the fee simple owner can properly be regarded as having an absolute interest in the land. Even on the death of a fee simple owner without a valid will and without any next of kin, in all jurisdictions except Western Australia the fee simple interest passes to the Crown as bona vacantia, rather than the land passing through an extinguishment of the estate: see [2.20]. In early Australia, disputes over the use of land were matters between neighbouring landowners to be settled according to the law of nuisance. In

1 2 3 4 5 6

Stow v Mineral Holdings (Australia) Pty Ltd (1977) 51 ALJR 672. Stow v Mineral Holdings (Australia) Pty Ltd (1977) 51 ALJR 672. Re Smith [1967] VR 341; Re Hadden; Public Trustee v More [1931] All ER Rep 539. The Adelaide Parklands Act 2005 (SA) was enacted in part to remove argument on this point. See Johnson and Langmead, The Adelaide City Plan-​ Fiction and Fact (Wakefield Press, South Australia, 1986), p 27. Williams v Attorney-​General (1913) 16 CLR 404.

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modern times, controls on land use have been imposed by general planning and environmental statutes. But even such statutes regularly require permits for individual developments and the permits may be issued subject to a number of conditions.7 The conditions then impose a management regime in respect of the piece of land. [6.20]  The proposition that urban Australia has been developed under freehold tenure has

one significant exception –​the national capital, Canberra.8 When the decision on the site for the national capital was made, the land for the site was acquired by the national government. Public buildings are a feature of the capital and are naturally retained in public ownership. However, from the first stages of development, particularly at the instigation of Prime Minister Sir Edmund Barton, the decision was taken that even residential and commercial land should be retained in public ownership. Individual landholders would be granted leasehold interests. The issue of public ownership has been linked with the characteristic of planned development, though the planning of the national capital may well be more a factor of time. The other major urban centres all commenced prior to the acceptance of comprehensive land-​ use planning, and the dominance of the major civic buildings. The land for the Australian Capital Territory was acquired by the Commonwealth from 1911 pursuant to the Seat of Government (Administration) Act 1910 (Cth). That Act provided that that no Crown land in the Territory should be sold or disposed of for any estate of freehold. Grants to individuals were made pursuant to City Area Leases Ordinances first enacted in 1918. Comprehensive planning of the city followed the establishment of the National Capital Development Commission in 1958. The most significant growth of the city occurred under the management of the Commission. [6.25] With the grant of self-​ government in 1988, the National Capital Development

Commission was abolished and planning responsibilities handed to the Territory government. Today leases are granted by the Land Development Agency pursuant to the Planning and Land Act 2002 (ACT). Public auctions of residential land are conducted pursuant to Pt 2 of the Civil Law (Sale of Residential Property) Act 2003 (ACT). The use of land is controlled under the Land (Planning and Environment) Act 1991 (ACT) and particularly through the Territory Plan established by that Act. [6.30]  Land tenure policy in the Northern Territory has been subject to regular upheavals.

As in the Australian Capital Territory, there have been some determined efforts to implement a leasehold tenure system even for urban land. Under South Australian administration until 1911, fee simple grants had been the basic form of urban land tenure. After the Commonwealth assumed control of the Territory in 1911, it passed legislation which required all future grants of urban land to be in the form of perpetual leases purchased at auction on the basis of bids for annual rentals. Fee simple tenure for new grants was re-​introduced in 1926 but, following the bombing and civilian evacuation of Darwin during World War II, all land in Darwin and its environs (90 square miles in area) was acquired by the Government. At the same time, legislation was passed which restricted grants of both residential and non-​residential land to leasehold tenure, which provided for maximum terms of 99 years, rents based on 5% of unimproved capital value. In 1961, amending legislation provided for potential conversion of

7 8

On the validity of planning conditions, see Cardwell v King Ranch Australia Pty Ltd (1984) 58 ALJR 386. See Commission of Inquiry into Land Tenures, First Report (1973), pp 169–​170 and 172–​173. [6.30]  351

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all Darwin town leases to perpetual leases. Few conversions were made. On 1 January 1971, a new system of disposing of urban land was introduced for Darwin and other municipalities (Alice Springs also became a municipality in 1971) involving the virtual abolition of land rent (on existing as well as new leases) and the auctioning of new leases on the basis of reserve prices intended to ensure that costs of acquisition and servicing were fully recouped. A further dramatic change occurred after the grant of self-​government for the Territory. In 1980, legislation was passed by virtue of which from 1 January 1981 any person who was the lessee or entitled to be granted a lease of described land was granted a fee simple estate in that land. The described land included most urban land in the Northern Territory. The land to which a fee simple estate was thus granted was automatically brought under the provisions of the Real Property Act (NT), and the owner became entitled without charge to a certificate of title. All fee simple estates in the Territory are subject to the reservation to the Crown of all minerals. The sale of land in fee simple by the Minister may be subject to an agreement as to its development and a bond required as to the performance of the development agreement.9

Leases of rural land [6.35] If most urban land is held on freehold tenure, much rural land is held on lease or

licence. In particular, pastoral lands have been held on limited tenure. Apart from the special situation of the Australian Capital Territory, each jurisdiction developed a range of rural tenures for differing purposes and land uses; the emphasis was upon the opening up of the interior of the continent. Conditions attached commonly required the development of the land and the undertaking of improvements. The size of individual landholdings was sought to be controlled and the leaseholders were intended to reside on and manage the land themselves. Applications for land grants were thus scrutinised and the transfer of interests restricted. More recently, the tenures have been simplified and consolidated.10 Emphasis has switched to land management and environmental protection. The nature of the interests held pursuant to these lease and licence provisions has become particularly significant following the recognition of native land rights. A great deal of debate has been devoted to the issue of the extent to which native land rights have been extinguished by the grant of a pastoral lease or licence. [6.40]  The statutory codes of landholding introduced many novel forms of holding.11 Leases

could be annual, for a term of years (often with provisions as to renewal) or even perpetual. Licences at common law are distinguished from leases on the basis that they do not confer proprietary interests. Rather than adapt general forms of tenure to special situations, new tenure forms were created for different situations. Often the new forms reflected peculiar local situations. 9 10

11

Crown Lands Amendment Act (No 3) 1980 (NT), s 8(1). The relevant legislation is the Crown Land Management Act 2016 (NSW); Land Act 1958 (Vic); Land Act 1994 (Qld); Crown Land Management Act 2009 (SA) and Pastoral Land Management and Conservation Act 1989 (SA); Crown Lands Act 1976 (Tas); Land Administration Act 1997 (WA); Crown Lands Act (NT). On land tenures generally, see Lang, Crown Land in New South Wales (Butterworths, Sydney, 1973); Fry, Freehold and Leasehold Tenancies of Queensland (UQ Press, Brisbane, 1946); Brierley and Irish, The Crown Lands Acts of New South Wales (3rd ed, Law Book Co, Sydney, 1914).

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[6.45] One of the conflicts in rural Australia has been between the large pastoralists and

the person of modest means seeking land as a source of income. In the 1860s, rights of free selection were conferred by statute so that small freehold rural holdings could be acquired. However, pastoral interests managed to thwart most of the aims of the selection movement. Similar movements occurred with the resettlement of war veterans, but again these programs had limited success. Large holdings have dominated Australian rural life. Even a selection did not necessarily lead to freehold title immediately, but could lead to conditional purchases under which the Crown undertook to pass freehold title on completion of a series of payments. A  wide range of other rights of occupation of Crown lands have existed and continue to exist –​allowing anything from grazing to beach shacks. [6.50]  In the earliest days of settlement12 land was allocated by grants in fee simple. In many

cases, these grants occurred without any purchase price paid to the Crown, but subject to a payment of an annual fee known as a “quit rent”. The quit rent was in effect a tenurial incident and represented an obligation of the holder of the land to the crown. Although only small blocks were granted at first, eventually extremely large holdings were permitted. Furthermore, despite the charge on the land to secure payment, by 1831 most landholders did not pay the quit rents and no action was taken for non-​payment. An example of the conditions attached to a grant in the early 19th century is set out in Re Wadi Wadi Peoples (1995) 129 ALR 167, where the obligations were that the grantee was not to sell during the first five years and was to cultivate 100 acres. The disposal of colonial land was originally a matter of royal prerogative. During this early period, most grants had taken the form of fee simple dispositions by the Crown. During Macquarie’s governorship, limited-​term leases and occupation licences were more common. The policy had been to concentrate development around the settlements of Sydney, Hobart, Brisbane and Melbourne. Grants beyond defined boundaries were declined. However, individuals had moved well beyond these lines and thus a class known as the “squatters” had emerged. [6.55]  In 1842 the English Parliament passed the Sale of Waste Lands Act 1842 (Eng),

which removed the royal prerogative to make further promises and established, for the first time, a statutory scheme for the grant of interests in land.13 Considerable concern existed in England for the indigenous population of the colony and 15  percent of the gross proceeds of land sales were set aside “for the benefit, civilisation and protection of aborigines”. In 1847, a consequential Order-​in-​Council was made by the Imperial Government to provide some security for the squatters. Squatters could to apply for Crown leaseholds for periods from one to 14 years. Leaseholders were given the further right to purchase a fee simple from the Crown. From 1855, with the grant of self-​government under the New South Wales

12

13

The standard historical account is Roberts, History of Australian Land Settlement 1788–​1920 (Macmillan of Australia, Melbourne, 1968); see also Castles, An Australian Legal History (Law Book Co, Sydney, 1982), pp 456–​465 and Campbell, The Crown Lands of Australia (John Smith and Son, Glasgow, 1855). A detailed account of the history of land grants in New South Wales is set out in the judgment of Hill J in North Ganalanja Aboriginal Corporation v Queensland (The Waanyi People’s Case) (1995) 132 ALR 565 at 609–​611.

[6.55]  353

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Constitution Act 1855 the legislature of the colony for the first time had the power to deal with waste lands. Thereafter land administration was exercised by the colonial governments. Those governments produced a range of land holdings from the Crown unknown in the United Kingdom. [6.60]  As mentioned at [6.45], legislation was introduced to give potential small landholders

some scope to encroach upon the squatters. From 1861, closer settlement legislation gave effect to the policy of free selection. Under this process, individuals could select a small area of farming land subject to a pastoral lease and enter an agreement for the purchase of the land by instalments through the means of a conditional purchase grant. The squatters resisted the efforts of the selectors and, through manipulation of the system, had much success in thwarting inroads into their holdings. The result has been that throughout much of Australia rural land is still held under various forms of pastoral lease. [6.65]  Queensland inherited the New South Wales system when it became a separate State

in 1859. It continued to rely upon Crown leasehold tenure as a means of controlling rural land development. Its range of tenures has been described as “bewildering”, with minute differences between various forms of tenure.14 [6.70]  South Australia had never been part of New South Wales and it experienced the first

significant change of land grant policy. The first settlement in 1836 was based on the ideas of Edward Gibbon Wakefield. He believed that persons of means should be encouraged to become landholders. Money would become available from purchase payments for public works and for transporting further immigrants. If landholding was restricted, persons excluded from ownership would be available to work as farm labourers. These theories were particularly applied in the settlement of South Australia, where convict settlement was excluded. Because of these ideas, throughout the colony from 1832 free grants were abolished in favour of grants for a sufficient purchase price. This policy had an unexpected impact in that during the 1840s land speculation became so rife that the colony almost collapsed financially. A separate issue arose in South Australia because of the terms of instructions to Governors. They were claimed to be inconsistent with Crown grants actually made because of the instructions for native protection. In Fejo v Northern Territory (1998) 195 CLR 96 the High Court points out that a number of statements were made in instructions to the Governors of the Colony of South Australia and in correspondence between imperial authorities and colonial authorities, particularly to the Colonisation Commissioners for the Colony of South Australia. Many statements, often expressed in powerful terms, concerned the protection of the welfare of the indigenous peoples. Fejo v Northern Territory concerned land in Darwin, Palmerston and Litchfield. Grants of the land concerned had been made in the 1880s when the area was under South Australian administration. The Northern Territory Land Act 1872 (SA) provided that the Governor may grant land in fee simple or for any other lesser interest. The High Court (at 129) held that this statutory power could not be read down by any Colonial Office instructions.

14

Fry, Freehold and Leasehold Tenancies of Queensland Land (UQ Press, Brisbane, 1946), p 29.

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[6.75] Western Australia is the other state that was never part of New South Wales. An

exposition of the history of land development in that State is set out in the judgment of Lee J in the first instance determination by the Federal Court in Ward v Western Australia (1998) 159 ALR 483. Lee J (at 488–​490) points to the later European entry into outback Western Australia. Land in the East Kimberley region was not made available to settlers until the second half of the 19th century. Rights to graze stock were applied for by marking off the approximate position of areas sought. Some of the claims were for huge areas so that one claim of an area following the Ord River involved some 800,000 hectares. Within a short period large areas were claimed by the cattle industry so that, by 1884, 20 million hectares in the Kimberley had been included in pastoral leases. But cattle carrying capacity was low –​125 hectares for each head of cattle.15 [6.80] Historically, the details of legislation providing for Crown leases and licences have

provoked trepidation and little attention to underlying principle. In Re Hawkins (1948) 49 SR (NSW) 114 the former New South Wales Crown Lands Consolidation Act 1913 (NSW) was described by Jordan CJ at 118 as “a jungle penetrable only by the initiate”. If numerous tenures existed in each State, comparisons from State to State are even more difficult. Recently attempts have been made towards simplification and for a re-​evaluation of legislative direction in light of current needs for land conservation. Some features of the various land tenures merit comment: 1.

Convertibility:  It has been common for leaseholders to have an option to purchase a fee simple interest (or to convert from leasehold to freehold). The conditions applicable to such conversion have been subject to dramatic change often simply as a matter of Ministerial policy. Conceptually it is difficult to classify a lease with an option to convert as either realty or personalty  –​an issue which has arisen in interpreting the will of a Crown tenant.16

2.

Conditional purchase:  Any purchaser of land may enter a contract for payment by instalments.17 In respect of Crown land, such arrangements have been described as “conditional purchases”. The purchaser normally becomes a tenant until completion of the payment conditions and has a statutory right normally to a fee simple estate on completion.

3.

Perpetuity: At common law, a lease must be for a certain period and thus a perpetual lease could not readily be recognised. Nonetheless, such leases have been common under the statutory regimes. In terms of duration, no differences exist between them and fee simple interests, but various conditions have been applied to the interest of a perpetual lessee.

4.

Fixed duration: The demand for security has led to the grant of terms ranging from one year to commonly 42  years. In these fixed-​term leases, the issue of renewal becomes significant; the discretion of the granting authority is often circumscribed.

15

Reference is made in the determination of Lee J to Hasluck, Black Australians (2nd ed, Melbourne University Press, Melbourne, 1970) and Durack, Kings in Grass Castles (Corgi Books, Great Britain, 1973). Joy v Curator of the Estates of Deceased Persons (1895) 21 VLR 620. As between private persons from 1962 sale of land legislation has attempted to protect purchasers through the technique of a sale plus mortgage back: see [7.295].

16 17

[6.80]  355

PART 2 Title to Land

5.

Licences: Short-​term access to land for grazing or other purposes has been achieved by way of what are commonly called annual licences. In New South Wales the concept of permissive occupancies have been used for such grants.

6.

Improvements: As land policy sought to encourage development, covenants were often imposed requiring improvements. If the landholder’s interest was for a term of years, the expenditure might not accrue to the landholder’s long-​term benefit. To overcome any discouragement, provision for compensation on resumption was common.

[6.85]  Some consideration of the proprietary effect of a Crown grant of rural land occurred

in the case of O’Keefe v Williams (1910) 11 CLR 171 (further considered at [6.145] and [6.165]). That case concerned the rights of the grantee and the possible implication of terms into the grant. In the course of determining these rights, the High Court examined the nature of the grantee’s interest. The interest granted was described as an Occupation Licence and conferred an entitlement to occupy the land for grazing purposes. The court nonetheless concluded that the grantee had exclusive possession of the land and that a landlord and tenant relationship existed between the Crown and the grantee.18 This case is an interesting contrast to the later reading down of interests described as “leasehold” in the native title context in Wik Peoples v Queensland (1996) 187 CLR 1: see [6.350]. In Wik the leasehold interests were considered not to confer exclusive possession.19 [6.90]  The least extensive land holding rights appear to be those of the permissive occupancy.

They have been common in New South Wales and in 1958 numbered 16,500. The grant confers a permission to occupy Crown lands, terminable at will by the Minister and subject to a prohibition on transfer, subletting or parting with possession. In 1958 doubts emerged as to the validity of these interests so s 136K was inserted in the Crown Lands Consolidation Act 1913 (NSW) for an express authorisation of the continuing existence and creation of these interests. The general assumption seems to have been that these interests should be treated like a contractual licence and that they do not confer proprietary rights, but rights enforceable only against the Crown: Southern Estates v New South Wales Aboriginal Land Council (1991) 24 NSWLR 300. Inconclusive reference to the conceptual nature of these interests was made by the High Court in Broadcast Australia Pty Ltd v Minister Assisting the Minister for Natural Resources (2004) 221 CLR 178. In that case, a permissive licence had been granted to the Commonwealth Government for the purpose of constructing television transmission towers. Later the Commonwealth decided to privatise the transmission towers and a declaration was published pursuant to enabling legislation. The declaration purported to vest the Commonwealth’s interest under the permissive occupancy in the corporation, Broadcast Australia Pty Ltd. The High Court held that interest of a permissive licence was on foot prior to the declaration and the declaration was valid to pass the interest. The court referred to argument that an assignment would be in breach of the terms of the interest and therefore of no effect. The contrary position was that, by analogy with a transfer of a private leasehold interest in breach

8 1 19

See particularly the judgment of Griffith CJ at 190–​191. Contrast Living and Leisure Australia Ltd v Commissioner of State Revenue (Vic) [2018] VSCA 237 where the grant of crown land, on terms which described the grant as a lease, but which contained significant reservations in favour of public access was held, in a majority judgment, to still be a lease.

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of a covenant prohibiting assignment, a transfer was effective but gave rise to remedies for breach; in effect, the interest acquired would be voidable. The court rejected the application of these arguments to a vesting of the Commonwealth’s interest by operation of Commonwealth law that would override any state law to the extent of inconsistency. The court further resisted analogies with purported assignments of tenancies at will. It indicated strongly that the issues referred to are best answered by analysis of the jurisdiction’s legislation and the terms of any particular interest.

Comparison of freehold and leasehold tenure [6.95]  The desirability of urban land generally being held on leasehold tenure came into focus

in the 1970s. Reformers sought to reduce population pressures in the major cities through the establishment of new towns and new forms of tenure were considered for these towns. However, tenure did not become a major innovation in the initial experiments. Within a short time, economic difficulties facing the nation as a whole led to the abandonment of such large-​scale initiatives as new towns. One aspect of the regulation of urban growth, however, did result in a long-​term policy change. Opposition was directed against speculators who purchased urban fringe land and then realised the increase in value from the conversion of rural to residential land. To prevent this practice, much fringe land was purchased by government agencies to reap the profit for the community generally. More recently, controls by State and Territory Governments of urban fringe lands have been considered too restrictive and blamed in part for the general shortage of housing land. In planning in the 1970s for the new urban centres, the issue of the desirable form of land tenure was raised and some laudatory references made to the example of the leasehold system in Canberra. It was principally these concerns that led to the establishment of the Land Tenures Commission. The Commission,20 however, favoured freehold rather than leasehold systems for residential land grants. It did recommend the reservation from the freehold grant of development rights. This reservation meant that a charge could be made for a change in the type of land use. The Commission favoured residential freehold title because it considered that the overriding factors were permanency and a capital payment system for home ownership. On the other hand, it considered that business and industrial investment was made on a fixed-​term basis and that land for these purposes could be granted by a lease of fixed duration. The Commission argued the adoption of a leasehold rental system would increase inequalities between rich and poor and fail to treat similarly persons in similar circumstances. Such tenure would react adversely on the distribution of national wealth; absorb a higher proportion of household income at the lower end of the income scale and impose insecurity on all home owners on relatively low incomes; create comparative injustice and insecurity for particular classes of income recipients, especially wage and salary earners, and for particular age groups, notably those in or approaching retirement; discriminate against households taking up land in the new growth centres and in favour of those who already own land in existing cities; and provide opportunities for political decisions which would have the effect both of giving windfall gains to particular groups of landholders and of destroying the stability of the land tenure system.

20

Commission of Inquiry into Land Tenures, First Report (1973), pp 126, 135–​137. [6.95]  357

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[6.100] The Commission’s report seems to have marked the end of interest in land tenure

systems. If anything, the psychological attachment to fee simple interests has strengthened and self-​government in the two Territories has increased landholder influence upon decisions. While the Commission’s views may influence thinking about the problems, little in the way of implementation has flowed from its recommendations. Concern about the quality of life in the cities has been drowned by macro-​economic issues. Even the acquisition of fringe land by government agencies has not been without difficulties, as initially prices slumped and then holding costs increased because of climbing interest rates. Subsequently these factors have been reversed and State and Territory governments have entered into lucrative arrangements with large land developers for the conversion of urban fringe land. [6.105]  The grant of a leasehold interest by the Crown, to a private individual, confounded

common law theory. Under the common law, the application of the doctrine of seisin meant that private landowners could not deal with the land, so that at any one time there was no-​one seised of land. Consequently, there always had to be someone with a present freehold interest and that person being seised was liable to render feudal dues. Leasehold estates arose outside the prohibition on subinfeudation as they were viewed as commercial interests. Because of the co-​existence of freeholder and leaseholder, leases commonly involve the payment of rent by the leaseholder to the freeholder and thus provide a means of acquiring a right of occupation without any initial capital investment. The restrictions on dealings without seisin do not fetter the Crown in its dealings and would be, in any event, subject to statutory countermand. However, the freeholder and leaseholder relationship between private persons has formed a guiding point for dealings by the Crown. [6.110] Whereas a lease differed from a fee simple interest at common law by being for a

limited term of years, many Crown leases in Australia are in perpetuity. The existence of any difference between a fee simple and a perpetual lease was questioned by Roper J in Nolan v Wilambong SC (1939) 14 LGR (NSW) 89. On the other hand, the High Court in Fisher v Deputy Federal Commissioner of Land Tax (1915) 20 CLR 242 at 248 and Hawkins v Minister for Lands (1949) 78 CLR 479 has emphasised that there are fundamental differences between a freehold and even a perpetual leasehold interest. In Hawkins the issue arose as to whether land held on a perpetual Crown lease was classified as Crown land for the purposes of the Crown Lands Consolidation Act 1913 (NSW). Land held in fee simple was not so classified. Such land was distinguished by the High Court from land held on perpetual leasehold that was classified as Crown land. Dixon J stated in the Hawkins case at 492: Because it is a Crown lease in perpetuity, the land, it is claimed, is no longer vested in His Majesty within the meaning of the definition. No doubt the reversionary interest in the Crown is slight and it may be said to be technical. But a rent is reserved, there are special conditions, the interest is capable of surrender and, for non-​payment of survey fees, of forfeiture.

In evaluating the differences between the forms of tenure, regard must be had to both theoretical and practical differences. One of the complications in the relationship between the Crown and landholders stems from the nature of a democracy. The executive government ultimately depends upon popular support. The class of landholders may be a significant and sometimes a major portion of the public. The actions open to the Crown will be constrained by public reaction. Some of the changes to Canberra’s leasehold system have been widely considered to reflect political opportunism. A further complication is that the Crown’s tenurial position in 358 [6.100]

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relation to freehold land has had little consequence for so long that it would today be difficult to utilise it as a basis of control. As was mentioned in the historical survey, even the quit rents of the early 19th century were rarely collected. [6.115]  One common control upon the rights of the holders of leasehold interests from the

Crown is a requirement that assignment take place only with the consent of the relevant Minister. This requirement parallels an equally common provision of private rental agreements. In the case of Crown leases, the concern of the Crown as landlord has not been as much with the standing of any potential tenant as with the extent of ownership of any individual. The Crown has sought to ensure that leases are held only by persons who will themselves manage the particular property and that any individual not amass what would be regarded by the Crown as excessive holdings. The effectiveness and desirability of a policy of preventing entrepreneurial non-​resident ownership is open to question. The tenure system is not vital to the implementation of such a policy. [6.120]  The second difference is that charges by way of rent are imposed on leaseholders. As the historical evolution has illustrated, quit rents were imposed on those acquiring fee simple interests. The feasibility of imposing rents on property already granted absolutely would be more difficult. However, charges are imposed on fee simple owners by way of land rates and taxes. In Australia, rates have been imposed as a source of revenue for local government services. Some land taxes have been imposed by reference to unimproved land value to encourage land development. However, residential owners in particular have been successful in limiting or eliminating land taxes. Technically, the rates and taxes have not been imposed by means of tenure, but amounts owing for the taxes are levied as a charge on the land and are more than a personal imposition upon the landholder. Freeholders may be even less inclined to pay substantial sums for land taxes than leaseholders are to pay rent, but liability to charges can be imposed whatever the tenure and the issue of level of charges is largely political. [6.125] The third difference is the capacity to change land use and, in particular, to profit

from changes from a less valuable to a more valuable land use. Again, there is an attitude that freeholders are entitled to do whatever they please with their land within the limits of the law. These limits were traditionally set by the law of nuisance, which protected neighbours from unreasonable interference. Nevertheless, planning controls have been in place since the 1920s and since the end of World War II have become almost universal and restrictive. The range of land-​use choices for a fee simple owner has become circumscribed. Nonetheless, as urban areas continue to expand, the need arises to rezone fringe land from rural to urban use. At this point the fee simple owner has the opportunity to profit from the higher value attributed to the changed use. This profit from simply changed land use, rather than land development, has attracted much adverse attention. The basis of the opposition is that the gain does not come from any productive effort or even the investment in an asset producing benefit for others. Proposals have been advanced to impose a betterment tax or to charge for windfalls. As mentioned at [6.95], in Australia the most widely used method to remove this gain from private hands has been to establish government agencies to buy fringe land at rural values and to arrange for the subsequent development of the land for urban purposes. The technique has avoided any redefinition of the landholder’s interest. [6.125]  359

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[6.130]  The fourth difference has been the range of management conditions imposed upon

leaseholders. Originally, these conditions sought to ensure that the land was developed, but today may be directed towards responsible land management. Conditions may relate to soil conservation, preservation of native vegetation, control of noxious plants and animals and generally the preservation of land for future generations. These requirements can be imposed by way of statutes controlling actions by landowners, rather than by way of leasehold conditions. Leasehold conditions do promise, however, the additional remedy for breach of forfeiture of the leasehold interest. Experience suggests that this remedy is a notional rather than a practical one. Furthermore, enforcement measures in planning and similar statutes have become much more sophisticated so that a fine is not the only alternative to forfeiture. Planning statutes are also providing techniques for assessment of individual land parcels. Land management agreements allow for the owner and a government agency to agree upon a program of land management. These agreements are by statute given effect as encumbrances on the land binding successors in title. The advantages of leasehold tenure for land management are therefore limited. [6.135]  Historically at least, it seems that the most significant factor explaining the widespread

adoption of leasehold grants by the Crown has been the greater psychological acceptance of conditions and obligations attaching to leasehold rather than freehold tenure. The best statement remains that of Fry:21 In many lay minds the most distinctive feature of mesne leaseholds is the number and onerous nature of the tenurial incidents binding upon the tenant, in comparison with the almost total absence of tenurial incidents binding upon freehold tenants. That this, rather than the “length” or “size” of the freehold and leasehold interests respectively, is an important practical basis of differentiation between them is evident from the fact that even legal minds sometimes minimise the importance of the difference in essential nature in the length of leasehold and freehold terms respectively, especially as in mesne tenures it is possible to have a freehold life estate which is in law “larger” than any and all leasehold terms of years although in fact it is inevitably shorter in length than even a 1,000  years leasehold term; whilst even a fee simple is not actually likely to last longer in this practical world of everyday affairs than a 1,000  years leasehold term. These ideas, formulated in their minds by the Australian parliamentarians’ everyday experience as mesne lessors and mesne lessees, led them to use the term “leasehold” in legislation about Crown tenures between the Crown and its Crown tenants in capite, when they desired to indicate thereby that title was to be not only limited in duration but dependent upon due performance of many tenurial incidents imposed to prevent the anti-​social use of the land. It is natural enough, and justifiable enough, to regard Crown perpetual leasehold tenures as being in some respects like those non-​perpetual Crown leasehold tenures which also impose on the Crown tenant onerous incidents of tenure.

PRINCIPLES APPLICABLE TO CROWN TENURE Nature of the interests [6.140] The statutes creating the variety of Crown leaseholds and licences specify

the range of recognised interests and the conditions attaching to them, procedures for applications for the grant of an interest and the consideration of and response to those

21

Fry, Freehold and Leasehold Tenancies of Queensland Land (UQ Press, Brisbane, 1946), p 71.

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applications (normally by the responsible Minister). Applications are required to pass through approval processes, conditions are specified and payment of the purchase-​money and fees made. [6.145]  Consideration of the proprietary effect of a Crown grant of rural land occurred in the

case of O’Keefe v Williams (1910) 11 CLR 171 (further considered at [6.85] and [6.165]). The case concerned the rights of the grantee and the possible implication of terms into the grant. The court classified the interest of the grantee as those of a tenant and granted a remedy to the grantee based on the implied obligations of a landlord. In the course of determining these rights, the High Court examined the nature of the grantee’s interest. The interest granted was described by the terms of the grant as an Occupation Licence and conferred an entitlement to occupy the land for grazing purposes. The court nonetheless concluded that the grantee had exclusive possession of the land and that a landlord and tenant relationship existed between the Crown and the grantee.

Rights dependent on statute [6.150] The courts have been reluctant to apply common law doctrines to the creation of

interests by way of grants by the Crown.22 Even though there may appear to have been an offer and acceptance no contract will come into existence. An applicant may acquire, however, a statutory right to the grant of an interest. Similarly, conduct which might create an estoppel against a private person will be not held to do so against the Crown because of the statutory statement as to when rights arise. The rights of the lessee have been emphatically described as statutory and not contractual. In Davies v Littlejohn (1923) 34 CLR 174, Knox CJ stated at 183: It is abundantly clear, from the provisions of the Act and of the regulations, that the object of the legislature was, not to provide for the making of ordinary contracts for the sale of land by the Crown to its subjects, but to make Crown lands available for purposes of settlement in limited areas; not primarily to provide for raising revenue by sales of land, but to promote settlement on the land. This is illustrated by the restrictions imposed on auction sales and special sales, and by the limitation of the areas of holdings and of the rights of existing holders of land to acquire by transfer or otherwise further holdings. … The rights and obligations of the purchaser are statutory –​not contractual. He does not, at any rate expressly, agree to perform the conditions or pay the purchase-​money, though the statute imposes an obligation upon him to do so. There is no agreement on the part of the Crown to issue a Crown grant, though, no doubt, the purchaser could by appropriate proceedings compel the performance of the statutory obligation to issue a grant when the conditions have been complied with. These conditions lead me to think that it is unsafe to treat the rules governing ordinary sales of land by one person to another as necessarily applicable in determining the relations of the Crown to a conditional purchaser under the statute.

In that case, an individual had held land under a conditional purchase agreement. By his will, he directed his trustees, until “the charges or encumbrances” on that land should be entirely liquidated, to appropriate the income of his residuary estate towards payment of

22

Contrast Keswick Developments Pty Ltd v Keswick Island Pty Ltd [2012] 2 Qd R 114. It was held that a sublease of Crown land can be repudiated by conduct: contractual rights and remedies operate subject to the legislation. [6.150]  361

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those charges or encumbrances. The issue was whether the residuary estate should bear the cost of the unpaid instalments for the land. It was argued that these instalments were a charge or encumbrance because the Crown had an unpaid vendor’s lien for the unpaid money. The High Court rejected the existence of such a lien as such a right was not spelt out in the statute and the remedy of sale to enforce the lien would be inconsistent with the statutory provision for forfeiture on default. Consequently, the unpaid instalments were not a charge or encumbrance. [6.155]  The existence of any interest in the absence of formalities was also denied by the

Full Court of the South Australian Supreme Court in Matthews v South-​Eastern Drainage Board [1965] SASR 328. In that case, an individual applied for an allotment of land under the War Service Settlement Agreement Act 1945 (SA). The individual was informed that he had been selected for allotment of the land applied for and sent an application form that he duly completed and returned. The individual went into possession and paid rent over a substantial number of years. The issue arose as to liability for rates. These rates were imposed upon persons who were classified as “land-​holders” a term defined to include lessees of land held under lease from the Crown. Liability was successfully denied on the basis that as no formal lease had been executed the individual had no rights as lessee. The court held that the status of a person who had applied for and been allotted land under perpetual lease conditions but whose tenure had not been the subject of a formal instrument could not be equated with that of a lessee. On the other hand, the person may have a statutory right to a lease. A similar absence of rights prior to the completion of procedures was asserted by the High Court in Walsh v Minister for Lands (NSW) (1960) 103 CLR 240. There an individual held land pursuant to a lease. One of the rights of the holder of such a lease was to turn the conditional lease into a conditional purchase. The individual lodged an application to convert. Before that application was processed, the land was reserved from sale as a timber reserve. The individual argued that the reservation was invalid as the land was already subject to a contract for a conditional purchase. The right conferred by the lease was claimed to constitute an offer by the Crown, which was taken up by the individual by making the application. The argument was rejected and the individual’s rights held to flow solely from the statute. Under the statute, the holder of a conditional lease was entitled to make a conditional purchase out of a lease by following the prescribed procedures. However, conversion was only effected upon completion of the procedures. Before that time, the land had been reserved and in accordance with the procedures could not thereafter be converted. The case is of particular significance in that it directly concerned the relationship between the individual and the Crown rather than some consequential issue. [6.160]  This emphasis upon procedural compliance not only prevents what would normally

be contractual or even equitable proprietary claims but also threatens claims based on estoppel. One of the early cases establishing the doctrine of proprietary estoppel was Plimmer v Wellington Corporation (1884) 9 AC 699. The conduct giving rise to the estoppel was that of a local government authority which had allowed a pier to be established. Similarly, in Crabb v Arun DC [1976] Ch 179, a local government authority was held not to be entitled to go back on the appearance it had created even though it was clear that no formal documents

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had been executed. Despite these cases, the statutory statement of procedures for dealings by the Crown may prevent the acquisition of rights where there is non-​compliance with the procedures. The application of estoppel principles was denied in Victoria v Rossignoli (1983) 2 VR 1. In that case a letter was sent by an officer of the Victorian Department of Lands and Survey stating that if the named party completed the filling and levelling of certain Crown land, that party would be granted exclusive filling rights in respect of other Crown land. The party completed the required filling and levelling and then claimed the other filling rights. The Crown argued that any licence could be granted only by the Governor-​in-​Council or a duly authorised delegate and since no such grant had been made, no rights could accrue. The argument succeeded. The Full Court of the Victorian Supreme Court held that any equity sought to be raised would establish against the Crown, rights which the Crown was prevented by statute from creating except in a prescribed manner.

Scope of an established relationship [6.165]  The statutes concentrate on the procedures for the creation of a relationship between the Crown and an individual. Once that relationship has been established in accordance with the statutory procedures, the courts are less reluctant to give meaning to the relationship by reference to common law principles. Thus the implied covenants as between landlord and tenant may be applied to a Crown lease in the absence of any contrary terms or features of the arrangement.23 Similarly the right of the Crown to the whole of the purchase price has been held to give rise an unpaid vendor’s lien enforceable against a purchaser from a mortgagee.24 In O’Keefe v Williams (1910) 11 CLR 171 a grant had been made of occupation licences of certain areas of land. By mistake, a part of these lands was leased to another. The original grantee sued for damages for breach of an implied term of his lease. The High Court held that a contractual obligation would be implied that the Crown would not disturb, or authorise the disturbance, of the lessee in his occupation, and would not do anything in derogation of the rights conferred by the statutory contract. The court could see no reason why different canons of construction should apply to the construction of contracts between the Crown and a subject, and contracts between subject and subject. The court did concede that the obligation might not be co-​extensive in all respects with that applicable between subject and subject. This qualification was taken up in Commissioners of Crown Lands v Page [1960] 2 QB 274. There the Crown during wartime requisitioned premises that were the subject of a Crown lease. The Court of Appeal held that any covenant for quiet enjoyment must be read to exclude those measures affecting the nation as a whole which the Crown took for the public good.

3 2 24

The common features of the arrangement are described at [6.115]. Sandhurst Trustees v 72 Seventh Street Nominees Pty Ltd (1998) 45 NSWLR 556; the case concerned the Crown Lands (Continued Tenures) Act 1985 (NSW). Its consistency with the earlier decision in Davies v Littlejohn (1923) 34 CLR 174 (above at [6.150]) is not obvious.

[6.165]  363

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[6.167]  The extent to which common law doctrines will be applied will vary according to the extent to which the terms of any arrangement are specified in the governing legislation. The mere use of terms such as lease, mortgage or transfer carries no meaning unless express definitions or common law definitions are applied. In American Dairy Queen (Qld) Pty Ltd v Blue Rio Pty Ltd (1981) 37 ALR 613 the issue arose of the power of a sublessee to assign his interest in lands held by trustees as a reserve. Dealings with lands of this sort were set out in a separate part of the Land Act 1972 (Qld). That part was silent as to the sublessee’s right to assign. It was argued on the one hand that, as no right to assign was conferred by the legislation, none existed; on the other hand, it was argued that at common law a sublessee could assign in the absence of any express restriction and since there was no express restriction the sublessee could assign. The High Court per Mason J at 616 applied the common law position on the basis that the relevant part of the Act was so limited in its terms that meaning had to be given by reference to the common law: “The statutory scheme does not consist of a statement of new rights, powers and obligations; instead it assumes the existence of those arising under the general law and proceeds to modify them to the extent considered necessary”. A  policy objection to this result was that the Minister’s control of the land would be diminished. However, the court pointed out that restrictions on subleases could always be included in the terms of the head lease. To reinforce its position on the scope of the relevant part of the Act, the court referred to other parts dealing with tenure of different sorts of Crown lands. In these parts, there were extensive provisions relating to the disposition of interests and they could well be construed to exclude general law principles. The consistency of any common law doctrine with any form of holding of Crown lands will always depend on analysis of the basis of that doctrine and the nature of the statutory terms of the holding. In Cooper v Stuart (1889) 14 AC 286, a grant in fee simple had been subject to the reservation of “any quantity of land, not exceeding 10 acres, in any part of the said grant, as may be required for public purposes”. Subsequently, a proclamation was made resuming a parcel of 10 acres for a public park. The validity of this resumption was challenged. One of the bases of the challenge was that the reservation infringed the rule against perpetuities. The Privy Council concluded that (on the assumption that the rule in England was applicable to Crown grants) the rule was inconsistent with the needs of Crown grants in an infant colony. In such a colony, grants were made to attract immigrants and development. To provide prospective wants which could not be foreseen the Crown had to retain the right to resume such parts as might be found necessary for the uses of an increased population. The rule against perpetuities would inhibit this needed flexibility and so was inconsistent with the overall scope of the Crown grants. In Hari v Trotter (1959) 76 WN (NSW) 112, claims to an easement based on the doctrines of prescription  or lost modern grant were made against a conditional purchaser. The claims were held to be inconsistent with the powers of the holder of an interest under a conditional purchase agreement. That holder had a statutory right to a fee simple, but did not have a fee simple and was subject to the Crown’s rights of forfeiture. The essence of the doctrines of prescription and lost modern grant was the presumption that at some time there had been a grant. The presumption could not be made against a person whose estate would not entitle that person to make a grant. Only a person holding a fee simple estate could make a grant and the holder of a conditional purchase agreement did not have a fee simple. 364 [6.167]

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Registration and alienation [6.170]  The Torrens statutes make provision for the dealing in, and/​or registration of Crown

Land.25 In some cases these interests are recorded in a separate register but that register is deemed to have the same effect as an ordinary Torrens system register. There are two major consequences of registration: any transfer by a lessee has the same effect as a transfer by an ordinary registered proprietor and thus attracts the protection of indefeasibility; any entry of forfeiture or determination is deemed to be effective to forfeit or determine the interest. [6.175]  Rights of alienation of Crown lessees are generally more limited than those of fee

simple owners and much closer to those of private lessees. The position of private lessees comes as a result, not of the common law, which permitted alienation, but of standard restrictions in lease agreements. The statutes typically provide, or seem to implicitly allow the Minister or Crown in some way to impose conditions in relation to an alienation of Crown land.26 Whilst such a requirement is common in private leases, the effect of a transfer without consent is that the transfer is effective but the landlord has the right to forfeit for breach. The Crown lands legislation typically provides that the purported transaction has no validity without that consent. The High Court has affirmed that a dealing without consent is invalid and has no legal effect.27 Any sublease without consent is illegal and thus rent due cannot be claimed28 and conversely any rent illegally paid cannot be recovered.29 Similarly, any agency or trust must under the legislation be disclosed and approved as part of the policy against absentee landholders. Any undisclosed trust is therefore unenforceable,30 even though because of the specific legislation the legal interest may exist until forfeited. The prohibition upon transfers without consent applies to transfers of an interest in the lease. Therefore, the passing of a proprietary interest to the transferee is necessary to constitute a breach. The creation of purely personal rights (ie, rights against the lessee) does not infringe the prohibition. The scope of the rights conferred by a share-​farming agreement entered into by a Crown lessee were considered by the High Court in Hill v O’Brien (1938) 61 CLR 96. The grantee of the share-​farming rights sought to prevent acts of an outsider interfering with the share-​farmer’s possession. The title to do so was denied on the basis that the share-​farmer had purely personal rights. The majority of the High Court reached this characterisation purely as a matter of construction of the share-​farming agreement. Latham CJ, however, held that the share-​farming agreement was ineffectual as far as it purported to create any proprietary interest because any attempted alienation was prohibited and deprived of legal effect by the statutory terms of the lease.

25

26

27 28 29 30

Real Property Act 1900 (NSW), s 13A et seq; Transfer of Land Act 1958 (Vic), s 8; Real Property Act 1886 (SA), s 91 et seq; Transfer of Land Act 1893 (WA), s 81A et seq; Land Titles Act 1925 (ACT), s 17; Land Title Act (NT), s 50; Land Title Act 1994 (Qld), s 48; Land Titles Act 1980 (Tas), s 27A. Crown Land Management Act 2016 (NSW), Pt 5; Land Act 1958 (Vic), s 55; Land Act 1994 (Qld), s 240E; Crown Land Management Act 2009 (SA), s 34; Land Administration Act 1997 (WA), s 15; Crown Lands Act 1976 (Tas), s 29(7); Crown Lands Act (NT), s 46. Bouch v Bickle (1915) 20 CLR 663 at 670–​671. Gaudron v Mackay (1936) 60 WN (NSW) 11. Marks v Jolley (1938) 38 SR (NSW) 351. Orr v Pond [1988] 2 Qd R 258. [6.175]  365

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[6.180]  Transactions that might otherwise create proprietary interests have been denied such

an effect because of the prohibitions. In particular, any equitable rights of a transferee have been held not to exist because equitable rights are dependent upon the availability of specific performance. Due to the statutory prohibitions this would not be granted. In consequence, an agreement may be viewed as purely personal and thus any breach of the prohibition on alienation avoided. In Harrington v Keene (1975) 11 SASR 361, a valid sublease for a term of five years conferred an option to purchase on three months’ notice. The option was exercised and consent granted to the exercise of the option. The validity of the transaction was attacked on the basis that consent was necessary to the grant of the option, not just to its exercise. Jacobs J in the South Australian Supreme Court held that the conferral of the option did not amount to an agreement for sale nor to an alienation of any interest. There was no agreement for sale until the option was exercised. There was no alienation even though an option ordinarily confers an equitable interest upon the holder of an option. This option, given without consent, was not specifically enforceable. The creation of an interest by virtue of the doctrine of proprietary estoppel has also been held to fall outside prohibitions on dealings. In Wood v Browne [1984] 2 Qd R 593, a lessee had encouraged another to build on land on the basis that the individual would at all times be able to occupy the land. The individual built and claimed the right to occupy against a successor-​in-​title of the original lessee. The Queensland Supreme Court held that under the proprietary estoppel doctrine the individual had a right to occupy the dwelling throughout his lifetime. The court held that the grant of this right did not infringe any prohibitions on dealings in the relevant legislation. The court held that the arrangement did not amount to a transfer or sublease. This decision may turn on the narrow scope of the prohibitions on dealings in the particular statute. The court referred only to prohibitions on transfers and subleases and not a general prohibition on the creation of interest in the land. Alternatively, the doctrine of proprietary estoppel may have been viewed as creating purely personal rights though the more general current view is that the equity entitles the holder to a proprietary interest and the court did enforce the right against successors-​in-​title. No mention was made of any capacity of those successors to hold free of prior informal interests.

LAND HELD FOR PUBLIC PURPOSES Nature of the public interest in public land [6.185]  Much Crown land is set aside for particular public purposes. The existence of land

set aside for a particular purpose may encourage individuals to purchase land in the vicinity. Furthermore, members of the public may come to enjoy accustomed uses of public land or simply believe that a particular use is right and proper on grounds ranging from patriotism to conservation. Any threatened change of use may meet resistance and raise the issue whether the use has led to enforceable public rights. Some form of charitable trust constitutes the most readily accepted vehicle for public rights in such cases. [6.190]  Generally, the public does not acquire any interest in public land even though the

public purpose is set out in statutory form. In Stow v Mineral Holdings (Australia) Pty Ltd (1977) 51 ALJR 672, members of the public lodged objections to the grant of a prospector’s licence in respect of Crown land. The right to lodge an objection was conferred upon persons

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who had any estate or interest in the land. The High Court ruled that the objections were invalid because members of the public had no estate or interest in Crown land (see Aickin J at 679). [6.195]  Similarly, the mere use of land for a public purpose does not constitute any rights

in the public to enforce that purpose and the Crown is free to change the use as it sees fit. In Williams v Attorney-​General (NSW) (1913) 16 CLR 404, a challenge was brought against a decision by the government of New South Wales to convert to a park certain land that had from 1845 been used as the Governor’s residence. As was put most simply by Gavan Duffy and Rich JJ at 467: It is true that the land was reserved, and has long been used, as a residence and domain for the Governor of New South Wales; but the reservation was not intended to confer on the public of New South Wales any rights as against the sovereign. Its intention and its effect were to retain the land for the purpose of the king’s government in the colony. It created no right which could be enforced in a court of law by any individual or set of individuals, or by the public of New South Wales; the sovereign still retained complete and undivided ownership and dominion, and he alone could complain of any interference with the land or with the method of dealing with it. The reservation gave to the public no more than it would have given had the land been reserved and used for a post office, a court of justice, or a custom house. Such purposes are commonly called public purposes, but the public has no right with respect to them which can be enforced in a court of law, apart from the proprietary right which the sovereign can enforce and defend.

This principle was applied by Fox J in Kent v Cavanagh (1973) 1 ACTR 43, in which objection was made to the erection of a communications tower on Black Mountain, Canberra. Part of the objection was that land on the mountain had been declared a public park under a relevant ordinance. A further declaration was made revoking that designation and establishing a new park that did not include the site for the proposed tower. Fox J held that subject to any statutory procedures, the Commonwealth could do as it liked on its own land. The procedures for the revocation of declarations had been complied with. Similarly, in Attorney-​General; Ex rel Carkeek v West Torrens Corporation (1981) 26 SASR 472, a local council resolved to open a road through a public park. The court held that a declaration by a council that land was to be held at a public park to be retained for reserve and recreation purposes did not create any trust for a public purpose. The statute under which the declaration was made did not impose any statutory restriction or statutory obligation as to the use of the land in perpetuity. No irrevocable purpose had been stated. A declaration of a trust required a clear intention. No such intention existed.

Dedication of public land [6.200]  Commonly reference is made to land dedicated for particular public purposes. Such

land may be removed from that capable of alienation or other dealing by the Crown. Such land may be given exemptions from various tax impositions. It seems that in Australia dedication for a public purpose involves a formal creation of a trust for that purpose. In Randwick MC v Rutledge (1959) 33 ALJR 367, the High Court denied a rating exemption for the Randwick racecourse on the basis that it was not dedicated for a public reserve. The court reached that conclusion even though the land was vested in trustees because the terms of the trust deed did not require the trustees to preserve the land as a public place.

[6.200]  367

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The nature of public reserves and dedication for that purpose was considered by Windeyer J in the Randwick case at 372–​373: The term “public reserve” –​and the word “reserve” alone, when not controlled by a definition or a context indicative of a different sense  –​have come to be used in common parlance in Australia in an imprecise way to describe an unoccupied area of land preserved as an open space or park for public enjoyment, to which the public ordinarily have access as of right. This use of the word is not new. For example, in Town Life in Australia by Twopenny, published in 1883, the author said of Melbourne, “there are several pretty reserves notably the Fitzroy, Carlton and University Gardens, and the Regent’s Park which are well kept”; and of Sydney, “Unfortunately Sydney has very few reserves, and those few she keeps in bad order, with the exception of the Botanical Gardens”. The meaning of “dedicated” in the definition of “public reserve” with which we are concerned was discussed before us, but without reference to the main decisions. It is convenient to deal with the matter at this point because the word had come into fairly common use in New South Wales before its appearance in the Crown Lands Act 1861 to which we were referred. At common law the only way in which land can properly be said to be dedicated to a public use is when it is dedicated as a highway.31 Although a private right to enjoy a park can be created as an easement appurtenant to an estate,32 our law does not recognise a public ius spatiandi vel manendi apart from charitable trust or statute.33 Nevertheless, in England a right in the inhabitants of a locality to use the village green for recreation and games could exist on a basis of ancient custom –​a circumstance which may well have influenced the above-​ mentioned directions to the governors to provide reserves for the recreation and amusement of the inhabitants of towns and villages. It is possible that, since “public roads and internal communications” headed every early list of public purposes for which land was to be reserved, the expressions “dedicated and set apart” were thought to be applicable respectively to roads and other objects. The reservation of a road in a Crown grant amounted to dedication.34 But it seems more probable that “dedicate” came to be used in New South Wales without any concern for its limited common law sense. It seems to have been thought to indicate something more formal than mere reservation from sale, something binding the Crown and creating some right in members of the public or of a section of the public. Land reserved from sale did not pass from the control of the Crown. But lands granted for public charitable purposes were removed from the control of the Crown and were properly described as dedicated. … Attorney-​General v Eagar established that lands impressed with a trust could not be diverted by the Crown to purposes alien to the trust. Its authority that such lands were dedicated is undiminished. And in connection with the very lands there in question, the legislature later adopted the word “dedicated” in the Church and School Lands Dedication Act 1880. But, in so far as the decision in Attorney-​General v Eagar appeared to place dedicated lands outside the authority of the legislature, it was mistaken. It was a later and even greater mistake to think that lands appropriated and taken into use by the Crown for a particular purpose (without the creation of any trust) became dedicated to that purpose and could not thereafter be used by the Crown for another purpose. All this was fully considered in Williams v Attorney-​General (the Government House Case) (1913) 16 CLR 404.35 It suffices to say here that there can be no dedication in any strict sense unless a public trust be created.

31 32 33 34 35

Ex parte Lewis (1888) 21 QBD 191 at 197; Attorney-​General v Williams (Government House Case) [1915] AC 573 at 579; New South Wales v Commonwealth (Garden Island Case) (1926) 38 CLR 14 at 91 per Isaacs J. Re Ellenborough Park [1956] Ch 131. Attorney-​General v Antrobus [1905] 2 Ch 188. Rapley v Martin (1832) 4 SCR 173. On appeal [1915] AC 573.

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Trusts for public purposes [6.205]  Land may however, be set aside for a public purpose in such a way that the reservation

does create a charitable trust. Such a reservation is more likely to occur where land is transferred by an individual to a public authority for a particular purpose. That purpose is likely to be set out in the documents by which arrangements are made for the transfer. Once a charitable trust exists, procedures such as a relator action by the Attorney-​General are available. In Brisbane CC v Attorney-​General (Qld) [1978] 3 WLR 299, the trustees of a society conveyed land to the Brisbane City Council on the following conditions: (a) the area to be set apart permanently for showground, park and recreation purposes; (b) the show ring to be levelled off; (c) the show society to be granted the exclusive use of the ground without charge for a period of two weeks in each and every year, for the purposes of and in connection with the district annual show.

Some years later the Council contracted to sell the land for use as a shopping centre. In a relator action the Attorney-​General sought a declaration that the land was subject to a valid and enforceable charitable trust. The Privy Council held that the conditions showed unequivocally an intention to create a trust for the purposes specified binding the land in the council’s hands. Park and recreational purposes were clearly accepted charitable objects. Consequently, a valid and enforceable charitable trust was created. Over the past 50 years, one of the most common ways in which land has come into public ownership for prescribed public purposes has been the dedication of land pursuant to planning schemes. Often on subdivision of land, a certain proportion has to be conveyed to the local council for public parks or reserves. Land for parking lots is another common requirement, particularly for shopping developments. In Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566; [1998] HCA 59, land was transferred to the council for a car-​parking site. The High Court inclined to the view that the vesting of land in a local authority for the purpose of a publicly accessible free car park could be a charitable trust. The court held that in any event, the council was under an enforceable obligation with respect to the car park land.

INDIGENOUS PEOPLE AND PROPERTY LAW Original settlement [6.210] European settlement of Australia involved not just a claim of sovereignty by the

British Crown but an influx of settlers. Beyond the use of land for purposes of residence, the settlers saw the land as a source of income from the growing of crops and the grazing of animals: wheat and wool became, at the time, staples of the Australian economy. In addition, the land has given up minerals from the gold rushes of the 1850s to the mining booms of the 1960s and the 2000s. These uses of land have been at the expense of the Aboriginal36

36

Occasionally, the term “Aborigine” is used reluctantly, as it refers to the indigenous group of any country, and detracts from the named identity of the “Aboriginal people” in Australia. “Aborigines” in Australia in fact have their own general names for all “Aboriginal people”, which differ in different regions of Australia –​for example, the term “Koori” is used by the people in Victoria, Tasmania, New South Wales and Southern Queensland to refer to “Aborigines” in general, and “Nyungga” by the people in South Australia. “Aborigine” or Aboriginal and Torres Strait Islander Peoples will be used in this book because it is a book for general use in Australia. [6.210]  369

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and Torres Strait Islander Peoples –​who, although they did not grow crops or rear animals, relied on the land for the provision of shelter and food, and incorporated the land as part of their spiritual beliefs. The legal relationship between the newly proclaimed sovereign and the existing inhabitants was not formalised by way of treaty;37 nor were there any statutes recognising any general rights to land of those inhabitants. Furthermore, until 1992, it was generally assumed that the common law did not recognise any land rights of the inhabitants stemming from their prior occupation of the land. [6.215] The relationship between Aboriginal and non-​Aboriginal persons is probably the

most sensitive social issue of Australian society. It can be argued, particularly in relation to indigenous persons living in traditional ways that their relationships should be governed by traditional roles and custom. However, that argument has largely been confined to the potential use of traditional penalties in criminal proceedings. [6.220]  From the perspective of land rights,38 the denial of the existence of land rights in

favour of those Aboriginal inhabitants who occupied the land prior to the claim of sovereignty by the British Crown rested on two principles –​the nature of the territory at the time of being claimed and the principle of tenure. The principle of tenure in its basic form is that all land vests in the Crown and all rights of individuals to interests in land derive from a grant of an interest by the Crown and involve a tenurial relationship between the individual and the Crown. The form of tenure is described as free socage tenure. An element of unreality afflicts the statement as to the overriding interests of the Crown because the tenurial relationship between the individual and the Crown carries no consequences. There are no incidents or obligations owed by the individual to the Crown. Special rights of the Crown in relation to the land such as the right to acquire the land compulsorily and the right to claim the land when the holder dies without a will and without any relatives, are claimed not by virtue of the tenurial rights. Instead they are claimed from statutory powers that are not confined to interests in land. The principle of tenure must be distinguished from that of sovereignty whereby the Crown has legislative and executive authority with respect to the territory. This authority allows for the making of laws recognising, transferring or extinguishing rights in land. [6.225]  The exercise of legislative and executive power has allowed the recognition of interests

in land, whose source is inconsistent with the need for an original grant from the Crown. Not only Aboriginal land claims but those of many of the early non-​Aboriginal land claimants are based on an association with the land.39 In New South Wales, official government policy was to confine settlement close to the area surrounding Sydney Harbour. However, much development was undertaken by those who defied official government policy, went out, and exercised control over the lands of the interior. The feature of the claims of these squatters was that they were able to acquire the political power (the squattocracy) to legitimise their land takings. Australian preference for small land holdings has been constantly at odds with the economic power of large land owners. That battle was fought not only in early New South

7 3 38

39

See generally Hobbs and Williams “The Noongar Settlement: Australia’s First Treaty” (2018) 40 Syd LR 1. Much of the following analysis is based on material provided for the first edition of this text by Mr Richard Johnstone of the Law School of the University of Melbourne. Further substantial parts of this analysis have appeared in Moore, “Aboriginal Land Rights in South Australia” in Hinton, Johnston and Rigney (eds), Indigenous Persons and the Law (Cavendish, Sydney, 1996), pp 133–​147. Castles, An Australian Legal History (Law Book Co, Sydney, 1982), pp 175–​176.

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Wales, but in the later selection movement and the closer settlement attempts to reward the heroes of the two World Wars. Whatever the preferences of government, Australian geography has dictated victory by the large landholders. [6.230]  It is only if claims to land by Aboriginal and Torres Strait Islander Peoples, derived

from association with the land prior to the claim to sovereignty by the British Crown, are denied, does the doctrine of tenure become significant for the recognition of Aboriginal land rights. Recognition of rights existing prior to British claims to sovereignty depends upon the characterisation of the territory at the time sovereignty is claimed. The standard distinction is that between settled and conquered territory.40 In the case of settled territory, existing laws and thus rights flowing from those laws are not recognised. In the case of a conquered territory, existing laws continue to apply until displaced by an exercise of sovereignty. The basis of the distinction is a matter of constitutional rather than property law. It is possible to argue that the distinction is not one determined by the judiciary but reflects an executive determination. As a matter of the substance of the distinction, characterisation as a settled territory is said to rest on the absence of any existing legal system. At the same time, legal systems were conceived as a product of societies that cultivated the land rather than those which nomadically drew succour from the land. In modern environmental terms, civilisation equates to environmental degradation. Settlement was contrasted with the act of conquest and in turn, conquest was conceived in terms of battle on formed lines rather than the attrition of small-​scale killings and the impact of introduced disease. It is because of the primary issue of the characterisation of the territory that Mabo v Queensland (No 2) (1992) 175 CLR 1, whilst a case about the existence of land rights, is even more so a case about constitutional law. Land rights flow from Mabo not because they are accommodated as part of the common law as some form of exception to the tenurial principle, but because legal rights are recognised as flowing from the legal system in force prior to the claim of sovereignty by the British Crown. This legal system is recognised and enforced not as part of, but something outside the common law. This recognition cannot be simply a matter of land law. [6.235]  The application of the doctrine of the tenure in Australia is traditionally ascribed to

the 1848 decision in Attorney-​General (New South Wales) v Brown (1847) 1 Legge 312.41 In that decision a challenge was made to the exercise by an individual of the taking of minerals from land. The land had been granted to the individual, but the right to take minerals had been isolated from the grant. The challenge by the Crown in that case was upheld, on the ground that any right to the land was derived from the grant of the Crown. The Crown could make the grant subject to such exceptions or limitations as it desired. Although the grant provided the private rights to the land, it could also qualify those rights in such ways as the Crown saw fit. The court rejected an argument that there was an inconsistency between the fact of the grant itself and the exceptions from the grant. The decision can be seen as paradoxical: while the tenurial relationship of itself imposes no burdens upon the individual landholder in favour of the Crown, the terms of the grant by the Crown may be subject to such conditions and

40 41

Castles, An Australian Legal History (Law Book Co, Sydney, 1982), pp 515–​520. See Buck, “Attorney-​General v Brown and the Development of Property Law in Australia” (1994) 2 APLJ 128; see Chapter 2 at [2.25]. [6.235]  371

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exceptions as the Crown sees fit. Thus, rights to minerals have, in Australia, been divorced from ownership of the surface land. The application of the doctrine of tenure in Australia, and acceptance of the principle that Australia was a settled territory, was confirmed by the decision of the Privy Council in 1899 in Cooper v Stuart (1889) 14 AC 286. That decision has been traditionally seen as inconsistent with any claim by Aboriginal and Torres Strait Islander Peoples to rights in land based upon their traditional association with the land. [6.240]  Non-​recognition of Aboriginal land rights was not thereafter challenged for a long

time. The traditional analysis was again applied by Blackburn J in 1971 when the matter came before the Federal Court in Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141.42 Blackburn J (at 245) reiterated the proposition that the doctrine of tenure was part of the law of Australia and explained clearly its significance for Australia: All the Australian cases to which I  was referred … affirm the principle, fundamental to the English law of real property, that the Crown is the source of title to all land; that no subject can own allodially, that only an estate or interest in it which he holds mediately or immediately of the Crown. On the foundation of New South Wales, therefore, and of South Australia, every square inch of territory in the colony became the property of the Crown. All titles, rights and interests whatever in land which existed thereafter in subjects of the Crown were the direct consequence of some grant from the Crown.

Relations between indigenous peoples and land [6.245]  Prior to the establishment of the colony of New South Wales by Captain Phillip in

1788, the Australian continent was occupied solely by the Australian Aborigines. Aboriginal society was, and still is, diverse and culturally sophisticated, emphasising the group and its cultural obligations ahead of the individual. This emphasis, of course, is a direct contrast to the individualism at the heart of contemporary non-​Aboriginal society in Australia. Aboriginal law was, and is, an integral part of Aboriginal society, and covered cultural, spiritual, social and economic behaviour. The law has always had a crucial role in the manner in which Aboriginal culture reflects the interaction between the people of the present, their ancestors, and the environment. Central to Aboriginal culture, spirituality and sustenance is a complex and important relationship of the group with the land.43 It is a spiritual, intellectual and economic relationship. The land is a source of food and shelter, the home of Aboriginal “totems”,44 and a future resting place for the spirits of individual Aborigines. Aborigines believe they have come from the land,

42 43

44

Milirrpum v Nabalco Pty Ltd [1972-​73] ALR 65. The facts of this case and a fuller exposition of the reasons for the decision are set out at [6.265]. For descriptions of this relationship, see Dodson, “Aborigines and the Criminal Justice System” (1987) 28 Aboriginal Law Bulletin 4; Christie, Aborigines in Colonial Victoria 1835–​1886 (Sydney University Press, Sydney, 1979), pp 22–​23; Toyne and Vachon, Growing Up the Country: The Pitjantjatjara Struggle for Their Land (Penguin Books, Melbourne, 1984), pp 5–​8. “Totemism” means that Aborigines see humans and the natural species as part of one social and ceremonial whole, so that there is no dichotomy between humans and the things of nature. In Aboriginal society, each person, clan, local descent group, and part of land was identified with a natural species or object. A person saw the totem as a guide and a helper, and in return would respect and refrain from injuring the totem. The totems linked the individual with the creation of society, and is a reminder of social and ceremonial obligations: see Christie, Aborigines in Colonial Victoria 1835–​1886 (1979), pp 21–​22.

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that they are one with the land, and will return to the land when they die. To Aborigines, the land was created, with all its features, together with the law, the people, the culture, and other forms of life, by ancestral beings and every piece of land is marked with the passage of these ancestral beings. In their movement over the land, the ancestral beings determined the spirit centres for both humans and animals. The map of their travels –​the “songs” for the particular country –​are the property of the senior traditional owners of the land. It is the duty of these owners to care for the land, and the duty is passed down through families. Caring for the land, or “growing up the country”, involves making sure the country grows up, thrives and is in a suitable physical and spiritual condition to be handed down to future generations of the group. Aboriginal and Torres Strait Islander Peoples see themselves as the land’s inherent and perpetual custodians. The individual is, therefore, part of a continuum of culture. He or she links the past, the present and the future of the land. This process has been repeated since the earliest generations, and it is through the strict observation of this process, the law, that the country has continued to flourish. The activities of the spirit ancestors are commemorated in the rich Aboriginal oral tradition, and in Aboriginal ritual and social life. Aboriginal communities accept a collective responsibility for their country, and live in the “tracks” of ancestral beings. For Aborigines land is the central and inseparable part of their being. Knowledge of the land is central to Aboriginal self-​identity and pivotal in the creation and fulfilment of obligations in Aboriginal society. Acquiring knowledge of the land is a lifelong task, and the dispensing of it a lifelong obligation. This knowledge of the land involves an intimate understanding of the plants, animals and geographic formations on the land, and of the near inexhaustible food and medicinal resources that the land can yield.45 It means understanding the importance of geographic features as signs of the activities of ancestral beings, as links with the past and as deserving of respect and love. [6.250]  This approach is in strong contrast with European systems of land law, where land

is a commodity, to be bought and sold, to be commercially developed and exploited, to be a source of profit. The European concept of land ownership gives the owner exclusive rights to use the land: there is no obligation to look after it in the longer term. In contrast, Aborigines do not own the land. If anything, the land owns them, and they belong to the land. Land is not a source of material wealth as in European communities, but a source of comfort. Aborigines consider it important to die in one’s own country, so that the spirits might be at home. “It is their identity with the land, achieved through knowledge and understanding, that distinguishes Aborigines from the Europeans, who treat the land as a passive resource rather than an active ally”.46 [6.255] This integration of the spiritual, cultural and economic aspects of Aboriginal life,

particularly the relationship with the land, left Aboriginal and Torres Strait Islander Peoples very vulnerable when their connection with the land was broken. From 1788, Aborigines were defined as British subjects and were entitled to the protection of British law. They did not, however, have any recognised title to land, and their culture was fundamentally misunderstood

45 46

See, for example, Christie, Aborigines in Colonial Victoria 1835–​1886 (1979), pp 14–​15;Toyne and Vachon, Growing Up the Country: The Pitjantjatjara Struggle for Their Land (1984), pp 7–​8. Butcher and Turnbull, “Aborigines, Europeans and the Environment” in Burgmann and Lee (eds), A People’s History of Australia Since 1788, Vol 1: A Most Valuable Acquisition (1988), p 19. [6.255]  373

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to the extent that they were regarded as “primitive, if not subhuman”.47 As the frontiers of settlement expanded, more and more Aboriginal land was taken, and Aborigines were likely to be treated violently if they resisted the takeover of their lands.48 Consequently, during the following two centuries the relationship of most Aboriginal communities with their land was shattered. Many Aborigines tried to ignore the dispossession of their lands, but free-​range hunting and gathering was no longer possible because of the new laws of trespass and property ownership.49 Without their land, Aborigines’ whole system of knowledge and economic life has been endangered, and they have been “cut off from the privileges of their birthright”.50 The dispossession of their land and culture has caused Aboriginal communities distress at being unable to perform their true responsibilities to the land, and to their past and future generations. [6.260] Concern about the reduction in size of the Aboriginal population, and of their

mistreatment, led to the appointment in the 1830s of Protectors (in New South Wales, South Australia and Western Australia) to protect Aborigines from abuse and to provide remaining populations around the towns with some rations, blankets and medicine. This policy proved unsuccessful, and was replaced after the 1860s with more formal and extensive policies of “Protection”. This involved isolating and segregating “full blood” Aborigines on reserves and restricting contact and interbreeding between them and outsiders. The purpose of the reserves, therefore, was not to restore the relationship between Aborigines and the land. Rather it was a means of isolating the Aboriginal population. The missions that were entrusted with the running of the reserves were sometimes unsympathetic to Aborigines continuing their traditional way of life. The policy also aimed to assimilate “half castes”, especially their children who were often removed to “boarding houses” to be educated in European ways.51 From the 1950s, the Commonwealth and all the State Governments adopted the policy of “assimilation”, which involved the expectation that all Aborigines could attain the same manner of living as of other Australians and to live as members of a single Australian community, with the same rights and privileges, and accepting the same customs, and influenced by the same beliefs as other Australians.52 This policy involved expenditure on health, housing, education and training programs, and an attempt to remove restrictive and discriminatory legislation, and the mechanisms of protection. Aborigines became entitled to vote at Federal elections in 1962, and in the 1967 referendum, the Commonwealth Parliament was given power to pass laws specifically for the benefit of the Aboriginal people.

47 48

49 50

51 52

ALRC, The Recognition of Aboriginal Customary Laws, Report No 31 (1986) at [23]. See generally Reynolds, The Other Side of the Frontier: Aboriginal Resistance to the European Invasion of Australia (Penguin, Ringwood, Victoria, 1982); Reynolds, Frontier (Allen and Unwin, Sydney, 1987); Rowley, The Destruction of Aboriginal Society (Penguin, Melbourne, 1972). See Miller, Koori, a Will to Win. The Heroic Resistance, Survival and Triumph of Black Australia (Angus and Robertson, London, 1985), pp 51–​54. Eyre, Journals of Expeditions into Central Australia (T and W Boone, London, Vol 2, 1845), reproduced in Stone (ed), Aborigines in White Australia: A Documentary History of the Attitudes Affecting Official Policy and the Australian Aborigine 1697–​1973 (Heinemann Educational, South Yarra, Victoria, 1974), p 66. ALRC, The Recognition of Aboriginal Customary Laws, Report No 31 (1986) at [25]. ALRC, The Recognition of Aboriginal Customary Laws, Report No 31 (1986) at [26], fn 21.

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During the late 1960s, there was an increased questioning of the general policy of assimilation. The policy took no account of the value or resilience of Aboriginal culture, and did not allow Aborigines to observe their own languages and traditions. There was a gradual movement away from “assimilation” towards a general recognition of the value of Aboriginal culture and the right of Aboriginal and Torres Strait Islander Peoples to retain their languages and customs and to maintain their own distinctive communities. Early initiatives focused on increased funding and improved programs in health, education and employment, but there were also measures taken to increase funding for Aboriginal community projects. In 1972, a separate Federal Department of Aboriginal Affairs was established. Hand in hand with these developments was a gradual movement towards the assertion of rights, including land rights, for the Aboriginal people. Whilst the campaign for recognition of Aboriginal rights has never ceased since the time of European invasion and settlement, it received a renewed impetus in the late 1960s, and inevitably, the focus was on land rights, because of the traditional association with the land, long occupancy, and economic need. In 1966, Gurindji stockmen went on strike in protest against conditions of employment with the Vestey beef cattle interests in the Northern Territory, and then the entire community walked off Wave Hill Station and moved to establish camp on a portion of their traditional land at Wattie Creek in what was clearly a claim for land rights.53 [6.265]  A new effort at the legal assertion of land rights in favour of traditional Aboriginal

occupants came in the late 1960s in the Gove Peninsula. The discovery of minerals led to new interest in the land by non-​Aboriginal developers and conflict with traditional occupants. The resulting litigation produced the decision in Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141; [1972-​73] ALR 65, referred to in [6.240]. Aboriginal groups based at Yirrkala on the Gove Peninsula in the Northern Territory brought an action in the Northern Territory Supreme Court to assert their continuing ownership of their traditional lands. They challenged the validity of mining leases granted over their land by the Commonwealth government. In the determination of those claims, Blackburn J held that the doctrine of communal native title did not form, and had never formed part of the law of any part of Australia, and that such a doctrine had no place in a settled colony.54 In any event he concluded that the mining leases granted by the Commonwealth to Nabalco Pty Ltd were valid exercises of the executive power of the Commonwealth Government and thus overrode any communal native title rights. He further held that the Aboriginal clans in the Gove Peninsula had established a recognisable system of law and that this system of law provided for a relationship between the clans and the land. On the other hand, Blackburn J did not consider that the relationship between the clans and the land constituted a proprietary relationship in any sense known to the common law. In any event, he concluded that the plaintiffs had not established that their predecessors had, at the time of the acquisition of their territory by the Crown as part of the colony of New South Wales, the same links to the same areas of land as those claimed by the plaintiffs. This decision was strongly criticised by many writers, for its findings that New South Wales was a settled colony, that the doctrine of communal native title was never part of the Australian

53 54

See The Original Wave Hill Mob Letter reproduced in (1986) 20 Aboriginal Law Bulletin 11 and Miller, Koori, a Will to Win. The Heroic Resistance and Triumph of Black Australia (1985), p 194. Blackburn J held New South Wales to be a settled colony on the basis of Cooper v Stuart (1889) 14 AC 286, a decision referred to at [6.235]. [6.265]  375

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common law, and that the clans’ law did not recognise proprietary interests.55 However, the decision is significant in that it recognises that the Aboriginal clans had a recognisable system of law, and that system of law involved a relationship between the clans and the land. That relationship differed from forms of proprietary interest of land known to the common law particularly because it did not involve the total exclusion of other groups and because the ownership was not individualised but held on a communal basis. The findings in Milirrpum, however, undercut the basis for the description of Australia as a settled colony in that they reject the view that there were no systems of law operating prior to the assertion of sovereignty by the British Crown.

Limited statutory land rights [6.270]  State governments responded in different ways to the pressures for some recognition

of the land rights of the indigenous people. Land Trusts were set up by legislation in South Australia,56 New South Wales,57 Victoria58 and Western Australia59 to administer the remaining Aboriginal Reserves in those States in the late 1960s and early 1970s. While these developments did not result in land rights regimes totally acceptable to Aborigines, they did in some cases “symbolise the principle of ownership of Aboriginal Reserves by those Aborigines who live on the reserves”.60 These trust arrangements proved to be unsatisfactory, largely because the policy, powers and practices of the trusts were seen to be subject to excessive ministerial control and because the trusts were too bureaucratic and removed. [6.275]  Following the Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 decision, the focus for

the grant of Aboriginal land rights switched to the political arena. In 1967, a referendum had amended the Australian Constitution61 so that the Commonwealth parliament had power to pass laws specifically for the benefit of Aboriginal people. In 1973 the newly elected Australian Labor Party government commissioned Mr A E Woodward QC as Aboriginal Land Rights Commissioner. He was to inquire into and report on the “appropriate means to recognise and establish the traditional rights and interests of Aborigines to and in relation to lands”. In particular, the Commissioner was to report on arrangements for vesting title to, and granting rights in, land in the Northern Territory already reserved for the use and benefit of Northern Territory Aborigines. He was also to inquire into the desirability of establishing appropriate procedures for the examination of claims to Aboriginal traditional rights and interests in land in the Northern Territory outside Aboriginal reserves.

55

56 57 58 59 60 61

See Reynolds, The Law of the Land (Penguin, Ringwood, Victoria, 1992); Hookey, “The Gove Land Rights Case: A Judicial Dispensation for the Taking of Aboriginal Lands in Australia?” (1972) 5 FLR 85; Hocking, “Does Aboriginal Law Now Run in Australia” (1979) 10 FLR 16; Bartlett, “Aboriginal Land Claims at Common Law” (1983) UWALR 16. Aboriginal Land Trusts Act 1966 (SA); see now Aboriginal Land Trusts Act 2013 (SA). Aborigines (Amendment) Act 1973 (NSW); see now Aboriginal Land Rights Act 1983 (NSW). Aboriginal Lands Act 1970 (Vic). Aboriginal Affairs Planning Authority Act 1972 (WA). Pepper, You are What You Make Yourself to be: The Story of a Victorian Aboriginal Family 1842–​1980 (Hyland House, Melbourne, 1980). Section 51(xxvi) empowers the Federal Government to make laws with respect to the people of any race for whom it is deemed necessary to make special laws.

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The Commissioner’s two reports62 contemplated that Aboriginal reserves and certain other defined areas were to be vested in an appropriate Aboriginal body in fee simple. Claims to “vacant Crown land”, if not accepted by the government, were to be referred to an independent Aboriginal Land Commission for investigation and recommendation to the government. Title granted to Aboriginal and Torres Strait Islander Peoples should be communal and inalienable (except for the transfer of land from one Aboriginal body to another) and vested in a trust, with the trustees being nominated by Land Councils. The Councils were also to provide administrative services and to give directions in certain matters. The formal title to Aboriginal land was to be held in an Aboriginal corporation known as a Land Trust that was to hold the land for the benefit of all those having traditional interests or rights over the land. The Land Councils were, inter alia, to represent Aborigines in negotiations with the government in relation to land rights, to protect the interests of traditional owners in all negotiations concerning the use of land, and to co-​ordinate and make traditional claims to vacant Crown lands. The government was to support an Aboriginal Land Fund to finance the acquisitions of pastoral leases or land within towns, where claims could be made on traditional grounds or for social or economic reasons. It was recommended that minerals and petroleum should remain the property of the Crown, but that Aborigines should have the right to prevent exploration on traditional lands. The power of veto was to be overridden only if the government formed the opinion that it was in the national interest to do so. Land Councils were to have the power to negotiate with prospective miners on behalf of the traditional owners. [6.280]  In 1976, the newly elected Coalition government passed a revised Aboriginal Land

Rights (Northern Territory) Act 1976 (Cth). In line with the Commissioner’s recommendations, the 1976 Act provided for the setting up by the Commonwealth of at least two land councils for the Northern Territory. The councils were to nominate the trustees who should administer the land vested in the Aborigines, and were to provide administrative services and give direction in certain matters. The councils were to represent Aborigines in negotiations with the government in relation to land rights, to protect the interests of traditional owners in all negotiations concerning the use of land, and co-​ordinate and make traditional claims to vacant Crown lands. The making of “traditional land claims” was to be based on the spiritual attachment of Aboriginal clans to an area of land over which they were entitled to forage by Aboriginal law. Only unalienated Crown land could be the subject of a land claim. In accordance with the Woodward Reports, which envisaged the traditional owners, not the Land Councils, would have power over the land, the Land Councils were only able to act with the consent of the local Aboriginal communities. In 1980, however, the Act was amended63 to provide that if the Land Council agreed to mining, that agreement was valid even if the consent of the local Aboriginal communities had not been obtained. Under the Act, land claims are heard by an Aboriginal Land Commissioner, who is a judge of the Supreme Court of the Northern Territory. The Commissioner determines whether the

62 63

Aboriginal Land Rights Commission, First Report Parliamentary Paper No 138 (1973); Second Report Parliamentary Paper No 69 (1974). Aboriginal Land Rights (Northern Territory) Amendment Act 1980 (Cth). [6.280]  377

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Aboriginal claimants have traditional links with the land being claimed. This inquiry involves visiting the land in question, witnessing ceremonies, obtaining evidence from the Aboriginal people as to their traditions, and receiving “expert” evidence from anthropologists. If the Commissioner decides in favour of the claimants, a recommendation is made to the Minister for the granting of an area of land to the traditional owners. Upon receiving this advice the Minister is required to transfer the land to a Land Trust.64 Members of the Land Trust act at the direction of the local Land Council.65 At the middle of 1989, a total of 258,000 square kilometres of former reserves and land held by missions had been granted to Aboriginal Land Trusts from the time of the commencement of the Act. In addition, following successful claims by traditional Aboriginal owners, 21 deeds of grant had been handed over to Aboriginal Land Trusts. These deeds covered areas totalling 193,075 square kilometres.66 [6.285]  During the 1980s and 1990s, a number of State governments enacted or initiated

land rights legislation. These innovations can only be studied on a State by State basis in a roughly chronological order. [6.290]  South Australia passed the Pitjantjatjara Land Rights Act 1981 (SA) and the Maralinga

Tjarutja Land Rights Act 1984 (SA). The Pitjantjatjara Land Rights Act 1981 transferred just under 100,000 square kilometres of land to the Pitjantjatjara people (about 10% of the State’s land area) and the Maralinga Tjarutja Land Rights Act 1984 involved a 50,000 square kilometre tract of land.67 The statutes set up statutory Aboriginal corporations to be the holders of special title to traditional lands. All members of the relevant Aboriginal community are members of the corporate body. The body’s principal functions are to administer the land vested in it; to ascertain the wishes and opinions of all traditional owners in relation to the management, use and control of the land; and to seek, where practicable, to give effect to those wishes or opinions. The body corporate has wide powers to permit or deny access to lands, and there can be no mining operations without the consent of the body corporate, although unreasonable refusal of consent may lead to arbitration. Unlike the Northern Territory, South Australia did not set up any open-​ended claims procedure for vacant Crown lands but preferred to deal with each major land grant on a one off legislative basis. [6.295] The New South Wales Aboriginal Land Rights Act 1983 made provision for the

transfer of former reserves or Trust lands to the ownership of local Aboriginal Land Councils and for claims by Land Councils of “claimable” Crown Land. The legislation allocated 7.5% of Land Tax revenues for 15 years to a three tier system of Aboriginal Land Councils (State, Regional and Local) and enables the purchase of land on the open market.68 “Claimable”

64

65

6 6 67 68

For accounts of the land claims processes under the Act, see Bell, “In the Case of the Lawyers and the Anthropologists” (1986) 11 Legal Service Bulletin 202; Neate, Aboriginal Land Rights Law in the Northern Territory, Volume 1 (APCOL, 1989). For a criticism of the legal structures imposed by the Act for the setting up of Land Councils, see McGill, “Northern Territory Land Councils: European Systems Don’t Meet Aboriginal Needs” (1980) 5 Leg Ser Bull269. Department of Aboriginal Affairs, Annual Report 1988–​89 (AGPS), p 37. The Maralinga peoples had been moved from these lands in the 1950s and 1960s for the convenience of British testing of nuclear weapons. Land rights were also vested in the Wreck Bay Aboriginal Community Council by the Aboriginal Land Grant (Jervis Bay Territory) Act 1986 (Cth) which granted 403 hectares of land in the Jervis Bay Territory, geographically located on the south coast of New South Wales.

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Crown land excluded lands lawfully used or occupied and those lands which, in the opinion of the Minister, were needed or likely to be needed for either an “essential public purpose” or for “residential land”.69 An Aboriginal Land Council has a right of appeal to the New South Wales Land and Environment Court if dissatisfied with the Minister’s exercise of discretion. The difficulty in respect of the meaning of used or occupied can be seen in the decision of the High Court in New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2016) 260 CLR 232. Berrima Gaol had been decommissioned by the New South Wales Government, and while it was accepted that it was no longer operating, the Crown argued that it was still a occupation. The acts of maintenance, such as routine building work, the tending of gardens, and public visits were acts consistent with control. These arguments were accepted by a majority of the High Court. In coming to this conclusion, the majority reasoned that what was required was an examination of the activities undertaken on the claimed land. Furthermore, it wasn’t necessary that the term “lawfully used or occupied” be necessarily construed in a beneficial way for an indigenous group. [6.300]  Victoria did not have an open-​ended land claims procedure and, therefore, followed

South Australia in contrast to the Northern Territory and New South Wales. Land rights, in the form of freehold land, have been granted at Lake Condah (half a square kilometre) and Framlingham (11 square kilometres)70 to Aboriginal corporations who have full power of management, control and enjoyment over the land. Eligibility for membership of the Aboriginal corporations is determined by the relevant Committee of Aboriginal elders. The elders are given extensive powers over the management of the corporation and the land. Special protection is given to sacred or significant sites. The leases contain provisions relating to mining based on the Pitjantjatjara Land Rights Act 1981 (SA) and establish a procedure for balancing the interest of the miners and the Aboriginal owners. Mining rights created after the date of the Act may not be exercised without the permission of the relevant Aboriginal corporation. If permission is refused, or is granted on conditions to which the applicant objects, the applicant can ask the Minister to resolve the matter by conciliation, and, if need be, arbitration. [6.305] In Western Australia, a proposed Aboriginal Land Bill 1985 (WA) which would

have transferred the control and ownership of reserves to local councils and set up a claims procedure for vacant Crown Lands, was rejected by the Upper House. Consequently, the reserves remained under the control of the Aboriginal Affairs Planning Authority. In 1986–​1987 a joint Commonwealth-​State program was established to provide Aboriginal communities with secure tenure for reserve land, excisions from other areas of land, and improved living conditions for communities through the adequate servicing of the land.71 [6.307] In 1995, the Tasmanian government with bipartisan political support enacted

the Aboriginal Lands Act 1995 (Tas). This Act established the Aboriginal Land Council of Tasmania, with membership of this body elected by members of the Aboriginal community.

9 6 70

71

See Chalk, “New South Wales Land Rights … All Just an Act?” (1988) 32 Aboriginal Law Bulletin 4. Aboriginal Land (Lake Condah and Framlingham Forest) Act 1987 (Cth) enacted by the Commonwealth Parliament at the request of the Victorian Government after the Victorian Legislative Council refused to pass the legislation. Department of Aboriginal Affairs, Annual Report 1988–​89 (AGPS), p 34. [6.307]  379

PART 2 Title to Land

Land is vested in this Council and management plans are then developed which provide, for, in some instances, management by aboriginal persons who have a connection with the particular area that has been vested. The functions to be performed by the Council include using and managing Aboriginal land and its resources for the benefit of Aboriginal people and in doing so, it must act in the interests of reconciliation with the broader Tasmanian community. [6.310] The National Government with respect to the Northern Territory, and the South

Australian, New South Wales and to a lesser extent Victorian governments, had made significant steps in the protection of the rights of Aboriginal peoples with their traditional lands. However, that response was not matched in other parts of Australia. In 1985, the National Australian Labor Party government published a Preferred National Aboriginal Land Rights Model.72 This model included a commitment to the principles that Aboriginal land would be held under inalienable freehold title, and sacred sites would be protected. Despite the fact that the preferred model itself contained concessions towards development interests, in 1986 the proposal was allowed to die. The failure of the national Government to insist upon basic standards for Aboriginal land rights placed the onus for resolving the issue back with the courts. In particular, legislation in Western Australia and Queensland failed to make any commitment to land rights conforming to the model or the standards applied in 1976 in the Northern Territory by the national Liberal-​Country Party government.

RECOGNITION OF NATIVE LAND RIGHTS [6.315]  The opportunity for the Australian High Court to review its stance on native land

rights arose in Mabo v Queensland (No 2) (1992) 175 CLR 1. In the period following Milirrpum v Nabalco (1971) 17 FLR 141, the High Court had given an indication73 that it was willing to consider the issue of the recognition of native title in Australia. The judgments of the members of the court in Mabo have a highly political nature. This characterisation is not to attack the judgments, but to highlight the essence of the court’s consideration. As the final arbiter of common law doctrine in Australia, the High Court must be concerned with the moral coherence of the basic principles enunciated by the court as much as it must be concerned with their logical coherence. For a court of final review, the concern for coherence must override the conclusions of errant precedents or accidents of history. In essence, Mabo is a statement that the principles of the Australian legal system cannot withstand the immorality of the proposition that Australia is a settled territory because there was no legal system in force prior to the claim of sovereignty by the British Crown. The claim in the case involved land known as the Murray Islands. The Murray Islands comprises three islands with an area of nine square kilometres in the Torres Strait. The claim

72

73

See generally Brennan, “Aboriginal Aspirations to Land: Unfinished History and an Ongoing National Responsibility” in Hocking (ed), International Law and Aboriginal Human Rights (Law Book Co., North Ryde, NSW, 1988), p 148. In Coe v Commonwealth (1979) 24 ALR 118 the High Court stated that the issue of recognition of land rights of occupants prior to the assertion of sovereignty by the British Crown was an issue that had not been the subject to any authoritative ruling by the High Court. For a contemporary understanding of the constitutional recognition of Indigenous Australians, see Fulcher, “A Diminished Nation? The Racial Discrimination Act 1975, the Native Title Act 1993 and the Constitutional Recognition of Indigenous Australians” (2018) 92 ALJ 174.

380 [6.310]

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was instituted by three of the Meriam people who inhabit the islands. The native inhabitants live in village communities. The land is occupied in small properties that have been handed down from generation to generation. In 1879, the islands were annexed to Queensland. In 1882, the Queensland Government reserved the islands for native inhabitants. Also in that year, the Queensland Government leased to a missionary society an area of two acres on one of the islands. In 1931, the government leased two of the islands to non-​residents to allow a sardine factory to be established, but the lease expressly precluded interference with the natives’ use of the islands. The action by the Meriam people was commenced in 1982. In 1985, the Queensland Parliament passed the Queensland Coast Islands Declaration Act 1985 (Qld). That Act declared that, on annexation to Queensland in 1879, the lands vested in the Crown in right of the State of Queensland were free from all other rights, interests and claims whatsoever. In Mabo v Queensland (No 1) (1988) 166 CLR 186, this Act was held to be invalid as inconsistent with the Racial Discrimination Act 1975 (Cth). The High Court held that the 1985 Act extinguished all traditional land rights that would otherwise have survived annexation to Queensland. The High Court held that the Act deprived the Meriam people of their property but left unimpaired the rights of those whose property did not originate from the laws and customs of the Meriam people. Under s 10 of the Racial Discrimination Act 1975, persons of one race could not be granted by law property rights of a more limited nature than those granted to other races. The Meriam people were granted a more limited property right. The matter was then further heard by Moynihan J in the Queensland Supreme Court. He reserved a number of questions for determination by the High Court pursuant to s 18 of the Judiciary Act 1903 (Cth). In argument on these questions, the Queensland Government claimed that when the Murray Islands were annexed, the Crown acquired the absolute beneficial ownership of the islands, and that no other rights could exist over the islands unless granted by the Crown. The native inhabitants argued that their customary native title was not extinguished upon annexation, and that nothing since annexation had extinguished that title. The High Court held that the acquisition of sovereignty by the British Crown over territory in Australia did not automatically extinguish customary native title. The common law could accommodate native customary title as something in existence prior to the acquisition of sovereignty. The Crown’s sovereignty conferred upon it the ultimate title but this ultimate title did not necessarily confer beneficial ownership. The court held that existing customary native title was not extinguished. The Crown’s sovereignty carried beneficial ownership only over areas where no native title to the land in fact existed. The Crown’s ultimate sovereignty empowered it to appropriate land to itself or alienate land to others. However, until the land was appropriated or alienated any traditional native interests in the land that existed under native law or custom when the colony was established continued in existence. The mere acquisition of sovereignty was not an exclusion of the existence of the native title. The High Court held that, as had been shown in Milirrpum v Nabalco (1971) 17 FLR 141, there was a subtle and elaborate system of rules in force amongst indigenous people of Australia prior to the acquisition of sovereignty by the British Crown. It was therefore false to describe Australia as a settled colony on the basis that it was without settled inhabitants or settled law. Since that description was false, the rule that Crown ownership subsisted in the lands of the acquired territory because there was no other proprietor could not be sustained. The title of the Crown should be recognised where the Crown exercised its right to grant land [6.315]  381

PART 2 Title to Land

or its sovereign power to appropriate for itself full ownership of parcels of land. Otherwise the doctrine of tenure did not require wholesale beneficial ownership of the land to the exclusion of indigenous inhabitants. [6.320] Native title reflects the entitlement of indigenous inhabitants to their traditional

lands, in accordance with their laws and customs. The nature and extent of native title is essentially a question of fact as to what were the incidents conferred by the traditional laws and customs. Native title may possess characteristics unknown to the common law. To prove the existence of native title, there must be an established entitlement to occupy or use particular land. That entitlement must have sufficient significance to demonstrate a locally recognised special relationship between the users and the land. The relationship between the indigenous inhabitants and the land need not amount to possession as known to the common law. The use of the land need not involve exploitation of the land by way of permanent improvements upon the land. The relationship can flow from a nomadic lifestyle and need not involve more than the use of the land to obtain food. Native title is customarily held by communities, but in rare cases may be vested in individuals. Native title cannot normally be alienated but remains with the clan or group that exercises control. [6.325] The Crown’s status as the ultimate owner and the sovereign authority gives the

Crown the power to extinguish native title. Any Crown grant or alienation that is clearly inconsistent with the continued exercise of native title over the land extinguishes the title to the extent of the inconsistency. Thus a grant in fee simple which confers a total right of occupation extinguishes native title. However, in cases of leases by the Crown and the grant of mining rights the question of extinction involves a comparison of the extent of title claimed by the native group as against the nature of the claim under the interest later granted by the Crown. The High Court has emphasised that the extent of native title is defined, not by the common law, but by the system of law of the Aboriginal and Torres Strait Islander Peoples. Because there are many systems of law, there can be no single definition of the extent of that title. Similarly, the range of Crown leases in Australia is extensive and their common incidents vary very significantly. The question of extinguishment, therefore, depends upon the consistency of two things that take different forms in different places. It is certainly true that a number of Crown leases are expressed so that the rights conferred should not disturb the traditional exercise of movement across that land by native groups. There may well then be no inconsistency between the native title and such a Crown lease. The issue of extinguishment was raised by the existence of the two leases in Mabo v Queensland (No 2) (1992) 175 CLR 1; the first to the London Missionary Society (later transferred to the Australian Board of Missions), the second for the sardine factory. The first lease conferred an absolute right of possession and all members of the High Court considered that this lease extinguished native title. The sardine factory lease however contained a condition protecting the use by the Murray Islanders of their tribal gardens and plantations and of their fishing operations on adjacent reefs. Brennan J indicated his opinion that even this lease extinguished native title.74 He considered that the lease conferred possessory rights on the lessee and a reversionary interest to the Crown. These rights left no room for the continued

74

Mabo v Queensland (No 2) (1992) 175 CLR 1 at 433–​434.

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existence of rights and interests derived from Meriam laws and customs. On the other hand,75 Deane and Gaudron JJ contended that the lease neither extinguished nor had any continuing adverse effect upon any rights of the native inhabitants because it recognised and protected their usufructuary rights. [6.330] With respect to the grant of mining rights, the position resulting from the nature

of Crown grants in Australia,76 is that the fee simple interest does not carry with it rights to minerals in the land. Consequently, a later grant of mining rights is not inconsistent with the common law fee simple interest. However, native title may be, in this respect, more extensive than the common law fee simple interest. In particular, any disturbance of the land pursuant to mining rights, which would affect sacred sites, may well be inconsistent with the native title that regulates and protects access to the sacred sites. Even so, the grant of mining rights over land, even if inconsistent with native claim in total would seem only to detract from part of that claim and not extinguish it fully. [6.335] One significant constraint upon the capacity of State or Territory governments to

extinguish native title is the Racial Discrimination Act 1975.77 Under this Act, any State law or executive action, which discriminates against any native group would be invalid. Therefore, to extinguish native title without compensation, when title for other persons would only be extinguished with compensation, would seem to amount to discrimination and, therefore, be invalid. The significance of this proposition can be seen in the invalidation of the Queensland Coast Islands Declaration Act 1985 (Qld) in Mabo v Queensland (No 1) (1988) 166 CLR 186.

NATIVE TITLE LEGISLATION [6.340]  Following the decision in Mabo v Queensland (No 2) (1992) 175 CLR 1 the Federal

government passed the Native Title Act 1993 (Cth).78 This Act provides a procedure whereby native title may be claimed and its validity assessed.79 It also validates past Commonwealth government actions and allows the States and Territories to validate past actions of their governments. The objects of the Act are set out in s 3. They are: (a) to recognise and protect native title; (b) to establish ways in which future acts affecting native title can proceed, and to set standards for them; (c) to establish a mechanism for determining claims to native title; and (d) to validate past acts that are invalid because of the existence of native title. Native title is 75

76 77 78

79

Their discussion is at (1993) 66 ALJR 408 at 455. In Pereroultja v Tickner (1993) 42 FCR 32, the Full Federal Court held that a freehold grant to an Aboriginal Land Trust did not extinguish native title because the purpose of the grant was to give effect to and preserve native title. This position is illustrated by the decision in Attorney-​General v Brown (1847) 1 Legge 312 discussed at [6.235]. This Act assumes particular importance because the Australian Constitution provides no guarantee of just terms on a taking of property by the States. On the material in this section, see Justice French, A Lawyer’s Guide to Native Title (Adelaide University Continuing Legal Education Paper No 97, 1995) and Butt, “The Native Title Act: A Property Law Perspective” (1994) 68 ALJ 285. The extent of federal jurisdiction in relation to this can be seen in Edwards v Santos Ltd (2011) 242 CLR 421 where the High Court held that the Federal Court had erred in summarily dismissing proceedings by native title applicants where they sought declaratory relief in relation the grant of petroleum leases in favour of another party. Such an issue was of material interest to the applicants as it was contractually bound to negotiate an indigenous land use agreement with the other party, and their interest was thus greater than members of the public. The applicants were not seeking an advisory opinion. [6.340]  383

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defined by s 223 as the rights and interests of Aboriginal peoples or Torres Strait Islanders as observed under traditional custom and as recognised by the common law of Australia. Rights and interests comprising native title include hunting, gathering or fishing. [6.345]  The 1993 legislation was amended in 1998. To a significant degree, the amendments

resulted from public outcry concerning the decision in Wik Peoples v Queensland (1996) 187 CLR 1 (discussed below [6.350]). That case preserved native title from extinguishment by the grant of a pastoral lease. The 1998 amendments did not reverse the decision in Wik but attempted to overcome perceived adverse consequences for pastoral landholders and attempted to rectify government action based the assumption of extinguishment. In the debates on the original 1993 legislation, the impact of the recognition of the land rights of indigenous persons upon existing landholders was a key issue. Two groups in particular expressed concern as to their position:  they were the holders of rural leasehold interests, and those holding mining rights. The government seems to have taken the position that these rights extinguished any native title claims, but the legislation left the matter to be resolved under common law principles. The preamble to the 1993 Act recites that native title is extinguished by government acts that are inconsistent with the continued existence of native title rights such as the grant of freehold or leasehold estates. [6.350]  Wik Peoples v Queensland (1996) 187 CLR 1 involved a claim for native title over land in Queensland which had been the subject of grants of pastoral leases under the Land Act 1910 (Qld) and the Land Act 1962 (Qld). The High Court held that native title had not been extinguished. The court divided four to three with Toohey, Gaudron, Kirby and Gummow JJ in the majority and Brennan CJ, Dawson and McHugh JJ dissenting. It has been pointed out earlier in this chapter that a feature of rural leasehold interests is their diversity in any one jurisdiction, and particularly between jurisdictions; moreover, since native title is defined by the practices and customs of indigenous groups, the content of native title varies with the number of native groups throughout Australia. Thus, the comparison of leasehold interests and native titles is one of multiple variations. However, the Wik decision was taken as an authority for the continued existence of native title on rural leasehold land throughout Australia. After the decision in Wik, in 1996 there was a change of national government from Labor to a coalition of the Liberal and National parties. The National Party was based in rural areas and many of its supporters sought a reversal of the Wik decision. Ultimately, further national legislation was enacted in the Native Title Amendment Act 1998 (Cth). This legislation accepted the Mabo principle and did not directly overturn the Wik decision. The legislation did tighten the requirements for the recognition of registration of a native title claim. It authorised work by holders of non-​exclusive leasehold interests even where native title existed. It validated some government acts in an intermediate period of 1 January 1994 to 23 December 1996 being that between the coming into operation of the 1993 Act and the Wik decision. The legislation provided greater scope for indigenous land use agreements. [6.355] The Native Title Act 1993 provides that the registrar must be satisfied as to aspects

of the merits of the claim and as to formal requirements.80 Those merits include a description of the area, the claimants, the interests claimed and a factual basis for the claim.81

80 81

Native Title Act 1993 (Cth), s 190A. Native Title Act 1993 (Cth), s 190B.

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[6.360]  Concerns as to the ability to work leasehold interests, even to carry out development

required by the lease, were expressed though the validity of the grant was never in question, only its impact on native title. To settle the matter holders of non-​exclusive pastoral or agricultural leases are authorised to engage in primary production activities which are defined to include land cultivation, agisting animals, taking fish, forest operation, horticultural activities or leaving land fallow or destocking animals.82 Similarly, permits for acts on land granted for primary production purposes prior to 23 December 1996, such as permits for forest operations or agricultural activity, are permissible future government activities.83 [6.365] Grants during the intermediate period of interests on land, covered by current or

former pastoral leases made on the assumption that native title had been extinguished, are validated.84 [6.370] A new statutory framework was enacted in 1998 for agreement between native

title holders, governments and other parties about matters affecting native title rights and interests.85 Where native title has been determined to exist, a body corporate agreement may be made; where native title may exist but has not yet been determined, an area agreement may be made.86 Agreements may be made between native title holders, governments and other parties about native title rights, compensation for the impairment of rights, surrender of rights to the Crown and a framework for future agreement. Where native title has been determined to exist, a body corporate agreement may be made; where native title may exist, an area agreement or an alternative procedure agreement may be made. The details of any agreement are to be registered in the Register of Indigenous Land Use Agreements.87 [6.375] A right to negotiate system applies where the permissible future act involves the

creation of a right to mine or the extension of the area over which, or period during which, a mining right has effect.88 Notice of intention to do the act (ie, create the right to mine) must be given to any native title claimant for the land involved.89 Notice must also be given to the National Native Title Tribunal.90 All parties have the right to make submissions to the government about the proposed act.91 A  party may request mediation by the court or Tribunal. In the absence of agreement through negotiation or mediation a party may request a determination from the court or Tribunal.92 The court or Tribunal may determine that the

82 83 84 85 86 87

88 89 90 91 92

Native Title Act 1993 (Cth), s 24GC. Native Title Act 1993 (Cth), 24GB. Native Title Act 1993 (Cth), ss 232A, 248B. Native Title Act 1993 (Cth), Pt II, Div 3. Native Title Act 1993 (Cth), ss 24BA, 24CA. Native Title Act 1993 (Cth), s 199A. See also Native Title Amendment (Indigenous Land Use Agreements) Act 2017. An agreement will only be an Indigenous Land Use Agreement if all the persons whose name appear on an entry of the Register of Native Title Claims signs it; accordingly, an agreement cannot be registered where one of the individuals on the register of claims is deceased: McGlade v Native Title Registrar and Others (2017) 251 FCR 172; [2017] FCAFC 10. Native Title Act 1993 (Cth), s 26. Native Title Act 1993 (Cth), s 29. Native Title Act 1993 (Cth), s 30. Native Title Act 1993 (Cth), s 31. Native Title Act 1993 (Cth), s 36. [6.375]  385

PART 2 Title to Land

proposed act may be done, may not be done, or may be done subject to conditions.93 The determination may allow a mining claim to proceed but preserve some native title rights such as access to non-​dangerous parts of the site.94 [6.380]  The underlying principle of land rights is provision for self-​determination by traditional

clans or groups in respect of their lands. However, by 2006 public concerns were expressed about standards of behaviour of indigenous persons on traditional lands and other areas. These concerns related to the abuse of alcohol and drugs and the treatment of women and children, particularly sexual abuse. Lack of care for children extended to inadequate supply of food, medicines and poor school attendance. These concerns led to the national government’s Intervention in the Northern Territory. This intervention included the quarantining of part of social security payments for essentials such as food, rent and clothing. In relation to land rights, Commonwealth legislation covering the Northern Territory and Queensland legislation provide for the grant of fixed term leases to aborigines.95 [6.385]  Legislation complementary to the Native Title Act 1993 (Cth) has been enacted in all

States and Territories.96

VALIDATION OF GOVERNMENT ACTIONS [6.390] The Native Title Act 1993 (Cth) validates past actions by the Commonwealth

Government which were at least partially invalid97 because of the way in which they affected native land rights. As well as validation under the original 1993 legislation, further validation occurred as a reaction to the decision in Wik Peoples v Queensland (1996) 187 CLR 1 and relates to what is described as the intermediate period between the coming into operation of the original legislation and the time of the Wik decision (1 January 1994 to 23 December 1996).98 The original Commonwealth legislation also authorises State or Territory legislation which might similarly validate actions by State or Territory governments.99 [6.395]  Western Australia originally enacted legislation dealing with native title but on lines

very different to that of the Commonwealth legislation and the models in the other States and Territories. The Land (Title and Traditional Usage) Act 1993 (WA) purported to extinguish native title and substitute statutory rights flowing from the Act. This Act was held to be inconsistent with both the Racial Discrimination Act 1975 (Cth) and the Native Title Act 1993 (Cth) by the High Court in Western Australia v Commonwealth (1995) 183 CLR 373. The legislation has since been replaced by the Native Title (State Provisions) Act 1999 (WA).

93 94 95 96

97 98 99

Native Title Act 1993 (Cth), s 38. A right of appeal lies to the Federal Court with respect to a determination on a question of law: s 169(i). Cheedy on behalf of the Yidjibarndi People v Western Australia [2010] FCA 690. Indigenous Affairs Legislation Amendment Act 2008 (Cth), ss 2–​13 (amending s 19 and following of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth)); Aboriginal Land Act 1991 (Qld), s 40D. Native Title (New South Wales) Act 1994 (NSW); Land Titles Validation Act 1994 (Vic); Native Title (Queensland) Act 1993 (Qld); Native Title (South Australia) Act 1994 (SA); Native Title (State Provisions) Act 1999 (WA); Native Title (Tasmania) Act 1995 (Tas); Native Title Act 1994 (ACT); Validation (Native Title) Act (NT). Native Title Act 1993 (Cth) s 14. Native Title Amendment Act 1998 (Cth), s 4(6). Native Title Act 1993 (Cth), s 19.

386 [6.380]

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[6.400] The Commonwealth legislation only validates past acts that were to some extent

invalid. In the case of acts of the Commonwealth government, invalidity would normally result from an acquisition of property without just compensation thus infringing s 51(xxxi) of the Constitution. Past acts are further limited to acts that would have been valid but for the existence of native title. The past is in general defined as acts occurring prior to 1 January 1994 though some later exercise of rights flowing from earlier legislation may also be regarded as past acts. The amendment legislation added a further category of intermediate period acts to cover acts done between 1 January 1994 and 23 December 1996. In general, intermediate period acts are treated in the same way as past acts. The past acts are placed in four categories described as A, B, C and D.100 Category A acts are grants of freehold estates and commercial, agricultural, pastoral or residential leases. Category B acts are grants of leasehold interests other than commercial, agricultural, pastoral or residential leases, and other than mining leases. Category C acts are grants of mining leases. Category D acts are any other acts. The Commonwealth legislation validates the acts by the Commonwealth government.101 In respect of Category A acts, the legislation provides that the act extinguishes the native title involved. Category B acts extinguish native title to the extent of any inconsistency. Category C acts and Category D acts do not extinguish native title but suspend the rights flowing from native title during the currency of the activity allowed by the Commonwealth legislation. Validation of Commonwealth acts creates an entitlement to compensation for the holders of native title affected.102 With respect to Category A and Category B acts, the compensation is payable with respect to the title extinguished. With respect to Category C and Category D acts, where native title is suspended, compensation is payable only on conditions. The need for validation of intermediate period validation arose because it was assumed that pastoral leases did extinguish native title and land dealings proceeded accordingly. Such actions did not comply with the future acts regime of the 1993 legislation. Under the 1998 legislation these acts are validated but in accordance with Wik Peoples v Queensland (1996) 187 CLR 1 extinguish native title to the extent of inconsistency with a pastoral lease.103 [6.405] The State and Territory legislation follows the Commonwealth model. The

legislation expressly adopts the definition of past acts and the Categories A, B, C and D of the Commonwealth legislation.104 The legislation deems pasts acts of the State or Territory to have been at all times valid and extinguishes native title affected by a Category A past act and to the extent of inconsistency by a Category B past act.105 The legislation also preserves any reservation or condition contained in a past act where that reservation or condition was for

100 101 102 103 104

105

Native Title Act 1993 (Cth), ss 228–​232. Native Title Act 1993 (Cth), ss 14–​16. Native Title Act 1993 (Cth), s 17. Native Title Amendment Act 1998 (Cth). Native Title (New South Wales) Act 1994 (NSW), s 4; Land Titles Validation Act 1994 (Vic), s 4; Native Title (Queensland) Act 1993 (Qld), s 5; Native Title (South Australia) Act 1994 (SA), s 31; Native Title (Tasmania) Act 1995 (Tas), s 3(2); Native Title Act 1994 (ACT), s 5; Validation (Native Title) Act (NT), s 3. Native Title (New South Wales) Act 1994 (NSW), ss 10–​12; Land Titles Validation Act 1994 (Vic), ss 7–​9; Native Title (Queensland) Act 1993 (Qld), ss 10–​12; Native Title (South Australia) Act 1994 (SA), ss 32–​36; Native Title (Tasmania) Act 1995 (Tas), ss 6–​8; Native Title Act 1994 (ACT), s 8; Validation (Native Title) Act (NT), ss 5–​8. [6.405]  387

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the benefit of Aboriginal peoples and preserves any rights or interests of Aboriginal peoples other than rights conferred by native title.106 [6.410] The Native Title Act 1993 (Cth) also provides for the validation of future acts.107

Future acts include legislative and executive activity and the creation, variation, extension, renewal or extinguishment of any legal or equitable rights. The acts must affect native title in relation to land or water. The future is defined in relation to the making of legislation as acts after 1 July 1993 and in relation to other activity as acts after 1 January 1994.

EXTINGUISHMENT OF NATIVE TITLE [6.415]  Although the Crown’s title to land in Australia is as a result of Mabo v Queensland

(No 2) (1992) 175 CLR 1, subject to the recognition of native title, the Crown’s sovereignty means that the Crown may extinguish native title.108 [6.420] In Fejo v Northern Territory (1998) 195 CLR 96, the South Australian government

granted a fee simple interest in land in what is now Darwin to a private individual. In 1927, the land was acquired by the Commonwealth government. The appellants sought to argue that native title revived at this time. The High Court rejected this argument. The grant of the fee simple interest was inconsistent with any retention of native title. [6.425]  The contentious question in relation to pastoral and agricultural leases is the extent of

the interests granted by these leases. The issue is primarily one of the definition of the interest conferred by the relevant grant. As pointed out at [6.350], in Wik Peoples v Queensland (1996) 187 CLR 1, pastoral leases had been granted under the Land Act 1910 (Qld) and the Land Act 1962 (Qld). A native title claim was made in respect of this land. The majority of the High Court rejected the claim that native title had been extinguished. Although the legislation and the instruments under it adopted the language of lease and demise and those words carried an inference of a grant of exclusive possession, the language was not decisive. The legislation provided its own remedy in the nature of ejectment for holders of what were described as leases or licences. The interests were special tenures owing their force to the legislation itself and were not based on common law concepts. The legislation itself provided for some entry by native persons. The legislation conferred upon the grantee the use of the land for cattle grazing with mustering yards, with a sown area, an airstrip, fencing and residences. The grants provided limited rights of uses and those rights were not inconsistent with continued native title. The minority held that the legislation allowed only for the interests of the Crown, the lessee and those holding under the lease. No other rights co-​existed. Furthermore, the reversion at the expiration of the lease was to provide a total interest to the Crown. Again, there was to be no co-​existing interest. The High Court has also clarified that the test for extinguishment necessarily involves a comparison of the native title rights and the non-​native title rights at the time of the grant

106

107 108

Native Title (New South Wales) Act 1994 (NSW), s 15; Land Titles Validation Act 1994 (Vic), s 12; Native Title (Queensland) Act 1993 (Qld), s 14; Native Title (South Australia) Act 1994 (SA), s 38; Native Title (Tasmania) Act 1995 (Tas), s 11; Native Title Act 1994 (ACT), s 9; Validation (Native Title) Act (NT), s 11. Native Title Act 1993 (Cth), Pt 2, Div 3. Native Title Act 1993 (Cth), s 11.

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of the non-​native title right. This is a question of law, not of fact, and any suggestion that attention is to be drawn to the operational inconsistency between native title and non-​native title rights in fact rather than law is not to be countenanced.109 Native title rights can also maintained in the face of fisheries legislation that purports to prohibit a person from taking fish except in accordance with the Act. This legislation will only regulate the right to take fish and not prohibit it.110 This conclusion will also follow where the fishing is being commercially undertaken by native titleholders, whereas for non-​indigenous persons, the right to fish commercially can only be done by way of permit.111 The complexity of the inconsistency of rights test as a measure of determining whether sovereign acts have extinguished prior native title rights and interests, is demonstrated by the High Court reasoning in Queensland v Congoo (2015) 320 ALR 1; [2015] HCA 17. In a matter heard by six judges, with five different judgments delivered, the Court, while largely agreeing on the test to be adopted, split 3:3 in terms of determining whether the appeal should be allowed.112 In this case, the Bar-​Barrum people sought a determination of native title over land that had been used by the Commonwealth Government, pursuant to the National Security Act 1939, during the second world war. The land in question, had, during 1943–​1945 been used as an artillery range for the training of soldiers. The regulations decreeing the use of the land indicated that the military could prohibit all persons from exercising “any right of way over the land or any other right relating thereto”. As noted, three justices would have held that this did not extinguish native title rights whereas three held that it would have done. French CJ, Keane J, and in a separate judgement Gageler J, held that the Act and the regulations made pursuant did not lead to the Commonwealth having exclusive rights over the land. By contrast in three separate judgments, Hayne, Kiefel and Bell JJ, found that exclusive possession was given to the Commonwealth and even though this was for a limited and indefinite time, this taking was inconsistent with the continued operation of native title rights. The issue of inconsistency has been complicated by the adoption by the High Court of the characterisation of native title as a bundle of rights. Extinguishment is possible with respect to some rights and not others. In Western Australia v Ward (2002) 213 CLR 1, the High Court was concerned with a pastoral lease granted under the Western Australian Land Act 1898 and Land Act 1933. The High Court did not finally determine the matter but remitted it to the

109

Western Australia v Brown (2014) 88 ALJR 461; [2014] HCA 8. See also Tjungarrayi & Ors v State of Western Australia (2019) HCA 12 where it was held that petroleum exploration permits were not in fact leases for the purposes of the native title legislation. Accordingly their presence did not permit the prior extinguishment of native title being disregarded under the Native Title Act 1993. To explain this context further, where s 47B applies to land, any prior extinguishment of native title is disregarded, unless the land is covered by a freehold estate or a lease. Whereas the primary judge in the Federal Court had considered that the relevant tenements were not leases, the Full Federal Court disagreed. In so doing, the Full Federal Court relied on s 242 of the legislation which provided that where there is a reference to a mining lease, this also includes a licence or an authority. The High Court disagreed with the Full Federal Court. This conclusion was reached on a textual analysis of the commonwealth native title legislation. The Court was of the view that the purpose of s 47B was to facilitate the granting of native title, despite evidence of historical extinguishment. As 47B did not reference a ‘mining lease’, s 242 does not apply. Because the tenements could only be leases for the purposes of the native title legislation if s 242 allowed this to happen, and given that this did not, the tenements were not leases within the meaning of s 47B. 110 Karpany v Dietman (2013) 303 ALR 216; [2013] HCA 47. 111 Akiba v Commonwealth (2013) 250 CLR 209; [2013] HCA 33. 112 As the Court split 3:3, s 23(2) of the Judiciary Act 1903 (Cth) provides that the decision from which the matter was appealed, shall be affirmed. That is, the appeal was dismissed by the High Court. [6.425]  389

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Federal Court for a decision in light of the principles enunciated by the High Court. The High Court pointed out that the holder of a pastoral lease of the type in question was entitled to use the land only for limited purposes. However, the grant for those purposes was inconsistent with any native title right to control access to the land or to control the use to be made of the land. Beyond those limits, native title continued.

INDIGENOUS LAND CLAIMS UNDER THE NATIVE TITLE ACT Procedures [6.430]  Under the Native Title Act 1993 (Cth), an application can be made for a determination

as to whether native title exists.113 The application will normally be made to the Federal Court of Australia.114 Application for a determination115 can be made by the persons who claim the native title, or by the Commonwealth Minister, or by the Minister of a State or Territory where the whole of the area is within the jurisdiction of that State or Territory. An application can also be made by any person having an interest in the whole of the area over which the determination is sought.116 Therefore, a person whose interests are adverse to native title can seek a ruling as to the existence of native title. Title must however be established within the Australian legal system and subject to its evidentiary principles. In Harrington-​Smith on behalf of the Wongatha People v Western Australia (No 8) (2004) 207 ALR 483 the court considered whether missionary records could be considered as an exception to the hearsay rule on the basis that the records could be equated with business records. [6.435]  Once an application is made, it is given to the Registrar of the Native Title Tribunal.

The Registrar must consider whether the application meets the Act’s requirements for registration on the Register of Native Title Claims.117 Those requirements include aspects of the merits of reclaim and procedural matters.118 After acceptance the Registrar of the Tribunal must give notice of accepted applications to all persons whose interest may be affected by a determination. These persons may include anyone with a proprietary interest in the land registered in a Torrens or other register. A person whose interest may be affected by a determination that native title exists is entitled to oppose the application. The Federal Court has a range of powers to determine the parties to a native title application.119 [6.440]  The question of the nature of the claim under the Native Title Act 1993 (Cth) which

must be made out before the Registrar of the Tribunal, and of the procedures relating to its acceptance, were considered by the High Court in Re North Ganalanja Aboriginal Corporation; Ex parte Queensland (the Waanyi People’s Case) (1996) 185 CLR 595. The High Court held 113 114

115

116 117 118 119

Native Title Act 1993 (Cth), s 61; see Kanak v National Native Title Tribunal (1995) 132 ACR 329. Native Title Act 1993 (Cth), s 61; previously application was made to the National Native Title Tribunal; its powers were thrown into doubt by the decision in Brendy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245. In Wik Peoples v Queensland (1996) 187 CLR 1, Drummond J held that a determination under the Act operated “in rem” in that it declares the status of native land over the land as regards the whole world not just for the parties to the action. Native Title Act 1993 (Cth), s 62. Native Title Act 1993 (Cth), ss 190A–​190C. Native Title Act 1993 (Cth), ss 190A–​190C. Native Title Act 1993 (Cth), s 84.

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that the issue to be considered by the Registrar was whether, on the information and material furnished by the applicants, prima facie their claim could be made out. Only the applicant had a right to be heard or to furnish information at this stage. There was a division of functions between the Tribunal and the Federal Court. The Tribunal was not vested with jurisdiction to resolve contested matters and it was inappropriate for the Tribunal to be dealing with issues of law at the stage of the administrative decision whether to accept an application. Once a claim was arguable, that claim should be accepted by the Tribunal. A question of law that is not settled but is critical to the making of a valid claim to native title, should not be decided administratively but should be decided by the Federal Court in proceedings which would be binding on all interested parties. Acceptance of the claim by the Registrar was only the first step in the proceedings that proceed by way of mediation and, where there is a dispute, to the resolution of that dispute by the Federal Court. [6.445]  After the identity of the parties has been determined by the Federal Court, the matter

may be referred to the National Native Title Tribunal for mediation.120 Referral may be denied if it is unlikely that the parties can reach agreement.121 If an application is unopposed or the parties reach agreement the Federal Court may make orders in accordance with the agreement.122 In the absence of agreement the matter is heard by the Federal Court.123 The court may take account of the cultural and customary concerns of Aboriginal and Torres Strait Islander Peoples but not so as to prejudice unduly any other party to the proceedings.124

Nature of rights of enjoyment [6.450]  Native title, as recognised by the High Court in Mabo v Queensland (No 2) (1992)

175 CLR 1, was the entitlement that indigenous persons have to their land in accordance with their own laws and customs. The nature and extent of native title is thus defined by the traditions of the indigenous persons themselves –​it does not represent any of the estates or interests in land or the common law. The basic distinction is an emphasis on responsibility for land under native custom, as opposed to the common law’s emphasis upon exploitation. [6.455]  The High Court has emphasised the spiritual nature of many aspects of the relationship

between native communities and the land. Spiritual connection with the land has been a significant aspect of land use by indigenous peoples in Australia.125 The conduct of ceremonies 120 121 122 123 124 125

Native Title Act 1993 (Cth), s 86B. Native Title Act 1993 (Cth), s 86B. Native Title Act 1993 (Cth), s 87. Native Title Act 1993 (Cth), s 81. Native Title Act 1993 (Cth), s 82. See, for example, Banjima People v State of Western Australia (2015) 231 FCR 456 where the court recognised that the Banjima could require that permission to enter Banjima land would need to be sought before entry. If permission was not sought, it was considered that spiritual consequences for this contravention could occur, and that this was part of the native title right. At [23], it was said: “The primary judge’s finding of ‘need’ means that, without permission, entry to Banjima country by others could not be obtained consistent with Banjima traditional laws and customs. If entry without permission had occurred in any particular case by a person within the scope of Banjima traditional law and custom, that would be an entry in contravention of the traditional law and custom. Evidence of such an entry would not of itself undermine the continued existence of the traditional law and custom, however. The contravener may have suffered spiritual or physical sanction as a result, which would tend to confirm, not undermine, the traditional law and custom”. See also [34] of this judgment. [6.455]  391

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and preservation of sacred sites are recognised as native title rights. It has been argued that this special relationship presents problems in assessing compensation for compulsory acquisition of native title rights but a majority of the High Court has held that ultimately the power to acquire is paramount and appropriate compensation must be assessed.126 However, the High Court considered that protection of ideas and concepts relating to artworks is not part of native title, because connection with the land is not involved; protection may be provided by other laws.127 The first significant decision on the amount of compensation to be paid in a native title claim was decided by the High Court in Northern Territory of Australia v Mr A Griffiths (Deceased) and Lorraine Jones on behalf of the Ngaliwurru and Nungalie Peoples and Anor (2019) 364 ALR 208. The Ngaliwurru and Nungali People had native title rights and interests in certain parts of the Northern Territory. It was decided that the Northern Territory government was required to pay compensation: the question was how much. The majority of the court considered that the best approach was to determine the percentage reduction that resulted from having non-​exclusive native title rights when contrasted with full exclusive native title, and then using that percentage reduction to as a means to reduce what would otherwise be the full freehold value, with this the proxy for full exclusive native title. Given this, the non-​exclusive native title rights was no more than 50% of the freehold value. As noted at [74]: Whether or not the value of any given native title is to be equated to freehold value for the purposes of assessing just compensation must depend on the exact incidents of the native title rights and interests. If the native title rights and interests amount or come close to a full exclusive title, it is naturally to be expected that the native title rights and interests will have an objective economic value similar to freehold value. By contrast, if the native title rights and interests are significantly less than a full exclusive title, it is only to be expected that they will have an objective economic value significantly less than freehold value. There is nothing discriminatory about treating non-​exclusive native title as a lesser interest in land than a full exclusive native title or, for that reason, as having a lesser economic value than a freehold estate. To the contrary, it is to treat like as like.

Simple interest could be awarded on this amount. The High Court also awarded an amount ($1.3 million) for cultural loss. The approach to calculation required the determination of the spiritual relationship with the land, with this factoring in the compensable act, the identity of the native title holders, the connection native title holders had with the law or water, and the effect the compensable act had on that connection. It could not be manifestly excessive and needed to be consistent with community standards. [6.460]  The application of native title to hunting rights was considered in Yanner v Eaton

(1999) 201 CLR 351; 166 ALR 258. The appellant was charged with the offence of taking and keeping fauna without a permit under the Fauna Conservation Act 1974 (Qld). The charge related to the catching of two juvenile estuarine crocodiles. The appellant was a member of the Bunnamulla clan of the Gangalidda tribe and used a traditional form of harpoon to

126 127

Griffiths v Minister for Lands, Planning and Environment (2008) 235 CLR 322. Western Australia v Ward (2002) 213 CLR 1; 76 ALJR 1098; 191 ALR 1; [2002] ANZ ConvR 446; [2002] HCA 28. For an example of the relevance of fiduciary obligations within a native title context, see Gebardi v Woosup (No 2) (2017) 253 FCR 310; [2017] FCA 1467. See also Oliver Hume South East Queensland Pty Ltd v Investa Residential Group Pty Ltd [2017] FCAFC 141; (2017) 348 ALR 385.

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catch the crocodiles. The appellant’s clan had a connection with the land from which the crocodiles were taken, from before the existence of the colony of Queensland in 1823, and continuing to the present. It was a traditional custom of the clan to hunt juvenile crocodiles for food. The High Court held that the hunting and fishing rights of the clan were rights and interests possessed under traditional law protected by s 223 of the Native Title Act 1993 (Cth). The Fauna Conservation Act 1974 did not extinguish those rights and went no further than to regulate the way in which rights and interests could be exercised. Consequently, the appellant’s rights as a native title holder to hunt or fish for crocodiles taken for personal, domestic or non-​commercial communal needs were protected and no offence was committed. [6.465]  Rights concerning the sea and sea-​bed were considered in Commonwealth v Yarmirr

(2001) 208 CLR 1. An application for determination of native title was made in relation to a claim for the ownership and exclusive possession, occupation, use and enjoyment of an area of the sea and sea-​bed in the vicinity of Croker Island in the Northern Territory. The claimant group had used the waters of the claimed area for the purpose of hunting, fishing and gathering to provide for their sustenance and for other purposes associated with their cultural, ritual and spiritual obligations, beliefs and practices. The High Court held that the definition of native title in s 223 went beyond the Mabo v Queensland (No 2) (1992) 175 CLR 1 definition, in that it included waters, and waters included any waters over which Australia asserts sovereign rights under the Seas and Submerged Lands Act 1973 (Cth). The court was satisfied that the claimants had used the relevant waters and this use was entitled to protection, but the connection with the area had not encompassed ownership and had not been exclusive. The court furthermore doubted whether native title rights to the use of the sea could ever be exclusive as such rights would be inconsistent with fundamental principles of the Australian legal system. These fundamental rights included the right of innocent passage under international law and common law public rights to fish and navigate in the territorial sea and adjacent tidal waters. In Akiba v Commonwealth of Australia (2013) 250 CLR 209 the High Court held that native titles rights to take resources from the Torres Strait, continued despite the existence of Commonwealth and State Legislation that required a permit be sought before commercial fishing be undertaken in the Torres Strait. However, so called reciprocal rights (use rights between different members of an island community) were of a personal nature and as such could not be the subject of a native title determination. Also, a rayi connection to land (generally stated, this is a spiritual phenomenon involving attachment to a particular place or animal, and can be used as a reason for social inclusion within an identifiable group) is not to be considered a native title right, due to the lack of connection with land or waters (Manado on behalf of the Bindubur Native Title Claim v State of Western Australia (2018) 265 FCR 68.

Identity of title holders [6.470]  Normally native title is vested in a group and rights are exercised by members of that

group. The title is also normally inalienable and thus remains with the group as its members change through the generations. [6.475]  Title vested in a group requires identification of membership of that group, at least

as to the principles for identification. Outside native title disputes, fluctuation of membership of an unincorporated group poses difficulty in the means of transfer from departing members [6.475]  393

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and to new members; corporate bodies overcome this problem because the corporation not the members own the property. Similarly, native title is held by the group. Mabo v Queensland (No 2) (1992) 175 CLR 1 refers the content of title to native law and customs, and membership of the group should be determined by the practices of the group. [6.480] In De Rose v South Australia (2003) 133 FCR 325; [2003] FCAFC 286 the claimants were a tribe in northern South Australia who had interacted with tribes particularly to their west, and to some extent different groups merged. Some intermarriage of members of different groups took place. More significantly outside persons joined the claimant group as part of an ongoing process of migration. The Full Court of the Federal Court held that so long as persons were accepted by the group as members they were validly part of the group. Commonly children were identified with their mother’s group. Blood lineage was not essential. Fluctuation of membership was recognised subject to the limit of a take-​over by another tribe. Merger between groups was held not to be so extreme as to destroy the identity of the claimant group continuing a connection with the land under traditional laws and customs. In Bodney v Bennell (2008) 167 FCR 84, the Noongar community applied for native title in respect of large parts of Western Australia. In this instance, detailed records were available because of frequent contact between the Aboriginal people and sailors, prior to British settlement. In overruling the trial judge the Full Federal Court considered that it was an error to mitigate the requirement of non-​substantial interruption by reference to the arrival of non-​indigenous settlement. It was also necessary to consider whether the native title rights had continued without substantial interruption by each successive generation of the Noongar people. While native title rights and customs can evolve (such that it was acceptable to take account that a greater reliance on matrilineal descent did not necessarily lead to a view that the traditional descent rules were no longer applicable), it is not possible to subsume a claim to native title to the Perth metropolitan area within a claim over a larger area. In Sampi on behalf of the Bardi and Jawi People v Western Australia (2010) 266 ALR 537 a claim was made to land and water rights around the Dampier Peninsula. The contest was as to whether there was a single group or two groups. Despite the two names, the peoples were united by one law, culture and intermarriage. They had very similar bodies of law and custom. But there was some internal awareness of separate groups and languages and some differences of spiritual practices. The court concluded that the similarities outweighed any differences. By the late 19th century the group was clearly one and it could be assumed that that identity developed before British sovereignty.

Continuity of use [6.485]  Not only must there be continuity of the existence of the group claiming native title

but that group must have continued to exercise the rights and interests comprising the title from the time of assertion of British sovereignty until the present. The High Court in Western Australia v Ward (2002) 213 CLR 1 held that if rights associated with the use of cultural knowledge went beyond rights to control or deny access to water or lands, they were not rights protected by the native title regime. [6.490]  There are two steps in the assessment of continuity. Firstly, the content of traditional

laws and customs must be identified; secondly, continuation of a connection with the claim 394 [6.480]

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area by the claimants according to those laws and customs must be established. Connection includes a ceremonial responsibility for an area and ongoing recognition of this responsibility may establish continuity. Lack of physical contact over a period may not destroy continuity where lack of contact results from external forces. On the other hand, the breakdown of a traditional community may lead to an absence of recognition by a community of a set of laws or customs. Unless traditional laws or customs continue to be recognised, a physical link to the land is insufficient. Such a breakdown was held to have occurred in Members of the Yorta and Yorta Aboriginal Community v Victoria (2002) 214 CLR 422. A  claim was made on behalf of a group that had utilised land and water along about 200 kilometres of the Murray River. The claim failed because the group had not continued to acknowledge and observe traditional laws and customs. The collapse of the community meant that there was no group acknowledging and observing the traditional laws and customs and consequently any contacts with the land could not be pursuant to observed laws and customs. The reasons for interruption with continuity are not relevant; it is not to be mitigated by forced removal: Sandy and Others v Queensland and Others (2017) 254 FCR 107; [2017] FCAFC 108. By contrast, in two recent cases, one in outback central Australia, the other on the west coast incorporating the city of Perth, the results diverged as to whether there was a continuity of a community structure and connection with the land. The Full Court of the Federal Court in De Rose v South Australia (2003) 133 FCR 325; [2003] FCAFC 286 was prepared to entertain a claim where physical entry onto the land had to a large extent ceased but some tribal order had remained. The pastoral lessee was hostile to the indigenous persons. Threats had been made to the tribal elders, dogs had been shot, news of the death of a relative was withheld to prevent work disruption. Work opportunities diminished and outside attractions drew some members of the community away from the area. However hunting on the land continued, traditional ceremonies were held, often outside the land, steps were taken to protect important sites on the land and traditional responsibilities were accepted. The Full Court held that the claim should proceed because of maintenance of the spiritual connection and the lack of physical contact could be explained by settlor hostility. European invasion has necessarily made access to traditional lands difficult and the decision in De Rose makes some allowance for disruption to native connection but that allowance does not extend to total abandonment even under overwhelming force. By contrast, in Bodney v Bennell (2008) 167 FCR 84, claim to a large part of the south-​west of Western Australia failed. Whereas the trial judge was prepared to accept that there had been a single community since the time of sovereignty, the conflation of Perth within this larger area was a mistake. Similarly it was necessary, in considering whether there had been a substantial interruption to consider the influence that European settlement had on the continuance of traditional laws and customs within that area.

CONCLUSIONS [6.495] The decision in Mabo v Queensland (No 2) (1992) 175 CLR 1 may be seen as

emphasising the power of the common law to resolve crucial social issues. Perhaps a stronger argument can be made that the decision reflects the power of the courts to utilise a bill of rights. In Mabo a crucial element was the existence of the Racial Discrimination Act 1975 (Cth). This Act allowed the High Court to invalidate the Queensland Coast Islands Declaration Act 1985 (Qld). Unless the Act was invalidated the issues of whether Australia was truly a settled territory and the scope of the doctrine of tenure could not have arisen. [6.495]  395

PART 2 Title to Land

The Mabo decision has now assumed a dominant position in the framing of social values in Australia. Such is the respect paid to the decision that the Native Title Act 1993 (Cth) and the legislation in States and Territories (other than Western Australia) substantially provide only procedural devices whereby the substantive principles derived from Mabo can be developed. In Western Australia, the attempt to pursue an independent course was based not so much on a rejection of Mabo as an assertion that land rights are a matter of State determination. Of course this assertion involves the legally inaccurate analysis that the Australian Constitution divides subject matters between the national and State governments as opposed to the true position whereby the State’s powers are those left over after the exercise of Commonwealth powers and the key provision is the inconsistency section.128 In any event, it is disingenuous to describe Mabo as concerned with land rights rather than the rights of indigenous peoples. If the dominance of Mabo is readily explicable in terms of social culture, deficiencies of a system whereby land rights for indigenous peoples are defined by the common law process must be acknowledged. That process involves the enunciation of principle at the highest level by a High Court that adheres to a process of individual judgments and thus different shades of meaning for even agreed results. The case-​by-​case process means that the scope of native title, and the ways in which it is affected, will only be defined over an extremely long time. Furthermore, although native title takes its content from traditional laws and customs, ultimately those laws and customs and the factual matters which make out a claim pursuant to those laws and customs must be established before a court or other judicial body whose rules of evidence and procedures are those of the British invaders and their successors. The development of a doctrine of native title depended on an understanding of the cultures of the indigenous peoples of Australia. The factual findings in Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 were fundamental to the development of this understanding. The opportunity for a clear and bold resolution of native land rights existed in the 1980s and was lost by the national government. Against that inaction, Mabo was inevitable and the Native Title Act 1993 (Cth), and related State legislation at least provide a means for steps forward. Native title is described in Mabo as communal and inalienable. These features are part of the essence of native title and the inquiry is directed to a connection with the land by a native group and continuation by that group of the connection to present time. Individual rights are inconsistent with this concept of native title. Even the acceptance of commercial aspects of land use, such as trading in fish, has been a matter of contention. The inalienable and communal aspects of native title have recently been challenged particularly by the Northern Territory government intervention of 2006 and the Western Australian government intervention of 2015. Changes accompany a background of government disquiet with conduct on native lands and in particular the alleged failure of leadership; elders have been accused of at least connivance in sexual abuse of women and children, and in relation to Western Australia concerns about infrastructure costs for governments in servicing these communities. The existence of economic as well as social problems has been asserted. Whilst overall assessment is still premature and depends on much broader insights than legal analysis enables, the Northern Territory intervention reflects at least government disappointment with land reform. Somewhat allied to this, and on reference from the Attorney General, the Australian Law Reform Commission has delivered a major report into the law and policy surrounding native title. That report, ALRC, Connection to Country; Review of 128 Australian Constitution, s 109. 396 [6.495]

Public Lands and Land Rights of Indigenous Peoples  Chapter  6

the Native Title Act 1993 (Cth), Report No 126 (2015) highlighted how native title needed to be considered in a context of the legislation, as well as the common law and with a view to a comparative perspective. The doctrines of continuity and recognition that sit behind the current “test” for connection in s 223 of the Native Title Act have a long history and have been reframed over time. The law that now governs connection requirements was not made in a single moment or a single decision, although the Native Title Act now is the starting point for interpreting that law.129

The report also reflected on the difficulties associated with native title disputes: The native title system is highly resource intensive. Costs are borne by a range of governments, public institutions, industry, and private persons—​and most acutely by Aboriginal and Torres Strait Islander peoples. These costs may be compounded by long time frames for the resolution of native title claims and determinations. On the other hand, the growing number of native title determinations across Australia is a positive trend—​facilitating the conciliation and negotiation objectives of the Act and containing costs. Nonetheless, the law relating to connection requirements remains complex to navigate for all parties, and variable in its outcomes for Aboriginal and Torres Strait Islander peoples across Australia.130

With this context in mind, the recommendations of the Australian Law Reform Commission revolve around clarification of the law and ensuring a process that can be delivered more effectively and with better outcomes. With an eye to the concerns that had been raised by native title groups and the problems they have faced in the court system, the recommendations included that the definition of native title be amended to provide that the traditional laws and customs could evolve and that acknowledgement of traditional laws not necessarily be required to have been continually practiced since sovereignty, nor that they be practiced by each and every generation since sovereignty. It was also recommended that the law be clarified to reflect the principles of Akiba v Commonwealth (2013) 250 CLR 209 which provided that native title rights can be exercised for any purpose, including commercial purposes. Alongside other procedural recommendations, it was considered that specialist training schemes for native title professionals be considered.131 Recognition of native land rights faced 200 years of denial of rights and destruction of most of the social values flowing from native connection with the land. The dominance of the forces represented by the global free enterprise economy has over past years destroyed political structures as immense as the Soviet Union. Inalienable land rights vested in communities to an extent seek to preserve a way of life outside those economic forces. Land rights without economic activity can lead to a society dependent on government hand-​outs.

129 130

ALRC, Connection to Country; Review of the Native Title Act 1993 (Cth), Report No 126 (2015), p 8. ALRC, Connection to Country; Review of the Native Title Act 1993 (Cth), Report No 126 (2015), p 10. The complexity surrounding the payment of legal costs, where the claimants will never have any liability to pay costs themselves, but are successful in an application as part of the native process, can be seen in Oil Basins Ltd v Watson and Others (2017) 252 FCR 420; [2017] FCAFC 103. In a split decision, the court held that Oil Basins were liable to pay the costs of native title claimants in relation to an interlocutory application. In dissent, Dowsett J considered that a claimant cannot recover costs which it would never be liable to pay. 131 Application of the Akiba principles can be seen in Western Australia v Willis (2015) 239 FCR 175; [2015] FCAFC 186. The trial judge had held that the Pilki People had the right to take resources for any purpose, including commercial purposes, and that this right had existed since sovereignty. On appeal it was argued by the State that there was no evidence of right to take for commercial purposes at the time of sovereignty. In dismissing the appeal it was considered that the right to take resources without limitation can suffice to establish a commercial basis, without any direct evidence of usage for commercial purposes. [6.495]  397

CHAPTER 7

Mortgages [7.05]

THE PURPOSE AND NATURE OF SECURITY INTERESTS................................................. 400 [7.05] Use of property as security............................................................................ 400 [7.10] Forms of security interests............................................................................. 401 [7.20] Charges and liens......................................................................................... 402 [7.25] Credit for purchasers..................................................................................... 402 [7.30] Security and goods....................................................................................... 403 [7.35] Remedies and secured interests...................................................................... 404 [7.40] THE NATURE OF A MORTGAGE................................................................................... 404 [7.40] The general law............................................................................................ 404 [7.60] The Torrens system....................................................................................... 407 [7.80] Formalities for the creation of a mortgage...................................................... 410 [7.85] Mortgages and interests less than a fee simple............................................... 411 [7.86] Reverse mortgages........................................................................................ 411 [7.90] PRIORITIES BETWEEN MORTGAGEES........................................................................... 412 [7.90] Conflicting mortgages................................................................................... 412 [7.95] Tacking........................................................................................................ 413 [7.120] CONSUMER CREDIT LEGISLATION.............................................................................. 416 [7.160] REDEEMABILITY........................................................................................................... 419 [7.160] Clogs on the equity of redemption................................................................. 419 [7.180] Restraint of trade.......................................................................................... 422 [7.195] UNCONSCIONABILITY AND PENALTIES...................................................................... 423 [7.195] Unconscionable conduct............................................................................... 423 [7.215] Penalties...................................................................................................... 425 [7.225] RIGHTS, OBLIGATIONS AND REMEDIES...................................................................... 426 [7.225] Source of obligations..................................................................................... 426 [7.250] Promise to pay............................................................................................. 428 [7.255] Possession.................................................................................................... 429 [7.285] Leasing........................................................................................................ 432 [7.305] Receivers...................................................................................................... 433 [7.320] Sale............................................................................................................. 434 [7.335] Foreclosure................................................................................................... 435 [7.355] Discharge.................................................................................................... 438 [7.385] POWER OF SALE.......................................................................................................... 440 [7.385] Nature of power........................................................................................... 440 [7.390] Prerequisites to exercise................................................................................. 441 [7.405] Requirement of notice................................................................................... 442 [7.415] Erroneous notice........................................................................................... 443 [7.425] Nature of the sale......................................................................................... 444 [7.430] Title free from encumbrances......................................................................... 445 [7.445] Mortgagee’s duties....................................................................................... 446 [7.465] Protection of the purchaser............................................................................ 448

 

399

PART 2 Title to Land

THE PURPOSE AND NATURE OF SECURITY INTERESTS Use of property as security [7.05]  One of the uses for the ownership of land, goods or intangibles is to provide something

of value in support for a promise to repay money. The creditor making the loan is given an entitlement to take action against the subject matter in the event of default in payment. This action is in addition to any claim against the borrower personally. The Federal Court has pointed out that Australian law recognises four forms of consensual security:  a pledge, a contractual lien, an equitable charge and a mortgage. Besides a mortgage, a pledge exists where possession of goods is taken by way of security; a contractual lien is a right to hold property until payment for work done; and a charge involves a claim over an asset for satisfaction of a debt.1 The purpose of a security interest is to confer property rights upon someone to whom a debt is due. Those property rights confer remedies not enjoyed by someone who has a claim against another for a debt. The creditor without any security in general can proceed against a debtor only by legal action.2 The creditor must obtain a judgment for the sum due. A judgment can be obtained only after initiation of legal process, service of process upon the other party and proof of the claim; some short cuts are provided for. Even after judgment a creditor cannot proceed against a debtor’s assets as the creditor sees fit. Procedures for the enforcement of judgments differ among Australian jurisdictions, but all of them limit the creditor’s actions. In some instances a creditor is bound to accept instalment payments; commonly a creditor must sell goods before land; the remedy of an order against wages (garnishment) is favoured in some jurisdictions and prohibited in others. A judgment creditor cannot trace assets into the hands of third parties even if those assets were purchased with funds lent by the creditor. Some tracing of assets is allowed if a debtor is declared bankrupt.3 But bankruptcy proceedings may be initiated by any creditor or by the debtor and, upon bankruptcy, the total amount of recovery is limited to the bankrupt’s assets and that amount is generally divided equally amongst the creditors. A security interest avoids many of these difficulties. Land is an ideal security. It is readily identifiable and permanent and by and large has held its value well in Australian history. The precise rights a secured creditor has against land or other property depends upon the details of the creditor’s security interest; commonly the creditor may upon default sell the land to gain payment of the debt. The creditor is not required to take action in the courts to force a sale, though commonly some notice is required. Because the creditor has a proprietary interest, the land cannot be disposed of by the debtor to a third party taking free of that interest, although there are instances in which some third parties may do so. Even if the debtor becomes bankrupt, the creditor is entitled to look to the land for the debt notwithstanding the fact that land is the bankrupt’s sole asset and other creditors are left with no return. Again in some instances a security interest may be set aside in bankruptcy.

1 2 3

Beconwood Securities Pty Ltd v ANZ Banking Group Ltd [2008] FCA 594 at [36]–​[38]. Moore, “Repayment of Debts: Creditor Enforcement and Debtor Protection” (1986) 8 ABLR 81 at 153. On bankruptcy, see Rose, Lewis’ Australian Bankruptcy Law (11th ed, Law Book Co, Sydney, 1999).

400 [7.05]

Mortgages  Chapter  7

Forms of security interests [7.10] While it is common to speak of the classical mortgage as that produced by the

application of equitable rules prior to statutory changes, the incidents of a mortgage have changed over time as a result both of social change and changes to legal rules. At no stage did the mortgage conform completely to any model of security interests. In the classic Australian text on securities, Professor Sykes4 refers to three main forms of security interests based on Roman law models:  security by way of ownership, security by possession and security by means of a charge. Under the first form, the security holder becomes the owner of the property promising to reconvey it upon repayment of the debt; under the second, the security holder obtains possession of the property, but the debtor retains the general ownership; under the third, the security holder does not gain either the general ownership or possession, but has rights over the property, principally the right to sell, exercisable upon default. The common law mortgage took the form of a security by way of ownership, but in substance was closer to a charge, and the Torrens system mortgage has largely adopted the common law’s substantive situation of a security by way of charge. [7.15]  Most security interests arise from agreements and are thus described as consensual.

The debtor borrows money and in return confers the security rights upon the creditor. The rights of the parties flow from that agreement, though to some extent the law restricts the capacity of the parties to settle particular terms between themselves, and the law does limit the range of security interests. However, it is possible that security rights arise independently of any agreement of the parties. Persons who do work on land or goods are commonly given security rights over that land or those goods by operation of law.5 These rights are described as “liens” and, for example, may enable possession to be retained until payment. Security interests normally exist because of a debt that has been incurred. Security interests protect the creditor in the event of default in payment of the debt. It is possible to burden property with payment of a sum of money even though that money is not otherwise owed to the payee. In Queensland and the Australian Capital Territory rentcharges and annuities are excluded from the range of registrable interests.6 In other jurisdictions the Torrens system statutes recognise an encumbrance over land whereby the land is subject to the payment, on a regular basis, of a sum of money.7 Such an arrangement arose more commonly in the past when, for example, property was left to the eldest child subject to an encumbrance intended to provide for the child’s siblings.

4 5

6 7

Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 14–​20. Carriers’ and innkeepers’ liens are discussed by Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 739–​740, repairers’ liens, p 739, warehouse workers’ liens, p 746, solicitors’ liens, pp 746–​748, and contractors’ and workers’ liens, pp 774–​782. See also Marriott Industries Pty Ltd v Mercantile Credits Ltd (Maesbury Plumbers Pty Ltd Intervening) (1990) 55 SASR 228. See the Property Law Act 1974 (Qld), s 176; Land Title Act 1994 (Qld), s 72; Land Titles Act 1925 (ACT), s 103G. In other jurisdictions the rentcharge under the Torrens system is recognised by Real Property Act 1900 (NSW), s 56(2); Transfer of Land Act 1958 (Vic), s 74(1); Real Property Act 1886 (SA), s 129; Transfer of Land Act 1893 (WA), s 105; Land Titles Act 1980 (Tas), s 72; Land Titles Act (NT), s 5 (a mortgage may secure an annuity or rentcharge). [7.15]  401

PART 2 Title to Land

Charges and liens [7.20] This chapter concentrates on the most common form of security over land  –​the

mortgage. The nature of that interest is described at [7.45]ff. Four forms of consensual security are recognised in Australian law: the closest to a mortgage are charges and liens; by contrast pledges are possessory securities (see [7.05]). An equitable charge differs from an equitable mortgage principally because the holder of the charge has no right to foreclosure. The principal remedies of the holder, in the absence of any express remedies, are judicial sale and the appointment of a receiver. A charge may be created between parties as security for a debt or by will or a settlement in favour of a person other than the one receiving the property. Where a security transaction is entered informally, it may be difficult to discern whether an equitable mortgage or an equitable charge has been created. Where there is simply an intention to grant a security, such as in the case of the deposit of title documents, an intention to create an equitable mortgage is inferred. It has been suggested that in all cases of contract such an intention is inferred, but that proposition has critics.8 Legal charges, other than the rentcharge, are practically unknown.9 An equitable lien arises not from agreement, but by operation of law.10 The lien confers the same rights upon the holder as an equitable charge. A lien arises in situations in which a debt is incurred in relation to property. The most common type of lien is the vendor’s lien for unpaid purchase money in favour of a vendor of land who has parted with legal title. Liens also commonly arise in favour of a purchaser of land who has paid the purchase price before receiving legal title and where a trustee spends money on land held in trust in the proper execution of his or her duties. Equity has also developed rules whereby a lien is the remedy of an injured party in cases of breach of trust, dissolution of a partnership and a mistaken expenditure on property permitted by the other party. In Australia there are special statutory securities developed to assist primary producers.11 The problem leading to the special provisions has been that producers wish to grant security rights over their produce. That produce may not exist when the security is granted and, when it does come into existence, may be legally classified as part of the land. Thus the statutes have provided for fruit and crop liens. Similar issues have seen the development of stock and wool mortgages.

Credit for purchasers [7.25]  The purpose of security is to confer proprietary rights upon a creditor; this statement

implies ownership by a debtor of property in respect of which rights are transferred. Very commonly the debt is incurred for the purposes of purchasing residential land. The purchaser acquires title only, it seems, substantially to grant it away to the credit provider advancing the loan. Very little change to the transaction occurs if, rather than the debtor obtaining title, the creditor obtains title to the land directly and agrees to sell it to the would-​be purchaser. The transaction is even simpler if the vendor provides the finance. The creditor-​debtor relationship is translated into one of vendor and purchaser.

8 9 10 11

Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 193–​194; cf World Tech Pty Ltd v Yellowin Holdings Pty Ltd (1993) ANZ ConvR 121, discussed at [7.45]. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 187. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 199–​206. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 676–​727.

402 [7.20]

Mortgages  Chapter  7

The legal situation of a purchaser who is paying by instalments has not, in Anglo-​Australian law, been as protected as that of a mortgagor. That is so even though the form of a common law mortgage has been close to the model of a security for the creditor by way of ownership. Equity stepped in to protect the mortgagor:  see [7.55]. Probably at least in part because instalment purchase was not common when equitable rules were more flexible, the same protection was not accorded to an instalment purchaser. Indeed, the rules in relation to land as to recovery of instalment payments and forfeiture of the purchaser’s interest are still subject to controversy.12 The restriction of the remedy of relief against forfeiture by the High Court in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 may have restored differences between the legal rights of a mortgagor and those of an instalment purchaser: see [9.210]. The lack of protection for an instalment purchaser of land has resulted in legislation in some States forcing the transaction into the form of a sale plus mortgage: see [8.335].

Security and goods [7.30]  Common law theory accepted a mortgage over chattels as much as a mortgage over

land.13 A  mortgage of goods differs from a pledge or pawn in that a mortgage involves the transfer of property by way of security, whereas a pledge involves the holding of possession: Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249; 215 ALR 253. In that case under a so-​called mortgage transaction the mortgagee took possession by way of caring for the goods. The majority accepted the transaction at face value and rejected a claim that the mortgagee was an unlicensed pawnbroker. Because of the complications affecting security interests in goods, lenders turned to an indirect security whereby lenders retained property in the goods and agreed to sell the goods to the person who did not pay immediately in full. However the development of security interests in chattels was considerably affected by the bills of sale legislation of the 19th century. Enforceability of property rights was also restricted by the Sale of Goods Acts, which allowed a buyer in possession to pass good title.14 In Anglo-​Australian commerce, financial arrangements relating to goods were from the late 19th century until the consumer credit law reforms of the 1970s and 1980s expressed most commonly in the hire-​purchase transaction under which the seller retained property and the other party was given an option to purchase the goods on payment in full.15 This transaction avoided the registration requirements of the bills of sale legislation and the restrictions on enforceability of property rights imposed by the Sale of Goods Acts. However the advantages of hire-​purchase as a protection for creditors have gradually been eroded. The Bills of Sale legislation has also been repealed and today priority of security interests in goods whether by retention of title or by a form of mortgage is regulated by the Personal Property Securities Act 2009 (Cth).This Act sets up a scheme for the registration of security interests in goods. 12

3 1 14

15

The right to recover instalments other than the deposit was considered in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457. Prior to Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57, the right to relief against forfeiture for failure to pay a due instalment was considered in Legione v Hateley (1983) 152 CLR 406; 46 ALR 1 and Stern v McArthur (1988) 165 CLR 489; 81 ALR 463. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 536–​537. In particular, a buyer in possession of goods with the consent of the seller could pass good title to a subsequent buyer in good faith and for value. See Sutton, Sales and Consumer Law in Australia and New Zealand (3rd ed, Law Book Co, Sydney, 1983), pp 330–​353. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 539–​545. [7.30]  403

PART 2 Title to Land

Remedies and secured interests [7.35]  The contrast between the secured and unsecured creditor flows significantly from the

requirement that an unsecured creditor could not take action directly against a debtor or his or her property, but had to obtain a judgment from a court and use the procedures for the enforcement of judgments. The common law did allow one widespread remedy against a debtor’s property without court action. This was the remedy of distress, which allowed a landlord to seise any goods on the rented premises of a defaulting tenant (see [14.385]). This remedy has been substantially extinguished by statute but is still available for non-​residential landlords in South Australia, the Australian Capital Territory and the Northern Territory and generally in Tasmania. Distress is a remedy that mortgagees sometimes seek for themselves by use of a notional landlord and tenant relationship between the mortgagee and the mortgagor. A secured creditor gains an advantage of other creditors in taking rights over the asset involved. In the event of default the secured creditor can simply sell the asset involved whatever the effect upon other creditors. These creditors have reason to complain if they were not aware of the holding of security. Normally a mortgage over land will be recorded on the title to the land; even a caveat should alert other creditors. However there is no general requirement for registration or lodgment of a caveat, though risks attach to such an informal interest. Requirements for registration with ASIC of documents recording charges do not apply where the charge is over land or fixtures attached to land.16 Where there has been a designed attempt to cheat other creditors, actions including an attack on the basis that the transaction is defeasible in bankruptcy are available.17 The position in relation to goods is more open to abuse as possession is but a guide to ownership and allowing another to have possession of goods where ownership has been transferred has been held not to create any barrier to the assertion of ownership rights.18 The Bills of Sale legislation sought to stamp out fraudulent dealings and required public recording of (in essence) transactions transferring rights to goods not matched by an accompanying transfer of possession.19 Unfortunately, the recording processes were extremely cumbersome and were accompanied by some social stigma.20 Today registration of security interests in goods and rules for priority amongst such interests is provided by the Personal Property Securities Act 2009 (Cth).21

THE NATURE OF A MORTGAGE The general law [7.40]  The form of the general law mortgage is said to have been influenced by such factors as

attitudes in the Middle Ages to usury and the expulsion of the Jews from England in the reign

16 17 18 19 20

21

See Corporations Act 2001 (Cth), s 262. A transfer to defeat creditors may be void in bankruptcy: Bankruptcy Act 1966 (Cth), s 121. Farquharson Brothers & Co v King & Co [1902] AC 325. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 530–​534. The development of consumer credit and acceptance of secured borrowings beyond the mortgage for the purchase of the family home represents a major reversal of earlier attitudes. In Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 530, the authors refer to the view that mortgages of chattels are usually indicative of serious financial embarrassment and frequently a prelude to bankruptcy. The scope of the legislation is discussed in Re Maiden Civil (P & E) Pty Ltd [2013] NSWSC 852.

404 [7.35]

Mortgages  Chapter  7

of Edward I.22 The form of transaction adopted was one whereby the mortgagor transferred the land to the mortgagee and the mortgagee promised to reconvey the land upon payment in full of the debt and interest. Moreover, the date for repayment was commonly set at a short time after the loan –​most often six months. Thereafter the mortgagor was in default with respect to the obligation and the condition for reconveyance was apparently broken. The conditional bond was widely adopted as a commercial transaction in the middle ages and is the central feature of The Merchant of Venice.23 Such a form would appear to leave the mortgagor with few, if any, legal rights. Again for historical reasons, equity stepped in to transform the substance of the transaction. Equity is said to have acted on the view it adopted that the substance of the transaction was that of a security for the mortgagee. Consequently, so long as the mortgagee received his or her money (including interest and costs), the mortgagee had no further claim against the land. [7.45] As a general law mortgage took the form of a transfer of the legal estate from the

mortgagor to the mortgagee, the formalities involved were those associated with any transfer of land; a deed24 or writing25 is needed to transfer a legal interest. The mortgagee thus had the legal estate and the mortgagor an equitable right to get the land back. Only a first mortgage could confer legal rights on the mortgagee; since the mortgagor retained equitable rights, all that could be transferred to a second or subsequent mortgagee were in turn equitable rights. In some cases a mortgagor has only equitable rights –​such as a beneficiary under a trust –​ and, therefore, even a first mortgagee could acquire only equitable rights. In some cases, although a mortgagor may have legal rights, the formalities for the transfer of those rights may not be completed and again the mortgagee would acquire only equitable rights. In fact, mortgages without any written agreement were not uncommon –​a mortgagor would simply deposit title deeds with the mortgagee. That deposit is a sufficient act of part performance to enable enforceability despite the Statute of Frauds. The deposit of a duplicate certificate of title with respect to Torrens system land has been held to have the same effect.26 The deposit of title deeds by a debtor with a creditor may be done as a step in the process of preparing a legal mortgage. In many cases the loan will not be made until the legal mortgage is properly completed; however, the parties may agree to grant a mortgage to secure an existing indebtedness. Where a mortgage is intended to secure an existing indebtedness, there is a presumption that the deposit of the documents of title for the purpose of preparing a legal mortgage is intended to have immediate effect as part of the security and creates an equitable mortgage.27 Where there is an existing indebtedness, in the absence of a contrary intention, an equitable mortgage will come into existence on the handing over of the title documents

22

23

24 25 26 27

Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 167; Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 39–​42; Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017) at [11.20]. See Stretton, “Contract, Debt Litigation and Shakespeare’s The Merchant of Venice” (2010) 31 Adel LR 111: the bond emphasis seems to have retained attraction in the United States where an absence of liability beyond the property seems to have encouraged mortgagors to walk away and houses remain boarded up. Conveyancing Act 1919 (NSW), s 23B; Property Law Act 1958 (Vic), s 52(1); Law of Property Act 1936 (SA), s 28(1); Conveyancing and Law of Property Act 1884 (Tas), s 60(1); Property Law Act 1969 (WA), s 33(1). Property Law Act 1974 (Qld), s 10(1); Civil Law (Property) Act 2006 (ACT), s 201; Law of Property Act (NT), s 9(1). Theodore v Mistford Pty Ltd (2005) 221 CLR 612; [2005] HCA 45. World Tech Pty Ltd v Yellowin Holdings Pty Ltd (1993) ANZ ConvR 121. [7.45]  405

PART 2 Title to Land

even though that handing over is for the purpose of creating a legal mortgage. Whether the equitable mortgage comes into existence immediately or in the future, if an intention to create a security is established, the function of the deposit of title deeds is to provide an act of part performance and to overcome a lack of writing. When title deeds are deposited with a creditor without any clear intention, the question is whether an intent to create a security should be inferred. In Theodore v Mistford Pty Ltd (2005) 221 CLR 612; [2005] HCA 45 the High Court has cited, seemingly with approval, a late 19th-​century Privy Council statement28 that such an inference in favour of the creation of a security should be drawn. In Theodore the High Court based its decision on the existence of evidence of intention. The case goes beyond the previously cited authority in that the depositor was not the debtor, but the debtor’s mother. The equitable mortgage was created over property of a third party to the contract of loan. [7.50]  Essential to the equitable approach, with respect to even legal mortgages, were the

notions of redemption and foreclosure. Redemption is the mortgagor’s right to get back the property. Foreclosure is the mortgagee’s right to extinguish the right of redemption. Even under the common form of mortgage with a provision for payment in six months, the mortgagor has a contractual right (enforceable in courts of common law if not by way of specific performance) to get this land back if payment is made within the six-​month period. This right can be properly described as a “contractual right to redeem”. The significance of equitable intervention was to entitle the mortgagor to redeem even after the contractual right had expired. This right is described as the mortgagor’s equity of redemption. Moreover, equity enforced the contractual and equitable rights against all except a bona fide purchaser of the legal estate for value and without notice. The mortgagor thus has an equitable proprietary interest. The terminology is confusing as this proprietary interest is described as the equity of redemption and includes both the contractual and equitable right to redeem.29 The right of foreclosure was the means whereby mortgagees could obtain the land for themselves. Despite the apparent absolute ownership, and whatever the mortgagee may have provided in the agreement, without foreclosure the mortgagee was subject to the mortgagor’s right of redemption. The mortgagee could, however, apply to the court of chancery for an order of foreclosure, cutting off the right of redemption.30 The mortgagee could apply whenever the mortgagor was in default under the contractual provision. The established practice was for a conditional order to be made allowing the mortgagor six months in which to repay the debt, with the order becoming absolute if payment was not made. Even a foreclosure order was not absolute and redemption would still be allowed if the mortgagor was not guilty of unconscionable delay, the mortgagee had not acted to his or her detriment on the basis of the foreclosure order, and provided that no innocent third party had acquired an interest in the land.31 [7.55]  Equity intervened to allow redemption wherever the parties intended the agreement to be

by way of security. Equity would look beyond any written agreement to discover this intention. It acted against a background where the standard agreement at least disguised the security nature 28 9 2 30 31

Bank of New South Wales v O’Connor (1889) 14 App Cas 273 at 282–​283 per Lord Macnaughton. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 52. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 53–​54, 130–​134. Campbell v Holyland (1877) 7 Ch D 166.

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of the transaction. In the case of doubtful transactions, the court endeavoured to find that a security was intended. A transaction very similar to the standard mortgage is one whereby the land is transferred, but the vendor is given an option to purchase at a future date. Equity accepted a distinction between a power to redeem and one to repurchase, but it had to be convinced that the real intention was repurchase. The High Court has indicated that today the courts will take the parties at their word unless it can be shown that the form of the transaction was adopted as a disguise. In Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98 the plaintiff mortgagor was the registered proprietor of land subject to two mortgages. The mortgagor was in default and the mortgagees had arranged a public auction of the land. The mortgagor had been seeking finance from the defendant. Just prior to the auction, the mortgagor entered an agreement for the sale of the land to the defendant for the sum of 3,760 pounds which covered the debts plus expenses. The defendant undertook to complete a building on the land at a cost of 1,240 pounds. In consideration of the payment of 10 pounds by the plaintiff, the plaintiff was given an option to repurchase the land for 5,500 pounds within 12 months. The option was not exercised. The plaintiff brought an action seeking, nonetheless, to get the land by way of redemption. He claimed that the sum of 5,500 pounds represented the amount lent plus the cost of building plus interest calculated at 10% for 12 months. He alleged that the transaction was truly one of security and thus he was entitled to redeem even after the contractual date. A majority of the High Court held that despite the surrounding circumstances there was insufficient evidence that both parties truly intended a security transaction. By contrast, if the transaction on its face purports to be an absolute transfer, even though the transferor may have rights to buy back the property, the courts will generally accept the purport of the transaction. The courts will interfere only where there is evidence that the parties really intended that a security interest or that the transaction is a sham. Beconwood Securities Pty Ltd v ANZ Banking Group Ltd [2008] FCA 594 involved securities and an arrangement for lending and borrowing. The plaintiffs transferred securities in return for funds. The securities were then transferred to the bank and the plaintiffs claimed to have a right of redemption mortgage or charge over those shares. The court pointed out that not only did the plaintiffs purport to transfer the shares absolutely, but their entitlement was to delivery not of the shares transferred, but to the same number and type of securities. The charge claim was argued to relate to the equivalent shares, but they could not be identified as the transferee could select the equivalent shares. The claim to an equitable right over the shares was rejected.

The Torrens system [7.60]  The Torrens system form of mortgage represents a significant alteration to the position

under the general law. Even if the substance of the transaction was retained, at the very least the Torrens system translated the mortgagor’s equitable rights into legal rights.32 The changes also meant that the form of the transaction could be simpler and what was set out in the agreement corresponded with the actual legal rights of the parties. The essential change made by the Torrens system is that the mortgagor does not transfer the mortgagor’s legal estate, but grants a charge over the estate. This concept is expressly stated

32

Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 167, argues that the form of mortgage under the common law was regarded by the drafters of the Torrens system as unsuitable to the needs of the colonies. [7.60]  407

PART 2 Title to Land

in all the Torrens system statutes. Both the mortgagor and mortgagee have legal interests in the land: the mortgagor as the beneficial owner, the mortgagee as the holder of charge.33 The significance of the charge is to confer upon the mortgagee rights in case of default by the mortgagor. [7.65]  The character of the mortgagor’s interest has a consequential impact upon subsequent

mortgages. As the mortgagor retains legal title, he or she can confer legal rights over that interest. Consequently, second, third and subsequent mortgages may all confer legal rights upon the mortgagees. These mortgages take the same form as a first mortgage and are entitled to be registered. Upon registration the mortgagee’s rights are legal. Even under the Torrens system, the mortgage may still be equitable. If a document in registrable form is executed, it will not confer a legal right until it is registered. Prior to registration the mortgagee may well gain equitable rights under the Walsh v Lonsdale (1882) 21 Ch D 9 principle. Furthermore, it is possible to deposit the duplicate certificate of title with the mortgagee without any written agreement. Just as under the general law, this deposit is a sufficient act of part performance to overcome the requirements of the Statute of Frauds so there is an enforceable contract to grant a mortgage. This result is expressly recognised in the South Australian Real Property Act 1886.34 A hankering for the past may induce some parties or their advisers to attempt to reproduce a general law mortgage. They are able to execute an apparently absolute transfer to the mortgagee which will be registered and confer legal title upon the mortgagee. They may execute a separate agreement for the transfer of land back to the mortgagor on payment of the debt, interest and costs. This agreement cannot be registered, but the mortgagor’s rights can be protected by the lodging of a caveat. While the wording of the Torrens system statutes is mandatory and requires the use of the statutory form of mortgage by way of charge whenever land is to be made the subject of a security, it has not been argued that a general law form of mortgage is illegal and confers no rights. Such an argument is likely only to hurt the mortgagor and the mortgagor is unlikely to have dictated the form adopted. A stronger argument exists that the registrar should deny registration to an apparently absolute transfer where the transfer indicates that it is a security only.35 The Full Court of the South Australian Supreme Court has adopted this view.36 Practice appears to differ from State to State.37 [7.70]  Although the form of the Torrens system mortgage differs markedly from the general

law, much of the nomenclature and trappings of the general law mortgage have been retained. Even a right of foreclosure survives, though it is available only in most limited circumstances. The tension between the change in form and the retention of nomenclature surfaces when it is argued that general law doctrines apply to the Torrens system mortgage in areas upon which the Torrens system statutes are silent. 33

34 35 36 37

Real Property Act 1900 (NSW), s 57(1); Transfer of Land Act 1958 (Vic), s 74(2); Land Title Act 1994 (Qld), s 74; Real Property Act 1886 (SA), s 132; Transfer of Land Act 1893 (WA), s 106; Land Titles Act 1980 (Tas), s 73; Land Titles Act 1925 (ACT), s 93; Land Title Act (NT), s 76. See also Alliance Acceptance Co Ltd v Ellison (1986) 5 NSWLR 102. Real Property Act 1886 (SA), s 149. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 235–​236; Putz v Registrar of Titles [1928] VLR 348; Wright v Registrar of Titles [1979] Qd R 523. Road Chalets Pty Ltd v Thornton Motors Pty Ltd (1986) 47 SASR 532. See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, 2017) at [11.200].

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In Perry v Rolfe [1948] VLR 297 Fullagar J held that the rule that a mortgagee was entitled to the mortgagee’s costs in a suit for redemption did not apply to an action in which a Torrens system mortgagor claimed an order that on payment of all amounts due the mortgagee execute a discharge. Fullagar J pointed out that the general law mortgagee’s entitlement to costs reflected the absence of any legal rights once the date for legal redemption had passed. As the mortgagor was thus seeking a concession or indulgence from equity, a condition of that concession or indulgence was the payment of costs. On the other hand, a Torrens system mortgagor was entitled at law to have the mortgage discharged on payment of the debt and was, therefore, seeking to enforce the mortgagor’s other rights. The mortgagor had such an entitlement even after default as the default did not take away the right to a discharge, but was the basis of other compensatory remedies of the mortgagee. By contrast, in Re Forrest Trust; Trustees, Executors & Agency Co Ltd v Anson [1953] VLR 869 the Victorian Full Court held that the mortgagor’s right to discharge the mortgage could still properly fall within the description of “a suit to redeem the mortgage”. The term was used in the Property Law Act 1958 (Vic) in reference to the limitation of actions in a situation where the mortgagee had been in possession. The Full Court pointed out that, on payment, the mortgagor was entitled to have the mortgage discharged and this right involved freeing the land of the interest of the mortgagee. The right thus conformed to the essence of what was understood by the concept of a right to redeem. The term “all right and equity of redemption” was used in the Torrens system statute in relation to the interest that was taken away by foreclosure. The court concluded that the term “redemption suit” could apply equally to the general law and Torrens system. The application of general law rules will depend upon an analysis of each rule and the Torrens system context. Whereas in Perry v Rolfe there was good reason to displace the general law rule, in Re Forrest Trust no obvious alternative to the term redemption suit to describe the mortgagor’s recovery of the land was used in the Torrens system statute and (given the application of the particular limitation of actions provisions to the Torrens system) no reason existed to exclude the limitation of action in relation to cases of mortgagees in possession. [7.75] It is central to the Torrens system that a registered forged mortgage is protected

by indefeasibility, as a registered transfer it is protected by the principle of immediate indefeasibility and gains indefeasibility on registration.38 The mortgagee therefore has an indefeasible charge over the land but the scope of protection is subject to dispute. Problems arise in particular under more recent forms of mortgage which simply secure money owing under a separate loan agreement and it is argued that if this agreement is forged, it is void and no money is owed under the loan agreement. One recognised limitation on the indefeasibility of the mortgagee’s interest was established by the High Court in Queensland Premier Mines Pty Ltd v French (2007) 235 CLR 81, where the court held that, on a transfer of a mortgagee’s interest, the transferee’s indefeasible title only extended to the charge over the land and did not extend to the personal covenant. With respect to promises to pay, the position now seems likely to be that whilst a forged mortgage confers an indefeasible interest upon the mortgagee, subject to general statutory and case-​law exceptions, the promise to pay is only indefeasible to the extent that it is incorporated into the registered instrument.39 This 38 39

Frazer v Walker [1969] 1 AC 569. See the discussion at [4.170] and Stoljar, “Mortgagors, Indefeasibility and Personal Covenants to Pay” (2008) 82 ALJ 28; Grattan, “Recent Developments Regarding Forged Mortgages: The Interrelationship Between [7.75]  409

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position seems to be settled in New South Wales where it was adopted most recently by the Court of Appeal in Perpetual Trustees Victoria Ltd v Cox [2014] NSWCA 328.40 In part the decisions rely on words in the mortgage describing the amounts owing as money payable under the security agreement and because of forgery this separate agreement is void. In other jurisdictions earlier cases inclined to an opposite approach,41 but in Perpetual Trustees v Xiao [2015] VSC 21, Hargrave J specifically rejected earlier Victorian decisions in favour of the New South Wales position. This case is highly persuasive because of its extensive review of cases in all jurisdictions. In New South Wales42 and Queensland43 a mortgagee is under a statutory duty to check the identity of the mortgagor and breach of this duty may give a mortgagor a claim for compensation for any loss under the mortgage.44 Furthermore protocols relating to electronic conveyancing require subscribers to the service to undertake necessary steps to verify the identity of the person with whom they are dealing (see [4.170]).

Formalities for the creation of a mortgage [7.80]  A general law mortgage is still possible in the five jurisdictions with general law land

(New South Wales, Victoria, South Australia, Western Australia and Tasmania). As a legal mortgage involves the transfer of the legal estate to the mortgagee, the formalities necessary for the creation of a legal mortgage are the same as those involved in the transfer of a legal fee simple estate: see [8.105]. In Victoria and Tasmania a short form of deed of mortgage is set out in a schedule to the property law statute.45 The statute provides that such a deed is sufficient with respect to form and expression. In New South Wales and Western Australia the short form of deed of conveyance could be adopted for a mortgage by the addition of the proviso for redemption.46 Under the Torrens system, there is express provision for the mortgage as a statutory charge. The form of such the mortgage is set out in a schedule or regulations.47 In South Australia, Tasmania and the Australian Capital Territory the document must contain an accurate statement of the estate or interest mortgaged and a statement of all encumbrances. In all jurisdictions the general requirements for the transfer of a legal interest under the Torrens system apply and, in particular, a legal interest will not pass until registration: see [8.105].

40

41 42 43 44 45 46 47

Indefeasibility and the Personal Covenant to Pay” (2009) 21 Bond LR 43; Weir, “Indefeasibility: Queensland Style” (2007) 15 A Prop LJ 79 at [4.225]. The court followed a mass of earlier decisions including Perpetual Trustees Victoria Ltd v English [2010] NSWCA 32; Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694; Grgic v ANZ Banking Group (1994) NSWLR 202. New Zealand has followed the New South Wales approach: Westpac v Clark [2010] NZLR 82. Hilton v Gray [2007] QSC 401; Solak v Bank of WA Ltd [2009] VSC 82; Public Trustee v Paradiso (1995) 64 SASR 387. Real Property Act 1900 (NSW), s 56C. Land Titles Act 1994 (Qld), ss 11A and 11B. Mortgagee’s duties are further discussed at [7.460]. Property Law Act 1958 (Vic), s 206, Sch 8; Conveyancing and Law of Property Act 1884 (Tas), s 70, Sch 2. Conveyancing Act 1919 (NSW), s 43; Property Law Act 1969 (WA), s 37. Real Property Act 1900 (NSW), s 57; Transfer of Land Act 1958 (Vic), s 74; Land Title Act 1994 (Qld), s 73; Real Property Act 1886 (SA), s 132; Transfer of Land Act 1893 (WA), s 106; Land Titles Act 1980 (Tas), s 73; Land Titles Act 1925 (ACT), s 92; Land Title Act (NT), s 74.

410 [7.80]

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Mortgages and interests less than a fee simple [7.85]  In this chapter analysis is devoted to a mortgage of a fee simple interest in land. To the

extent that other interests in land have value, they may be used as security for repayment of a debt. The unforeseeable duration of a life estate makes it an unsuitable basis for a commercial transaction. However, a leasehold estate for a term of years has a value that is calculable –​ the calculation involves the comparison between the value of the right of possession and the obligation of making the rent payments. For many businesses the leasehold interest in the land on which the business is operated represents the most valuable asset of that business. Consequently, mortgages of leasehold estates are reasonably common.48 Most of the issues discussed in this chapter with respect to a mortgage of fee simple interest apply to the mortgage of a leasehold interest. However, because the right to possession is the most valuable aspect of the lessee’s interest, mortgagees will be most interested in their right to take over possession on default by a lessee-​mortgagor. The legal problems that arise commonly concern the relationship between the mortgagee of the lessee and the lessor. The general proposition is that a mortgagee of a lessee who enters into possession is liable on the covenants in the lease, but only to the extent of any benefit, rents and profits received.49

Reverse mortgages [7.86]  A traditional mortgage provided security to the lender in return for the advance to the

borrower of money used for the purchase of property. That property is the asset forming the security. The expectation is that the borrower will repay the debt over time and thus acquire the asset free of any debt. The purpose of the transaction is this acquisition. In past decades owners of assets looked to the asset as a means to acquire cash or some equivalent. Such borrowers are often elderly and seeking to supplement their savings or government benefits. The lender again takes a security interest over an asset, but the borrower wishes to utilise the cash for current enjoyment and defer repayment often until the death of the borrower or sale of the asset. Repayment of the amount of the original loan and interest on that loan is deferred until death or sale. These features lead to the description of a reverse mortgage.50 As the borrowers are elderly, their understanding of the transaction may not be adequate to cope with the legal and financial complexities of the transactions. Advice to borrowers is often provided by financial advisors for whom competency standards are loosely regulated. As no repayment of any of the capital or interest is envisaged, interest will be compounded. The debt will therefore rise significantly. Lenders will incorporate this rise into their calculation of the amount to be repaid. But the value of borrower’s equity declines and the borrower’s capacity to acquire cash by disposal of the asset falls away. Traditional mortgages can produce a result

48 49

50

The nature of the mortgage of a leasehold estate under the general law and under the Torrens system is discussed by Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 335–​342. Real Property Act 1900 (NSW), s 64; Transfer of Land Act 1958 (Vic), s 78(2); Land Title Act 1994 (Qld), s 80(2); Real Property Act 1886 (SA), s 139; Land Titles Act 1980 (Tas), s 84; Transfer of Land Act 1893 (WA), s 114; Land Titles Act 1925 (ACT), s 100; Land Title Act (NT), s 80. See also The Church of England Collegiate School of St Peter v Chesser House Pty Ltd (1993) ANZ ConvR 110; Carnovale v State Bank of New South Wales (unreported, NSWSC, 3 November 1992); Stockland Macquarie Pty Ltd v Australia and New Zealand Banking Group (1991) Q ConvR 54-​371; Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1998) 196 CLR 245. Burns, “The Evolving Statutory Regulation of Reverse Mortgages in Australia’s ‘Risk Society’ ” (2013) 39 Mon LR 611. [7.86]  411

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where the amount owed exceeds the value of the asset described as a negative equity. With a reverse mortgage the borrower may not have income or assets to cover any negative equity. To counter this situation, reverse mortgages often provide that the lender will not seek to recover any amount in excess of the equity. The lender’s position is also affected by the borrower’s care for the property and payment of charges such as rates and insurance. The borrower does not have the same long-​term association with the property to be as interested in performance of these obligations as a normal mortgagor. The lender may seek to impose obligations for maintenance and payments. However, a remedy for breach of these obligations may threaten the borrower’s enjoyment of the asset if the lender is able to sell the asset. [7.88]  Regulation of reverse mortgages now results from amendments to the National Credit

Code made by the National Consumer Protection Act 2009 (Cth). Responsibility for the administration and enforcement of this Act (as with all of the National Credit Code  –​ see [7.120]) rests with the Australian Securities and Investment Commission. The legislation applies where the borrower is a natural person or strata corporation, the credit is provided wholly or predominantly for personal, domestic or household purposes, and the lender engages in credit activities which include entering into mortgages. The legislation requires disclosure of certain information, protection for residents other than the borrower, limits on recovery beyond the value of the mortgaged property, limits on what may amount to default, and notice prior to any default proceedings. Lenders must inform the borrower about the depletion of the borrower’s equity in the property as a result of the mortgage, and the nature and effect of reverse mortgages.51 Unless the right is specifically excluded, the mortgage must state that the borrower may at any time nominate a person who is to be allowed to occupy the property. That person is entitled to occupy the property until the borrower dies or vacates the property.52 Unless the borrower has committed fraud or made a misrepresentation, the borrower’s liability is limited when the accrued liability exceeds the market value of the property. The borrower is under no obligation if the lender receives the market value as determined in accordance with regulations and is entitled to any excess the lender receives above the market value.53 The mortgagee cannot take default proceedings for failure by the borrower to inform of occupation by another person, if the premises are left unoccupied, and if the borrower fails to make a payment within three years of the payment becoming due.54 Finally the lender may not commence default proceedings until notice has been given giving the lender at least 30 days in which to remedy the default.55

PRIORITIES BETWEEN MORTGAGEES Conflicting mortgages [7.90]  Priority disputes often arise in the context of mortgages because they are essentially

paper transactions in which money is lent, and security taken without any effect upon 51 52 53 54 55

National Consumer Credit Protection Act 2009 (Cth), s 133DB. National Credit Code, s 17(15A). National Credit Code, ss 18A, 18B. National Credit Code, ss 86A 86D. National Credit Code, s 88(1).

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possession, at least until default. In general, the principles by which priority is determined are those by which priority between any legal or equitable interests is determined. The applicable rules will, however, reflect the fact that, under the general law, the first mortgage may be legal and all subsequent mortgages must be equitable and that, under the Torrens system, all mortgages may be legal. Under the general law, a legal mortgagee will have priority over a purported subsequent legal mortgagee and any subsequent equitable mortgagees because of his or her priority in time. The mortgagee acquires the full legal interest in the land. The only instance in which the mortgagee will be defeated by subsequent mortgagees is if he or she has been guilty of some conduct which will cause him or her to be estopped. The mortgagee will take free of prior equitable mortgagees unless he or she is regarded as having notice of their interests. Between equitable mortgages, priority according to priority of time only occurs if the conduct of the parties can be regarded as equal. Priority may be upset by non-​ registration under the deeds registration system. Generally an unregistered mortgage will lose priority to a subsequent registered mortgage where the mortgagee takes bona fide and for value. Under the Torrens system, priority among legal mortgagees will depend upon the order of registration. Even notice of a prior and yet unregistered mortgage will not of itself defeat a mortgagee otherwise bona fide and for value who first becomes registered.56 Similarly, a registered mortgagee has priority over prior equitable mortgages and any subsequent mortgages. Between equitable mortgages, again priority in time only confers priority of interest if conduct is equal. What conduct causes postponement is a vexed question and competition between unregistered mortgages does not raise issues different from those of competition between equitable interests generally.57 In New South Wales and Victoria, where two or more mortgages are registered, the mortgagees may register a postponement of one to the other and on registration priority reflects the new document.58

Tacking [7.95]  The general law had some doctrines by which the priorities between mortgagees could

be affected. These doctrines rest on established authority rather than any readily explicable principle. Their application to the Torrens system is also obscure and has been severely doubted (see [7.110]). [7.100] The most peculiar of the doctrines is that of “the plank in the shipwreck”, a title

which Professor Sykes tells us “evokes a vision of drowning equitable owners struggling for the lifebelt of the legal estate”.59 The doctrine applies where there are equitable mortgagees, one of whom has advanced money without notice of a prior equitable interest but later discovers that interest. If that person subsequently acquires the legal estate, he or she can rely upon that legal title to protect his or her security against the formerly prior equitable holder on the basis of the good faith purchaser without notice doctrine.

56 57 58 59

Zafiropoulos v Recchi (1978) 18 SASR 5. Priority between competing unregistered mortgages will depend upon such factors as the effect of the failure to lodge a caveat: see [5.130]ff. Real Property Act 1900 (NSW), s 56A; Transfer of Land Act 1958 (Vic), s 75B. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 392. [7.100]  413

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In Bailey v Barnes [1894] 1 Ch 25 the claimant purchased what he understood to be an equity of redemption. However, the holder of the equity of redemption from whom he purchased was subject to a previous equitable interest which had arisen because the power of sale under a previous mortgage had been improperly exercised. The title of the claimant purchaser was subject to this previous equitable interest which conferred a right to set aside. In turn, the holder of this right had granted a charge over his interest to the respondents. The claimant paid out the legal mortgagee and took a conveyance of the legal estate. It was held the claimant could rely on his legal title to gain priority over the respondents. Even this doctrine is subject to an exception in cases where the holder of the legal estate stood in the position of trustee towards the prior equitable owner. The leading case establishing this exception is one in which the reason for a trust is, on general principle, difficult to discern. In Mumford v Stohwasser (1874) LR 18 Eq 556 the subsequent equitable mortgage was an informal mortgage of a leasehold estate. The prior equitable interest was an informal sublease. In effect, the lessee had sublet and then granted a mortgage. The mortgagee took a formal legal mortgage and became the legal lessee. This party was held not to be entitled to priority because of a breach of trust by the lessee. [7.105]  The application of “the plank in a shipwreck” doctrine to the Torrens system has been

denied by Holland J in the New South Wales Supreme Court60 and by Professor Whalan.61 They argue that priority among mortgagees depends upon the time of registration and that the first mortgagee does not acquire the legal estate, but has merely a charge. More recently, Heenan  J in the Western Australian Supreme Court62 has doubted the applicability of any tacking doctrine to the Torrens system. In that case both the first and second mortgages were registered so that Heenan J denied any ability of the third mortgagee to gain priority over the second mortgagee by acquiring the interest of the first mortgagee. It is possible that both a second and a third mortgage can be created informally, that at the time of an advance by the third mortgagee the third mortgagee has no knowledge of the second mortgage, and that the third mortgagee then acquires the interest of the first mortgagee. In the absence of a caveat by the second mortgagee, the third mortgagee could register the memorandum of mortgage and thereby claim the protection of indefeasibility. Mere notice of the second mortgage before registration should not be enough to constitute a lack of good faith on the part of the third mortgagee. [7.110] The more general tacking doctrine was that involving further advances by a prior

mortgagee. It is possible under the general law for the prior mortgagee to be a first mortgagee and have the legal estate. In this case a further advance without notice of a subsequent equitable mortgage would form part of the legal interest and be protected against the claim of the subsequent mortgagee by the good faith purchaser rule. If the mortgage is equitable, assuming conduct is equal, priority depends on priority in time and a subsequent advance could not gain priority over an interest prior in time to the advance. The prior equitable mortgage may, however, require further advances. In this case the prior mortgage would cover the further advances and give them priority. It is possible that the legal or equitable mortgagee has notice of the subsequent mortgage prior to making the further advance. It has been held 60 61 62

Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293. Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 70. Davidson v Registrar of Titles [2002] WASC 168.

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that once a legal or equitable mortgagee has notice of a subsequent mortgage, priority cannot be claimed for any further advance, even when that advance is required by the prior mortgage. The absence of priority for a required advance has been affirmed in England and Australia. The absence of priority was the basis of the decision in West v Williams [1899] 1 Ch 132. It was reasoned in that case that notice of the subsequent mortgage destroyed the obligation to make further advances. This decision was assumed to represent the law in Australia by Holland J in Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293. Holland J stated that it rested on a general principle of doing justice between mortgagees and held that priority for required further advances was preserved where those advances were to improve the land and thus enhanced the value of the property. The decision of Holland J was followed by Kearney J, again in the New South Wales Supreme Court, in the case of Central Mortgage Registry of Australia Ltd v Donemore Pty Ltd [1984] 2 NSWLR 128. Kearney  J held that the notice depriving the earlier mortgagee or priority for further advances must be actual notice,63 not constructive notice. He pointed out that it would be commercially inconvenient to require searches by a mortgagee before any further advance and that a subsequent mortgagee had the power to provide actual notice to the prior mortgagee. In Victoria, Queensland and Tasmania the general law rules have been displaced by statute, although only the Queensland provisions expressly purport to apply to Torrens system land.64 Under this legislation, further advances may be added to a mortgage in priority to the claims of subsequent mortgagees in three instances: 1.

where an arrangement to that effect has been reached with subsequent mortgagees;

2.

where the prior mortgagee had no notice of the subsequent mortgage when making the further advance; and

3.

where the mortgagee is by virtue of the mortgage instrument under an obligation to make the advances.

The major effect of these rules is to reverse the rule flowing from the decision in West v Williams. [7.115]  The general law approach to further advances has been applied to the Torrens system

in Matzner v Clyde Securities Ltd [1975] 2 NSWLR 293. However, under the Torrens system, all the mortgages may be legal and in that event priority depends on time of registration and priority could not be claimed for a further advance not required by the mortgage instrument. Moreover, as Professor Whalan points out,65 where the subsequent mortgages are registered, the process of registration will involve application to the prior mortgagee for production of the duplicate certificate and thus clear notice of the subsequent registered interest will be given. If a voluntary further advance is made by a legal mortgagee where other mortgages are equitable, the variation can be registered and the varied mortgage would be protected by indefeasibility. If a further advance is made by a legal mortgagee pursuant to an obligation in the mortgage instrument, there will be no priority if there is notice of a subsequent mortgage.

63 64 65

Actual notice of a registered second mortgage was held to deny priority for further advances by a registered first mortgagee in Mercantile Credits Ltd v Australian & New Zealand Banking Group (1988) 46 SASR 407. Property Law Act 1958 (Vic), s 94; Property Law Act 1974 (Qld), s 82; Conveyancing and Law of Property Act 1884 (Tas), s 38. Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 173. [7.115]  415

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It now seems clearly established66 that the rule in West v Williams [1899] 1 Ch 132 would apply both to general law and Torrens system land. In Queensland the legislation altering this result expressly applies to Torrens system land; the application of the Victorian and Tasmanian legislation to Torrens system land is not clear, but there seems no reason why the legislation should not apply. Where both mortgages are equitable, the general law position seems to be maintained. Further advances will gain priority only if made pursuant to an obligation in the mortgage and only if made without notice of the subsequent mortgage. Again priority for required further advances even with notice will be conferred by the Queensland legislation and may be conferred by the Victorian and Tasmanian legislation.

CONSUMER CREDIT LEGISLATION [7.120] Legislation governing consumer credit generally was first enacted by the national

government in the National Consumer Credit Protection Act 2009 (Cth) and the National Credit Code, which is set out in Sch 1 to the Act. Administration of this legislation is entrusted to the Australian Securities and Investment Commission.67 The legislation requires contracts to be set out in writing with a statement of the interest rate in a prescribed form, restricts some terms, regulates associated contracts of insurance and guarantee and imposes some restrictions upon the exercise of rights upon default.68 It requires lenders to satisfy themselves as to the capacity of the borrower to repay. It empowers courts and associated bodies to set aside terms considered to be unjust. As well as rules under the credit code, licensees and credit representatives may apply to ASIC for approval of a code of practice. The most important of the current codes are the Banking Code of Practice, whose current form was adopted in 2019, and the E-​Payments Code. [7.125]  Ascertaining whether a mortgage is subject to the consumer credit legislation involves

consideration of the scope of the legislation. The legislation applies to loans made in the course of a business to a natural person where the loan is provided wholly or predominantly for personal, domestic or household purposes.69 The key to the legislation is, therefore, that the lender is acting in the course of a business (thus including a person whose business is that of lending –​such as a bank or credit union or finance company –​or who provides finance as a part of a business  –​such as a retailer providing credit for goods sold) and that the borrower is not acting primarily for business purposes (the predominant purpose of the loan is determinant). [7.130]  The requirement for a credit licence applies to both credit providers and intermediaries

such as brokers.70 These two categories reflect the ability of a borrower to approach a credit provider directly, such as applying for a credit card from a bank or other card issuer, or go through an intermediary, such as a mortgage broker, who will endeavour to find the best 66 67 68 69 70

See Matzner v Clyde Securities Ltd; Central Mortgage Registry of Australia Ltd v Donemore [1984] 2 NSWLR 128; Mercantile Credits Ltd v Australian & New Zealand Banking Group (1988) 46 SASR 407. National Consumer Credit Protection Act 2009 (Cth), s 239. See generally, Wallace, Weir and McCrimmon, , Real Property Law in Queensland (4th ed, Law Book Co, 2015), pp 805–​810; Moore, Debt Repair for Dummies (Wiley, Milton, 2010), Ch 3. National Consumer Credit Protection Act 2009 (Cth), ss 14, 17. National Consumer Credit Protection Act 2009 (Cth), s 35.

416 [7.120]

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mortgage for the borrower’s needs from a range of credit providers. Sometimes a borrower may not be aware at first that the borrower is dealing with a broker. Advertisements may describe the deals available from “U-​Beaut Home Loans” when that firm does not lend any money itself but arranges loans from other parties. To obtain a licence a credit provider and an intermediary must make a commitment to act honestly, efficiently and fairly and ensure that all staff are properly trained.71 A lender must provide a statement of its products and an intermediary a statement of its services. Intermediaries must disclose the range of their services, their fees and any commissions. Both the credit provider and any intermediary must be satisfied that the loan is appropriate to the borrower’s circumstances. Part of the background to the 2008 global financial crisis was the United States “sub-​prime mortgages”. These mortgages resulted from a combination of events. Interest rates in the United States were reduced to very low levels and house prices increased significantly in the following years. Because of the increasing house prices, mortgage loans were regarded as involving little risk because they were protected by the increasing value of the security. Consequently, checks on the capacity to repay were minimal and the Australian legislation seeks to address this failure. Before a loan can be granted, both the credit provider and any intermediary must be satisfied that the loan is appropriate to the borrower’s circumstances.72 They must inquire into the borrower’s financial capacity and seek documents to verify the borrower’s financial situation. This assessment would include consideration of a credit report. They must inquire and conclude that the loan is suitable for the borrower’s needs and that the borrower has the capacity to repay the loan. [7.135]  The major impact of the national legislation is with respect to disclosure. Prior to the

conclusion of a contract, a credit provider must provide a statement setting out the terms of the proposed contract and a statement of rights under the legislation.73 The terms must be set out in full and required matters disclosed; the interest rate must be described in accordance with a statutory formula. The credit provider must also provide regular statements of account setting out the history of the transaction.74 A borrower must be given a preliminary statement before signing a credit contract.75 This statement must contain a table of financial obligations including: • the amount of credit provided; • the repayment amounts and times; • the annual percentage rate for any interest; • the method of calculating interest; • the frequency of debiting interest; • a statement of applicable fees and charges; • when fees and charges are payable; • the amount of the fees and charges.

71 72 73 74 75

National Credit Code, s 45. National Consumer Credit Protection Act 2009 (Cth), s 29. National Credit Code, ss 14, 15. National Credit Code, s 31. National Credit Code, s 16. [7.135]  417

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The borrower must also be given a statement of the protections provided by the National Credit Code. A credit contract cannot be oral. It must be in writing and signed by both parties.76 The borrower must also be given a copy of the contract. The contract must be clearly expressed and set out in not smaller than 10 point type. It must contain the financial details set out in the preliminary statement and the following details: • the name of the credit provider; • a description of any land or goods provided through the loan; • the ways in which interest may be changed; • what statements of account will be provided; • what happens if the borrower defaults on a payment; • any enforcement expenses for which the borrower is liable; • any property (land or goods) subject to a mortgage provided as security for the loan; • details of any commission paid to another party; • details of any guarantee; • details of any required insurance. [7.140]  Unjust transactions may be reopened and the credit contract varied.77 In determining

whether a contract is unjust, a court is directed to have regard to a list of factors.78 These factors include the bargaining power of the parties, their capacity to negotiate, the necessity of terms for the protection of a party’s interests, the intelligibility of language used, the extent of explanation of terms, whether unfair tactics were used, the creditor’s ability to ascertain the debtor’s capacity to pay, and whether the interest rate is excessive having regard to comparable rates charged. The power to reopen the contract includes granting relief against any excessive payment or interest charge and setting aside or varying all or any of the terms of the agreement.79 [7.145] Assistance is available to borrowers facing unexpected difficulties. When an

unexpected event, such as unemployment, causes temporary difficulties, the borrower has an entitlement to temporary relief.80 The relief does not involve a reduction of the obligations, but a modification. Interest keeps accruing during the modification period. Usually the period involved is about three months. Payments can be rearranged or transferred to the end of the loan period. [7.150]  The mortgagee’s powers to take any enforcement action are restrained by the national

credit legislation. The mortgagee must not take any enforcement action to recover money due or seek to take possession, exercise a power of sale, appoint a receiver or foreclose without first serving a default notice.81 Notice can only be served after default and must allow the debtor at least 30  days to remedy the default; it must specify the default and the action 76 77 78 79 80 81

National Credit Code, ss 14, 17. National Credit Code, s 76(1). National Credit Code, s 76(2). National Credit Code, s 77. National Credit Code, s 72. National Credit Code, s 80(2).

418 [7.140]

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necessary to remedy the default.82 If the default is remedied during the period specified no further action can be taken.83 [7.155]  The national credit legislation sets up special procedures for handling disputes. There

are three tiers that can be used to resolve any dispute between a borrower and a lender or financial intermediary. They are internal dispute resolution, an approved external dispute resolution process and action in the courts and complaints to an independent authority. As a condition of its licence, a lender or financial intermediary must ensure that the first two stages are in place.84 The first stage means that the borrower is entitled to have someone listen to any complaint and seek an outcome acceptable to both sides. A lender must belong to an approved external dispute resolution scheme. This process involves an independent referee. The referee normally considers the claims without the need for face to face contact. The independent authority is the Australian Financial Complaints Authority. The Authority may consider any complaint relating to a credit, finance or loan product provided by a financial firm. [7.158]  An Australian Credit Licence is granted by ASIC.85 The holder must comply with rules

governing credit contracts. Many of the provisions of the credit code carry criminal penalties if they are infringed. ASIC is responsible for supervising the conduct of licence holders and taking action for breach of the rules. ASIC has power to take action against any credit provider or intermediary for arrange of the following outcomes. ASIC may seek a banning order which suspends or cancels a licence.86 The Commission may seek an infringement notice which may include an order for payment.87 It may also seek civil88 and criminal89 penalties. In Frugtniet v Australian Securities and Investments Commission [2019] HCA 1, the Commission sought a banning order against Frugtniet on the basis that he was not a fit and proper person to hold a licence. Frugtient had a criminal record including convictions in the United Kingdom and Australia for handling stolen goods, forgery, theft and obtaining property by deception. However, the Commission was prevented from taking into account convictions which were more than 10 years old. That restriction did not specifically apply to appeals before the Administrative Appeals Tribunal. The High Court held that the Tribunal had to sit in the place of the Commission and was also prevented from taking into account the past convictions.

REDEEMABILITY Clogs on the equity of redemption [7.160]  Courts of Equity overrode the stated terms of the parties’ agreement (if necessary)

to ensure that mortgagors got back their property on payment of the debt, interest and costs.

82 83 84 85 86 87 88 89

National Credit Code, s 80(2), 80(3). National Credit Code, s 80(2)(b). National Consumer Credit Protection Act 2009 (Cth), s 47(1)(h). National Consumer Credit Protection Act 2009 (Cth), s 35. National Consumer Credit Protection Act 2009 (Cth), s 80. National Consumer Credit Protection Act 2009 (Cth), s 288J. National Consumer Credit Protection Act 2009 (Cth), s 275. National Consumer Credit Protection Act 2009 (Cth), s 274. [7.160]  419

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Wherever the transactions were in substance mortgages, the fundamental right of mortgagors to get back their property could not be taken away from them. Equitable intervention extends not merely to ensuring that mortgagors can get back the property, but that any fetters associated with the property will not endure beyond redemption. At the same time, the right of redemption does not entitle mortgagors to pay off the mortgage at any time, but redemption could be postponed so long as a real right to redeem was retained. The continued relevance of the clogs doctrine in Australia was disputed by Young  J in Westfield Holdings Ltd v Australian Capital Television Pty Ltd (1992) 32 NSWLR 194. However, it was supported by Cohen  J in Chase Corporation (Australia) Pty Ltd v North Sydney Brick and Tile Company Ltd (1994) 35 NSWLR 1, where it was connected to the emerging unconscionability doctrine. The leading Australian case of Toohey v Gunther (1928) 41 CLR 181 provides a simple illustration of the basic prohibition upon fetters on redemption. The owner of a New South Wales hotel had entered into a mortgage agreement with the Tooth Brewery. The owner entered a further undertaking to obtain all drink supplies from Tooth Brewery until December 1935. The mortgage was discharged. A successor in title sought to sell the hotel and the purchaser declined to accept his title on the basis of the existence of this undertaking. The High Court rejected the purchaser’s claim. The court held that a tie could not operate after redemption of the mortgage. The court further held that the unregistered covenant could not be enforced because of the principle of indefeasibility. [7.165]  Fetters of the sort involved in Toohey v Gunther (1928) 41 CLR 181 are directly

attached to the mortgage property and, if enforceable after redemption, render the property less valuable than prior to the mortgage. The doctrine has been extended to restrictions that have a practical effect upon the mortgaged property, even though the property itself is free of restriction. In Bradley v Carritt [1903] AC 253 shares in a tea company were mortgaged to a tea broker. The mortgagor agreed to use his best endeavours to ensure that the mortgagee would always thereafter have the sale of the company’s teas and that if the teas were sold through another broker, the mortgagee would have the commission he would have earned had the tea been sold through him. The loan was paid off. The company changed its broker and the mortgagee sued for breach of the agreement. The House of Lords held that enforcement of the agreement would burden the equity of redemption. The shares were of value mainly to tea brokers for the purpose of obtaining the sale of the company’s teas. If the agreement were enforceable, the shares of the mortgagor after redemption would be frozen in the hands of the mortgagor as their sale would almost certainly result in his being liable for the loss of brokerage. Another argument for the enforcement of covenants has been that they are independent from the mortgage. In Kreglinger v New Patagonia Meat & Cold Storage Co Ltd [1914] AC 25 a firm of woolbrokers lent £10,000 to a meat preserving company secured by a floating charge over its assets. The loan was repayable on a month’s notice. In the absence of default, the mortgagee could not call up the loan for five years. The parties agreed that, during the five years, so long as the mortgagee was willing to buy at the best price otherwise available, the mortgagor should not sell sheepskins to any other person; the mortgagor agreed to pay a commission to the mortgagee on all skins sold to others. The loan was repaid after two-​and-​a-​half years. The House of Lords held that the mortgagee was entitled to enforce the selling agreement. The court considered that the agreement was independent of, and separate from, the mortgage.

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On the other hand, any artificial attempt to create separate undertakings is likely to be struck down. In Toohey v Gunther the mortgage and trade ties were set out in separate documents. The High Court held that wherever contemporaneous documents belonged in substance to the one transaction, equity would treat those documents as part of the mortgage transaction and apply its rules to them. In South Australia the effectiveness of the use of separate agreements is destroyed by s 55A(2) of the Law of Property Act 1936 (SA), which declares that any covenant collateral to the mortgage has no effect upon extinguishment of the mortgage debt. [7.170] Today fetters on the equity of redemption are likely to exist in very different fact

situations to the trade ties of the early 20th  century. An option granted to a mortgagee to purchase the mortgagor’s interest may be caught by the doctrine.90 Similarly, a mortgage granted to secure “all money owing” and thus one requiring the payment of previous debts may be regarded as preventing redemption through repayment of the mortgage debt.91 [7.175]  The continuation of a collateral covenant is allowed for the period of the mortgage.

Maintaining a covenant for a fixed period may be achieved by a prohibition upon redemption of the mortgage. In Biggs v Hoddinot [1898] 2 Ch 307 a hotel was mortgaged to a brewer. The mortgage provided that the loan could not be repaid for five years and that during the continuance of the loan the mortgagors were to purchase all their beer from the brewer. The mortgagor sought to redeem before the five years and the mortgagee sought to restrain breach of the covenant. The mortgagee’s injunction was granted. The postponement of the right to redeem was considered reasonable in the circumstances. The equity of redemption was not clogged or fettered as the tie ceased when the mortgage was repaid. Postponement of the right to redeem must not render that right illusory. In Fairclough v Swan Brewery [1912] AC 565 a mortgage for £500 was granted to a brewery over a hotel lease for a term of 20 years. The mortgage was repayable by 209 monthly instalments, the last of which fell due about six weeks before the expiration of the term of the lease. The mortgage tied the hotel to the brewery. The hotelkeeper offered to redeem. The Privy Council held that the permission to redeem was a mere sham and effectively prevented any redemption. Redemption at an earlier date was therefore permitted. Despite the statements in Biggs v Hoddinot, so long as there is a real right to redeem, postponement will be permitted so long as it is not unconscionable or oppressive without any judgment as to its reasonability. In Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441 the owner of substantial freeholds mortgaged them in 1931 to secure a loan of 310,000 pounds. The mortgagor was bound to pay by 80 half-​yearly instalments and the mortgagee bound to accept such payments. The price of money fell in the following years and the mortgagor sought a declaration that the mortgage could be redeemed prior to the expiration of the 40  years. The Court of Appeal rejected the claim, holding that the reasonableness of the postponement was irrelevant. What was essential was that there was a real right to redeem and that the transaction was not oppressive or unconscionable. It is, however, difficult to see that any issue of unreasonableness arose as the transaction was completed by two informed parties dealing at arm’s length after considerable negotiation. 90 91

Epic Feast v Mawson KLM Holdings Pty Ltd (1998) 71 SASR 61. Re Modular Design Group Pty Ltd (1994) 35 NSWLR 76.

[7.175]  421

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Restraint of trade [7.180]  The cases on the right of redemption have been subject to detailed analysis –​probably

to a far greater extent than their significance warrants. Meaningful reconciliation of all the decisions has so far eluded the many learned commentators. The principal cases arose in the early part of the 20th century when the traditional interventionist role of equity ran up against the then dominant ethos of freedom of contract. Litigation in Australia was much less than in England. Today many of the issues are subject to statutory rules relating to company debentures and restraint of trade. Possible invalidity of provisions of company debentures because of constraints upon redemption are affected by the provisions of the Corporations Act 2001 (Cth). Under s 1047(9), the term “debenture” is defined to cover any document evidencing or acknowledging the indebtedness of a corporation in relation to money lent to the corporation, whether or not that document creates a charge on property of the corporation. Any written undertaking by a company to repay a debt would thus be regarded as a debenture. Under s 1055(1), where a debenture is irredeemable or redeemable only on a contingency, the trustee may apply to the court, which may order the debenture to be enforceable immediately or at such time as the court directs. The rules as to restraint of trade are far more complex. These rules result from both common law doctrine and statute. The principal statutory provisions are ss 45 and 45B of the Competition and Consumer Act 2010 (Cth). [7.185]  At common law, any agreement in restraint of trade is valid only if that agreement

is reasonable in the interests of the parties and the public. The common law has, however, viewed ties between sellers and buyers with less suspicion than those between employers and employees. The common law has been prepared to accept exclusive dealing arrangements between seller and buyer so long as they are not too broad and provide safeguards for the buyer. Thus in Peters American Delicacy Co Ltd v Patricia’s Chocolates & Candies Pty Ltd (1947) 77 CLR 574 the High Court upheld an agreement restricting a storekeeper to the use of a brand of ice cream provided by the particular manufacturer. The court emphasised that the agreement was for a limited time and restricted the buyer only within a limited area and was subject to the supply by the manufacturer of ice cream at agreed prices. The application of the common law doctrine has also been restricted by an insistence that there be a restriction on a freedom previously enjoyed. Otherwise the agreement is not classified as imposing any restraint. In Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] AC 269 the House of Lords held the doctrine to be inapplicable to a restrictive covenant in a petrol station lease tying the lessee to a particular brand of petrol. The House of Lords argued that, prior to the agreement, the lessee had no right to sell any petrol on the premises and so was giving up no freedom in entering a lease subject to a restriction. [7.190]  Currently the two most significant provisions of the Competition and Consumer Act

2010 (Cth) are ss 45 and 45B. These sections are mutually exclusive as s 45(5) states that s 45 does not apply where s 45B applies. As a result of the definitions in s 4, s 45B applies to any covenant attached to or running with any interest in land. A covenant in a mortgage would seem therefore to be subject to s 45B. The substance of the two sections is very similar. Under s 45, any contracts, arrangements or understandings which have the purpose or effect of substantially lessening competition are 422 [7.180]

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unenforceable. Under s 45B, any covenants which have the effect of substantially lessening competition are unenforceable. The key issue under both sections is whether the undertaking resulted in the substantial lessening of competition.

UNCONSCIONABILITY AND PENALTIES Unconscionable conduct [7.195] The basic equitable protection for the mortgagor is commonly said to be related

to the concept of unconscionability. “The lending of money, on mortgage or otherwise, was looked on with suspicion, and the court was on the alert to discover want of conscience in the terms imposed by lenders”.92 More particularly, the right to redeem at any time before foreclosure is linked to relief against penalties or forfeiture. The loss of the mortgagor’s right to have his or her interest back because of failure to repay the loan by the named day is seen as a penalty. Furthermore, equitable intervention was associated with ecclesiastics’ concern to protect the spirit of usury laws –​any advantage beyond repayment of debt, interest and costs amounted to a greater return than that allowed by usury laws. Even when the courts have restricted equitable intervention and promoted freedom of contract, they have added a clear proviso that enforcement of contractual terms is subject to unconscionability. In Kreglinger v New Patagonia Meat & Cold Storage Company Ltd [1914] AC 25 the House of Lords indicated that, after the repeal of the usury laws in 1854, a more relaxed attitude could be taken towards collateral advantages. Such advantages were to be struck down if they fettered or were inconsistent with the right to redeem. Such advantages were also subject to review for unfairness or unconscionability. In Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441 postponement of the right to redeem was upheld by the Court of Appeal. Again the court qualified contractual freedom by requiring a real and not illusory right of redemption and added the proviso that oppressive or unconscionable terms are not enforced. The focus of these cases is to deny bases broader than unconscionability for equitable intervention in favour of a mortgagor. They, therefore, do not provide any analysis of what is meant by the qualification that unconscionable terms are not enforced. The Knightsbridge case distinguished unconscionability from unreasonableness, stating that unreasonableness was not a basis of intervention. The statements about unconscionability are made in the context of the right to redeem though the doctrine is expressed to apply to all terms of a mortgage agreement (or possibly to all terms of a loan agreement). The lack of specificity led Professor Sykes to assert in earlier editions of his text that, historically, the unconscionability doctrine was limited to two situations: those of undue influence and exploitation of expectant heirs in relation to reversionary interests.93 Early cases applying the doctrine outside these situations were claimed by Professor Sykes to be based on protection for usury laws and to have lost force with the repeal of those laws. The development of a more general doctrine in modern times is accepted in the current edition of this work. [7.200] The common law doctrine of unconscionability has been clearly adopted by the

courts. The breakthrough came in the 1983 decision of the High Court in Commercial 2 9 93

Per Viscount Haldane in Kreglinger v New Patagonia Meat & Cold Storage Co Ltd [1914] AC 25 at 36. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 49–​50. [7.200]  423

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Bank of Australia Ltd v Amadio (1983) 151 CLR 447, analysed at [9.175]. The doctrine of unconscionability as explained in that case is distinct from that of undue influence and applicable beyond contracts of mortgage and contracts of loan. The doctrine is said to apply wherever one party, by reason of some condition or circumstance, is placed at a special disadvantage vis-​a-​vis another and unfair or unconscientious advantage taken of the opportunity thereby created. In relation to mortgages, the decision places some onus on the mortgagee to ensure that the mortgagor understands the commitment. This understanding relates to both the obligations under the mortgage and the details of the financial obligations. As a result, mortgages have sought to protect themselves by insisting that the mortgagor obtain independent advice. Lawyers have been one group to whom mortgagors have been referred; ensuring understanding is a difficult task. Persons giving advice may find that they are in turn being sued for negligence. In Australian Regional Credit v Mula [2009] NSWSC 325, McCallum J held that the duty to act conscionably did not necessarily mean that the mortgagee deal with the mortgagor in person. [7.205]  Today there are two major statutory bases for the review of mortgage agreements on

the basis of unconscionability: National Credit Code, ss 76, 77; Australian Consumer Law, ss 20–​22. The consumer credit legislation allows the reopening of consumer credit contracts where any term is regarded as unjust. It is slightly narrower than earlier moneylenders legislation in that it is restricted not only to loans by persons in the business of providing credit, but also to loans to consumers. The restriction of loans to consumers is achieved by excluding corporate borrowers and loans not predominantly for personal, domestic or household purposes.94 The test of the purpose of the loan replaces earlier tests which related to the amount of the loan and thereby excluded many mortgages over land and the new legislation will be more significant for such mortgages. The Australian Consumer Law is not restricted to mortgage or loan agreements but applies to consumer contracts generally. Analysis of the unconscionability provisions of the National Credit Code and the Australian Consumer Law is set out at [7.140] and [9.175]ff respectively. [7.210]  Excessive interest rates are in themselves today a basis for declaring that a term of

a mortgage is unjust. In earlier legislation they were but part of the grounds for re-​opening and the elements were expressed as involving either procedural (bargaining) unfairness or substantive (harsh terms) unfairness.95 Cases on the earlier legislation do provide a guide as to whether rates are excessive. In determining that issue, the courts have been much influenced by the value of any security and the risk of non-​payment.96 In times of stable bank home loan interest rates the courts have looked to a lack of security and risk of non-​payment to justify higher rates.97 In an era of rapidly changing rates and a deregulated finance industry producing

94 95

96 97

National Credit Code, s 6(1). The traditional English money lenders legislation provided for relief where the interest was excessive and the transaction was harsh and unconscionable; in Australia excessive interest has been allowed as a sufficient ground for relief as an alternative to harshness and unconscionability. Consumer credit regulation in Australia commenced with the Consumer Credit Act 1972 (SA); uniform legislation came through the adoption in all jurisdictions of the provisions set out in the Consumer Credit Act 1995 (Qld). See generally Moore, “Uniform Consumer Credit Legislation –​Future Relevance of Solutions to Past Problems” (1995) 1 FJLR 60. Bailey v NSW Mont De Piete Deposit & Investment Co Ltd [1918] VLR 16; Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122. Popjak v Finance & General Corporation Ltd [1964] ALR 340.

424 [7.205]

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many sources of finance, the issue of excessive rates is much more indefinite and the courts are likely to compare the rate charged with rates available for the particular transaction. Intervention is thus more likely where borrower ignorance has enabled a rate to be charged out of line with commercial rates.

Penalties [7.215] The doctrine of penalties is closely related to the concept of unconscionability.

A mortgage may provide that, on default, interest will be payable at a higher rate or that the total balance payable (including future interest) will become due. Such provisions may infringe the common law prohibition upon penalty clauses. The penalty doctrine has been subjected to some triumphs of form over substance. While a higher interest rate on default may not be demanded, stipulation of a lower rate for punctual payment is acceptable. Similarly, the stipulation of liability for an entire amount subject to the acceptability of punctual periodic payments has also had some degree of acceptance. On the whole, however, acceleration of future interest on default is today unlikely to be acceptable. In Wanner v Carvana [1974] 2 NSWLR 301 the balance payable, after 14 days’ default with respect to any instalment, was expressed to include the balance of the principal and interest thereon at 10% for the balance of the mortgage term. Street CJ invalidated the clause as a penalty. His Honour distinguished early cases on the basis that they had involved the form of an entire sum due, whereas the case before him expressly required the calculation of unaccrued interest. [7.220]  The general issue of penalties came before the High Court in the context of a fixed

period leasing of goods in O’Dea v Allstates Leasing System (WA) Pty Ltd (1984) 152 CLR 359; 57 ALJR 172.98 That case involved the lease of a prime mover for 36  months. The consideration was stated in clause one of the agreement to be an entire rental of $39,550.32 due on the signing of the agreement with the proviso that if the lessee performed all the covenants of the lease and paid 36 instalments of $1,098.62, the lessor would not enforce payment otherwise than by instalments. Clause 12 provided that on default in any payment or performance of any covenant, the lessor might retake possession and the lessee’s right to possession would thereby terminate. The lessee failed to make some instalments and the lessor repossessed and sued for the balance of the $39,550.32. The High Court held that in the circumstances the lessee’s liability under the contract amounted to a penalty and was not enforceable. The majority of the court (Gibbs CJ, Wilson, Brennan, Deane JJ) confined the scope of their judgments by characterising the situation before them as one of an action under clause 12 for money due after repossession. The liability was, therefore, solely that upon breach and in such circumstances the clause was a penalty. The majority did not have to reach a conclusion as to their attitude to clause 1. It was argued that liability under clause 1 could not be a penalty as the liability was expressed to exist irrespective of default. Gibbs CJ, Brennan and Deane JJ all expressed hesitation about such an argument, pointing out that the matter had to be one of substance, not form, and that the argument had an air of commercial unreality. Murphy J took a broader ground and rejected the traditional view that a statement of liability subject to an indulgence would not prevent the liability from

98

See also David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 93 ALR 271 at 297–​300. [7.220]  425

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being characterised as a penalty if the substance was that the indulgence was the liability in the absence of default and the expressed liability operated only on default. Murphy J’s view would invalidate clauses allowing lower interest rates as an indulgence for prompt payment. The continuing significance of the penalties doctrine has been given prominence by the range of charges associated with credit cards. The severity of these rates was challenged in Andrews v Australian and New Zealand Banking Group Ltd [2012] HCA 30. The bank imposed fees attaching to conduct in the use of its credit charges. In the High Court argument centred on whether all the fees were subject to the penalties doctrine because not all of the fees attached to breaches of the contract for the use of the cards. Thus whilst a fee for late payment did relate to a breach, others did not. The High Court upheld the application of the penalties doctrine to all the fees because they attached to burdens upon the card user. The court did however reaffirm recognition of the distinction between a penalty and a genuine pre-​estimate of liquidated damages.

RIGHTS, OBLIGATIONS AND REMEDIES Source of obligations [7.225]  In the case of a formal legal mortgage the rights and obligations of the parties are likely

to be set out in the mortgage document itself. The position of the parties will largely depend upon these express provisions. The parties may establish individual rights and obligations even where there are statutory provisions on the particular aspect of the transaction.99 Statutory provisions will only be relevant in so far as they set out requirements that override the express intention of the parties. Formality is not always observed; in the case of an equitable mortgage by way of deposit of title documents, no written agreement whatsoever may exist. In such cases implications to be made by the general law or by statute are most significant. The enforcement of a mortgagee’s powers can include an application to a relevant court for orders ancillary to the primary relief. In St George Bank –​A Division of Westpac Banking Corporation v Zhang [2013] NSWSC 1455, the bank sought to exercise its power of sale. Arguments as to estoppel against the bank were rejected, but since the original mortgage the land had been subdivided. The bank sought to have the orders for consolidation of the title on the basis that it could not otherwise obtain appropriate return. This argument was accepted, and an ancillary order made under s 138 of the Real Property Act 1900 (NSW) for consolidation. In Australia statutory terms relating to mortgages have been set out in both the property law and Torrens system statutes. To some extent the application of these statutes depends upon the nature of the instrument in which the mortgage is set out. Under both the general law and the Torrens system an informal mortgage is necessarily equitable.100 However, it is possible that a deed be used in relation to an equitable mortgage, particularly if the property mortgaged is itself equitable. [7.230]  Four questions arise with respect to the application of the statutory terms. First, with

respect to informal mortgages under the general law, the issue is to what extent the property law statutory terms apply. Secondly, with respect to Torrens system formal mortgages, the issue

99 Argylle Developments Pty Ltd v ANZ Banking Group Ltd (1994) 4 Tas 172. 100 The issue of formalities is discussed at [7.45]. 426 [7.225]

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is whether the general law statutory implications apply. Thirdly, with respect to the informal Torrens system mortgages, the issue is whether general law statutory terms apply. Fourthly, again with respect to informal Torrens system mortgages, the issue is whether Torrens system statutory terms apply. These four questions are considered in turn: 1.

In all jurisdictions except Queensland, the Australian Capital Territory and the Northern Territory, the general law statutory implications are expressed to apply to all mortgages made by deed. In Queensland and the Australian Capital Territory and possibly the Northern Territory, the implications apply to all written mortgages.

2. The application of the property law statutory terms to the Torrens system differs widely from jurisdiction to jurisdiction. In Victoria all the mortgage provisions indicate whether they apply to instruments under the Torrens system. In New South Wales and the Australian Capital Territory most provisions make an indication of application and where they do not it appears that the provisions do not apply. In Queensland the provisions apply to Torrens system land.101 In South Australia the provisions generally apply to Torrens system land except for instances of express inconsistency and some provisions expressly do apply thus, as later provisions, presumably they override in the event of any inconsistency. In Western Australia the application of some provisions is expressed to extend to Torrens system land and that of other provisions appear to extend except for inconsistency. In Tasmania all the mortgage provisions indicate whether they apply to Torrens system land. 3.

The property law statutory terms will apply to informal mortgages under the Torrens system if in any individual jurisdiction a positive answer is given to questions one and two. The position in Victoria, however, is complicated by the statutory expression for the application of the property law terms to the Torrens system. Except for specified sections, the provisions of the Property Law Act 1958 do not apply to mortgages under the Torrens system affected by instruments under the Transfer of Land Act 1958.102 An informal mortgage would not normally be described as effected by an instrument under the Transfer of Land Act 1958. None of the property law terms are therefore excluded in relation to informal mortgages; their application depends solely on the first question, viz, whether the mortgage was made by deed.

4.

The Torrens system statutory implications have been asserted not to extend to informal mortgages under the system.103 In some circumstances this result seems to flow from the express reference to the exercise of a power by a registered mortgagee (New South Wales and the Australian Capital Territory) or by the definition of “mortgagor” and “mortgagee” as the registered mortgagor and registered mortgagee (South Australia and the Northern Territory). Otherwise the position does not appear to be as clear as is asserted.

[7.235]  More generally, the rights of an informal mortgagee depend on the application of the

principle that equity deems to be done what ought to be done. Argument on the application of

101 Section 78 of the Land Title Act 1994 (Qld) provides that the powers of a Torrens system mortgagee are those set out in Pt 7 of the Property Law Act 1974 (Qld). 102 Property Law Act 1958 (Vic), ss 86, 102. 103 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 317. [7.235]  427

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this principle is connected with analysis of the impact of fusion of law and equity. Once rights are established, are all remedies available to give effect to those rights?104 In Walsh v Lonsdale (1882) 21 Ch D 9 the tenant was said to be regarded in equity as holding on the same terms as if a formal lease had been granted. Because of the Judicature Act 1873 (UK) this interpretation of the tenant’s position by equity entitles the landlord to the legal remedy of distress. If, in the case of a mortgage, the mortgagee is to be treated as if a formal mortgage had been executed, this mortgage would then include the common rights of mortgagees or be deemed to include the statutory implications. On the other hand, it can be argued, first, that the common rights of mortgagees are insufficiently defined and, secondly, that as the statutory implications are expressed to apply to actual formal documents, they can be said not to apply to notional formal documents. The arguments against a broad interpretation receive some support from the High Court decision in Chan v Cresdon Pty Ltd (1989) 168 CLR 242; 89 ALR 522. Just as the guarantee in that case of obligations under this lease did not create any obligations with respect to the unregistered lease which took effect as an agreement for a lease, so the implied terms are only part of a formal registered mortgage. [7.240] Unavailability of specific performance poses as one impediment to the rights of

an informal mortgagee. Such a restriction would flow from the strongly expressed view of Dean J in the Victorian Supreme Court in Ryan v O’Sullivan [1956] VLR 99 at 100.105 Dean J considered that a mortgagee by deposit of title documents has no right to specific performance with respect to the grant of a mortgage generally, but only to compel the vesting of legal title in the case of default. As Sykes argues,106 however, the act of deposit of title documents is an act of part performance making enforceable a contract and that contract must be one to grant a mortgage. [7.245]  A broad availability of mortgage remedies is, however, favoured by the most recent

High Court consideration of the nature of an equitable mortgage. In Theodore v Mistford Pty Ltd (2005) 221 CLR 612; [2005] HCA 45 the High Court considered that at least in the case of an agreement to give a legal mortgage, the mortgagee may be treated in equity as if a legal mortgage had been granted.107 The agreement carried with it the remedies, including foreclosure, incidental to a legal mortgage. The decision leaves open the possibility of lesser remedies for a mortgage which is equitable because the mortgagor has only an equitable interest over which to grant security.

Promise to pay [7.250] The mortgage agreement normally provides an express promise by the mortgagor

to repay the loan and interest. In Victoria, Queensland and Tasmania a promise to pay the principal and interest in is some instances implied by statute.108 In any event, the promise to repay will be implied from the fact of the loan and the payment of interest will also be implied.

04 1 105 106 107 108

See further [7.290]. Ryan v O’Sullivan [1956] VLR 99 at 100. Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 153. This application of the principle that equity deems to be what ought to be is expressed to be based on the decision of Jessell MR in Carter v Wake (1887) 4 Ch D 605 at 606. Property Law Act 1958 (Vic), s 117; Property Law Act 1974 (Qld), s 78; Conveyancing and Law of Property Act 1884 (Tas), s 28.

428 [7.240]

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Only the original mortgagor is directly liable on the covenant, as the covenant does not run with the land. An action for the debt is regarded in equity as conditional upon the ability to reconvey the mortgaged property. Thus, if the mortgagee has foreclosed and then disposed of the property, he or she is unable to sue on the personal covenant.109 This condition does not apply where the mortgagee exercises the power of sale. A mortgagee is able to take legal action to enforce the personal covenant. In the exercise of the remedies for enforcement of a judgment, the mortgagee may require the sale of the mortgagor’s interest in the land. At such a sale, the mortgagee is able to purchase the mortgagor’s interest.110 This result seems to contradict the restrictions on the mortgagee’s ability to exercise the power of sale in favour of himself or herself. The result has been overturned by legislation in New South Wales and Queensland.111

Possession [7.255] Entitlement to possession is one right significantly affected by the difference

between the forms of the general law and Torrens system mortgages. Under the general law, the mortgagee is the fee simple owner of the land prima facie entitled to possession; under the Torrens system, the mortgagor is the fee simple owner. This distinction reflects the characterisation of a general law mortgage as a security by way of ownership as contrasted with a Torrens system security by way of charge. A mortgagee in possession does owe a duty of account to the mortgagor; this account includes not only actual receipts, such as rent from a tenant, but also receipts that diligent management would have procured.112 Whoever is in possession also must protect the fabric of the property; the possessor must not commit waste which includes the cutting of timber.113 The starting point of the two systems in relation to the right to possession reflects this prima facie entitlement. The right is qualified, particularly in the case of the general law. The general law mortgagee is the fee simple owner from the time of the formal execution of the mortgage. As this ownership is the basis of entitlement to possession, the entitlement arises even before the nominal default after the six-​ month period.114 The courts have recognised the mortgagee’s claim even where the mortgage sets out a schedule for payments and that schedule has been complied with. The only discretion has been said to be the allowance of a short adjournment to give the mortgagor an opportunity to pay off the mortgagee in full.115 [7.260]  The traditional view as to entitlement to possession has been challenged by the Court

of Appeal decision in Quennell v Maltby [1979] 1 WLR 318, a decision in which the leading judgment was given by Lord Denning. He framed his new rule on the basis that (at 322) “in modern times equity can step in to prevent a mortgagee, or a transferee from him, from getting

109 110 111 112 113 114 115

Palmer v Hendrie (1859) 27 Beav 349; 54 ER 136. Simpson v Forrester (1973) 132 CLR 499. Conveyancing Act 1919 (NSW), s 102; Property Law Act 1974 (Qld), s 97. Fyfe v Smith [1975] 2 NSWLR 408. Crocombe v Pine Forests of Australia Pty Ltd [2005] NSWSC 151. Four-​Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317. Birmingham Citizens Permanent Building Society v Gaunt [1962] Ch 883. [7.260]  429

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possession of a house contrary to the justice of the case”. The mortgagee would be entitled to claim possession only where it was sought bona fide and for the purposes of enforcing the security. Claiming possession from a mortgagor not in default would not satisfy these conditions. The case involved a most unmeritorious claim. The owner of a house had let the premises to two tenants for a period of one year. Before the expiration of the year, he granted a mortgage to a bank on terms which included a prohibition on leasing without the mortgagee’s consent. After the grant of the mortgage, further one-​year leases were granted without the mortgagee’s consent. The defendants became the tenants and stayed on after a one-​year lease as protected statutory tenants. The mortgagor then wished to sell, but desired vacant possession to obtain a favourable price. After legal advice the mortgagor’s wife paid off the balance owing to the bank and took a transfer of the mortgage. She then brought proceedings for possession, claiming that as a transferee of the mortgagee she was not subject to the leases and had a general right to claim possession. For once, Lord Denning was concerned to prevent widespread evasion of the Rent Acts. [7.265] Whatever the status of Quennell v Maltby [1979] 1 WLR 318, it has long been

established that a mortgagee taking possession does so for the purposes of the security and must account for rents and profits received. This liability extends not only to actual receipts, but also to amounts which ought to be received. The mortgagee has been said to be chargeable for the utmost value the lands are proved to be worth. If the mortgagee moves into occupation of the land and thereby decreases the income available from the land, the mortgagee will be liable for the amount of income lost from the occupation. Merely because the mortgagee is in occupation, he or she is not liable for a charge if that occupation does not reduce income. It is possible that an occupation essential to operate a business on the land which does decrease income will also not be chargeable to the mortgagee. In Fyfe v Smith [1975] 2 NSWLR 408 a mortgage had been granted over a hotel in the small New South Wales country town of Fifield. Upon default the mortgagees took possession. In order to run the hotel they occupied one room in the premises and used hotel facilities such as the dining room and laundry. Helsham  J held that the basis of the mortgagee’s liability was to account for rents and profits received or those which would have been received but for wilful neglect and default. As there was no evidence the room could have been let to or occupied by anyone who would pay for it, no liability arose. [7.270]  The position of a general law equitable mortgagee with respect to possession is far less

certain. An equitable mortgagee does not have the legal fee simple estate, but, as explained at [7.45], has a promise of such an estate not a mere charge over the land. Professor Sykes points out that the difficulty faced by an equitable mortgagee seeking possession is the insufficiency of the mortgagee’s title to support an action for possession.116 That action is one in the nature of an action for ejectment which requires a legal title. For this reason an equitable mortgagee could not succeed in an action even if an express power to take possession is conferred by the mortgage agreement. He disagrees with the contrary decision of the Queensland Supreme Court in Mercantile Credits Ltd v Archbold [1970] QWN 9. On the other hand, he concludes that the equitable title would be sufficient to defend an action if possession was obtained peaceably. 116 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 130–​131. 430 [7.265]

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[7.275]  The Torrens system legal mortgagee has no legal estate on which to base a claim for

possession. Even on default by the mortgagor there is nothing inherent in the interest entitling the mortgagee to possession. However, in all jurisdictions a statutory right to possession is conferred upon the mortgagee upon default by the mortgagor.117 Notice is not necessary for the exercise of the power to take possession.118 In New South Wales, Queensland, South Australia, Tasmania, the Australian Capital Territory and the Northern Territory the right is limited to default by the mortgagor in payment of principal or interest and does not extend to breach of other covenants. Although in New South Wales, Queensland, Tasmania and the Australian Capital Territory the right is expressed simply to be to receive the rents and profits, that phrase appears sufficiently broad to cover right to actual possession not merely a right to take the income from those in possession. In Victoria and Western Australia the rights of the mortgagee are statutorily extended by a provision stating that the mortgagee shall have the same rights and remedies at law and in equity as the mortgagee would have had if the legal estate had been vested in that person as mortgagee.119 So far as possession is concerned, however, this right is expressly qualified by a right of the mortgagor to quiet enjoyment until default in payment of any principal or interest or a breach in the performance or observance of some covenant. This qualification means that the right of the mortgagee to possession is not limited to cases where the default relates to payment. The rights of a Torrens system equitable mortgagee to possession are even weaker than those of a general law equitable mortgagee. They could only arise upon default and then only upon a generous interpretation of Walsh v Lonsdale (1882) 21 Ch D 9. [7.280] A general law legal mortgage may confer an express right to possession upon the

mortgagor until default. As the mortgagee holds the fee simple estate and the mortgagor is being granted a right to possession, the mortgagor is a tenant of the mortgagee if the leasehold characteristic of certain duration is satisfied. If this requirement is not satisfied, the tenant is a contractual licensee. An express landlord and tenant relationship may be created by what is described as an “attornment clause”. Such a clause is inserted to confer upon the mortgagee the benefit of a landlord’s remedies for possession and the landlord’s right to distress. Today it threatens to impose upon the landlords responsibilities under tenancy legislation. Nothing denies a mortgagee/​landlord the landlord’s remedies for possession or the right of distress in those situations where it is still exercisable. Under the Torrens system, the Victorian and Western Australian Acts create a landlord and tenant relationship by conferring a legal right upon the mortgagee subject to quiet enjoyment by the mortgagor until default. The tenancy is for the term of the mortgage, subject to termination upon default. In other States an attornment clause is commonly inserted. In these States a true landlord and tenant relationship cannot exist because the mortgagor has the

117

118 119

Real Property Act 1900 (NSW), s 60; Transfer of Land Act 1958 (Vic), ss 78, 86; Land Title Act 1994 (Qld), s 78(2); Real Property Act 1886 (SA), s 137; Transfer of Land Act 1893 (WA), ss 111, 116; Land Titles Act 1980 (Tas), s 82; Land Titles Act 1925 (ACT), s 96; Land Title Act (NT), s 80. In Victoria and Western Australia the mortgagee is expressed to have the same rights as if the legal estate had been vested in the mortgagee: Transfer of Land Act 1958 (Vic), s 81; Transfer of Land Act 1893 (WA), s 116. Zanzoul v Westpac Banking Corporation (1995) 6 BPR 4 at 142. The right to take possession upon default was said to be conferred in clear and unambiguous language. Zanzoul v Westpac Banking Corporation (1995) 6 BPR 4 at 142. [7.280]  431

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fee simple estate. The express clause might, however, be considered to estop the parties from denying a landlord and tenant relationship. Professor Harrison has argued that a tenancy by estoppel cannot arise in such circumstances.120 There is a lot of Australian authority to the contrary and similarly English cases concerning the parallel mortgages by deed of charge have accepted the creation of tenancies by estoppel.121

Leasing [7.285]  Under a general law legal mortgage, a mortgagor does not have any legal interest and

has generally been assumed to have no right to possession. Consequently, the mortgagor cannot confer upon a tenant any rights to possession binding upon the mortgagee. As the mortgagor has no legal interest, the relationship between the mortgagor and the tenant is one governed by the principle of estoppel preventing the tenant from denying his or her landlord’s title. If the mortgagor has been granted a right to possession and holds as a tenant from the mortgagee, the relationship between the mortgagor and a tenant would be one of subtenancy.122 In Victoria, New South Wales and Tasmania statutory powers of leasing have been conferred upon a mortgagor.123 These powers are subject to contrary provisions in the mortgage. In New South Wales the maximum period of such a lease is five years to take effect in possession not later than three months from execution; in Victoria seven years taking effect within three months; in Tasmania 21 years in the case of an agricultural or occupation lease or 99 years in the case of a building lease taking effect within 12 months. In all States the rent must be the best reasonably obtainable and the lease must contain a proviso for re-​entry on non-​ payment of the rent for a period specified not exceeding 30 days. In New South Wales the lessee’s covenants under s 84 of the Conveyancing Act 1919 (NSW) may not be excluded. In New South Wales and Victoria the powers are not exercisable after the appointment by the mortgagee of a receiver. [7.290]  As legal owner, the general law legal mortgagee could grant a lease. The mortgagee

could not, however, grant a lease binding upon the mortgagor after redemption, as it would be regarded as a clog on the equity of redemption. The New South Wales, Victorian and Tasmanian powers to lease conferred upon a mortgagor have also been conferred upon a mortgagee in possession. [7.295] Under the Torrens system, the mortgagor retains the registered legal estate and

may execute a lease. However, the legal mortgagee also has an interest and the issue that arises is whether the mortgagor’s lease restricts the exercise of the mortgagee’s powers. In all jurisdictions the provision is that no lease of mortgaged land is valid and binding against the mortgagee unless he or she has given prior consent.124 It is clear that a lease subject to 20 Harrison, “Attornment Clauses in Torrens System Mortgages” (1942) 16 ALJ 64 at 96. 1 121 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 250251. 122 Lease by a mortgagor creates privity only between the mortgagor and the tenant. Any purchaser on a sale by the mortgagee succeeds to the rights of the mortgagor and those rights will include the mortgagor’s rights against the tenant: Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1998) 196 CLR 245. 123 Conveyancing Act 1919 (NSW), s 106; Property Law Act 1958 (Vic), s 99; Conveyancing and Law of Property Act 1884 (Tas), ss 19, 20. 124 Real Property Act 1900 (NSW), s 53(4); Transfer of Land Act 1958 (Vic), s 66(2); Land Title Act 1994 (Qld), s 66; Real Property Act 1886 (SA), s 118; Transfer of Land Act 1893 (WA), s 91; Land Titles Act 1980 (Tas), s 64; Land Titles Act 1925 (ACT), s 84; Land Title Act (NT), s 80. 432 [7.285]

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this provision will not bind a mortgagee if made without his or her consent. But not all leases are necessarily subject to this section. In Victoria the section expressly relates only to registered leases; in New South Wales it has been held not to apply to oral or implied leases;125 and in Queensland it has been held not to apply to unregistrable leases.126 However, there is significance to the question of what leases are subject to the section only if it can be implied that leases not subject to the section are binding upon the mortgagee even without his or her consent. There is no apparent source of a power to grant such leases and the power has been denied in the only modern Supreme Court decision on the topic.127 [7.300] The Torrens system mortgagee’s powers to lease are more limited than those of a

general law mortgagee as the Torrens system mortgagee does not have a legal estate. Even in Victoria and Western Australia the lease would amount only to a lease of the reversion as the right to possession arises only on default. Again, a lease lasting after redemption would be a clog on the mortgagor’s equity of redemption. In New South Wales, Queensland and Tasmania the powers to lease of a mortgagee in possession extend to a Torrens system mortgagee. In South Australia the mortgagee in possession is empowered to lease for a term not exceeding one year.128

Receivers [7.305]  A receiver is in effect a manager of the property who takes the income from the property

and uses that income to pay off the mortgage debt. The advantages of the appointment of a receiver are that the mortgagee is not only freed from the actual responsibility of managing the property, but, if the receiver is stated to be the agent of the mortgagor, the mortgagee is freed from legal liability for those rents and profits which he or she would have received but for wilful neglect and default. The receiver owes a duty to the mortgagor and this duty is to exercise the powers with regard to the interest of the mortgagor.129 [7.310]  In all jurisdictions a power to appoint a receiver is statutorily conferred upon a legal

mortgagee.130 The power extends to both general law and Torrens system mortgagees. In New South Wales, Victoria, Queensland, Western Australia and Tasmania the power is exercisable whenever the statutory power of sale given by the general law property statute or the Torrens system statute becomes exercisable. In South Australia the power is exercisable in addition to when any power of sale conferred by the mortgage instrument becomes exercisable. In all jurisdictions the receiver is deemed to be the agent of the mortgagor. In New South Wales the appointment is required to be registered; in other jurisdictions except Queensland the appointment must be in writing. 125 126 127 128 129 130

Dancher v Fitzgerald (1919) 19 SR (NSW) 260. English, Scottish & Australian Bank Ltd v City National Bank [1933] St R Qd 81. Australian & New Zealand Bank Ltd v Sinclair [1968] 2 NSWR 26. Real Property Act 1900 (NSW), s 53; Land Title Act 1994 (Qld), s 78; Real Property Act 1886 (SA), s 137; Land Titles Act 1980 (Tas), s 64. Inkhorn v Herbert [2000] WASC 333. Conveyancing Act 1919 (NSW), s 109(1)(c); Property Law Act 1958 (Vic), s 101(1)(c); Property Law Act 1974 (Qld), s 83(1)(c); Law of Property Act 1936 (SA), s 47(1)(c); Conveyancing and Law of Property Act 1884 (Tas), s 21(1)(c); Property Law Act 1969 (WA), s 57(1)(c); Civil Law (Property) Act 2006 (ACT), s 301(1)(b); Law of Property Act (NT), s 96. The right has been interpreted as one to appoint more than one receiver: Kendle v Melsom (1998) 193 CLR 46. [7.310]  433

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Additionally, as a result of statute and inherent equitable powers, a legal mortgagee may apply to court for the appointment of a receiver.131 A judicially appointed receiver is an officer of the court and the agent of neither party. The receiver’s duty is to get in the rents and profits and pay them into court. Traditionally, a legal mortgagee was denied a judicially appointed receiver because of the power to take possession. This bar to a claim has been removed, but still a legal mortgagee must establish some basis for the appointment.132 [7.315]  An equitable mortgagee would, according to the statutory terms, only have available

the statutorily implied power to appoint a receiver without court action if the mortgage was granted by deed, or in Queensland, the Australian Capital Territory and possibly the Northern Territory by writing. The equitable mortgagee under the general law or the Torrens system has always been entitled to apply to court for the appointment of a receiver. The reluctance to grant the remedy did not apply in cases of applications by an equitable mortgagee.133

Sale [7.320] Today, the power of sale is the most effective remedy of the mortgagee upon

unremedied default by the mortgagor. The power, however, represents a development in the form of the mortgage from its common law origins. A power may be set out in the mortgage agreement. In the case of a general law and Torrens system legal mortgage, it is implied by statute in all jurisdictions. The ability of the Torrens system mortgagee to convey a fee simple estate to a purchaser is also expressed in all jurisdictions. The exercise of the power of sale is governed by a variety of rules. These rules specify when the power may be exercised, what notice must be given before exercise, the responsibilities of the mortgagee in carrying out a sale and the obligations of and protection for purchasers from the mortgagee. Because of the significance of the power of sale, these rules will be considered separately. [7.325] With respect to an equitable mortgage, two questions about the power of sale

arise: first, when will such a power exist? Secondly, in the case of equitable mortgage of a legal estate, what power does the mortgagee have to convey a legal interest to a purchaser? The power of sale is not inherent in a mortgage and in the case of a legal mortgagee comes about by statutory implication; consequently, an equitable mortgage will not without more confer such a power. The property law statutory implication will extend to an equitable general law mortgage where that mortgage is created by deed by instrument. In the case of the Torrens system, the express statutory power of sale is on its face confined to registered mortgages and would extend to an equitable mortgage only on the broadest application of the Walsh v Lonsdale (1882) 21 Ch D 9 principle. In Queensland, South Australia, Western Australia, the Australian Capital Territory and the Northern Territory the general law statutorily implied power of sale does seem to extend to unregistered Torrens system mortgages.134 In Victoria the power does seem to apply even though the power is not one expressly applying to Torrens system mortgage since the provisions are only excluded in

131

Evans v Coventry (1854) 5 De GM & G 911; 43 ER 1125; see Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 123. 132 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), pp 129–​130. 33 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 129. 1 34 See Sandgate Corporation Pty Ltd (in liq) v Ionnou Nominees Pty Ltd (2000) 22 WAR 172 at 187–​189. 1 434 [7.315]

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the case of registered mortgages under the Torrens system: see [7.230]. In Tasmania the general law statutorily implied power is specifically excluded. As well as statutory implications, a power may be conferred by the express terms of the agreement. In addition, a sale may be available by court order at least in foreclosure proceedings. The position in New South Wales is most complex. The provisions of Pt 7, Div 1 of the Conveyancing Act 1919 (NSW) apply only to mortgages under the Torrens system where so specified. In King Investment Solutions Ltd v Hussain [2005] NSWSC 1076 the court held that there is no such specification with respect to the power of sale. However, the mortgagee could rely on the inherent equitable jurisdiction to order a sale. Compliance with the statutory notice requirements was unnecessary as they are limited to extra-​judicial sales. However, the court further held that the inherent power does not allow for the transfer of the mortgagor’s interest, at least where there is a prior registered mortgage. [7.330]  The equitable mortgagee of a legal interest, if the mortgagee has a power of sale, is

clearly able to convey an equitable interest to a purchaser. The intention of the transaction will, however, normally be that the mortgagor’s legal interest was the security for the loan. It is fairly clear that the equitable mortgagee under the general law and under the Torrens system can convey a legal interest if the mortgage agreement contains an express power of attorney. It is also asserted that, in the case of an express declaration of trust, the mortgagee could utilise vesting order powers of trustee legislation to have the court vest the legal estate in the purchaser.135 It is equally asserted136 that the purchaser’s equitable interest is not of itself enough to enable the power to be utilised, but is not obvious why this is so. King Investment Solutions Ltd v Hussain [2005] NSWSC 1076 indicates that the court has inherent power to order a sale by way of an action for specific performance. The right is inherent in an equitable charge and extends to an equitable mortgage at least where it is not inconsistent with the provisions of the Torrens system statute. Where the statutorily implied power of sale is exercised, the power to convey a legal estate may be thought to be derived from the further provision that a mortgagee exercising the power of sale conferred by the statute shall have the power by deed to convey the property sold for such estate, and interest therein, as is the subject of the mortgage. However, in Re Hodson and Howe’s Contract (1887) 35 Ch D 66 the Court of Appeal held that the interest, the subject of the mortgage, referred to the interest conferred upon the mortgagee, not that intended as the subject of the mortgage. In Re White Rose Cottage [1965] Ch 940 Lord Denning considered that a power to convey a legal estate was conferred and dismissed the earlier decision on what seems an inconsequential change in wording adopted in England in 1925, but not in the Australian statutes. Harman LJ was content to base the power to convey the legal estate on an express power of attorney. Salmon LJ concurred in the two judgments. An Australian court may take the lead to a broader reading of the section. The power to convey a legal estate by deed obviously has no application to the Torrens system.

Foreclosure [7.335] Foreclosure became an inherent part of the general law mortgage because of the

equitable right to redeem, even though the contractual right had been extinguished. Originally 35 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 128. 1 136 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 128. [7.335]  435

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the power of sale was uncommon and foreclosure was the only means whereby the mortgagor could be deprived of his or her interest in the land. Foreclosure entitled the mortgagee to hold the land free from any right of redemption. Under the general law, foreclosure comes about by court proceedings. Foreclosure is available upon default, even in relation to interest only, without default in relation to the principal.137 The proceedings involve two stages: an interim and a final order. Under the interim order, the court directs that an account be taken of what is due by the mortgagor to the mortgagee, and that upon payment of the amount within a time specified –​usually six months –​the mortgagee is to reconvey the land, but that otherwise the mortgagor will be foreclosed.138 In all jurisdictions the court is given by statute a discretion to order a judicial sale in place of foreclosure.139 Either the mortgagor or the mortgagee may seek such an order. The court has a discretion whether to accede to any application. The most common instance of the exercise of the discretion is where the amount of the debt is vastly exceeded by the value of the property. Although foreclosure appears to extinguish the mortgagor’s right of redemption, even it is not an absolute bar, though it is exceptional where a sale to a third party has occurred.140 If the mortgagor can show some special circumstance leading to his or her failure to redeem and acts promptly, foreclosure may be re-​opened; if a purchaser is involved, re-​opening may occur if the purchaser had been aware of the circumstance justifying re-​opening. If, after foreclosure, the mortgagee seeks to sue the mortgagor for the contractual debt, the mortgagee will be allowed to do so only if the mortgagee permits the foreclosure to be re-​opened.141 In Victoria, New South Wales and Western Australia foreclosure is deemed to discharge the mortgage debt (so that a later personal action is prohibited) and also to extinguish the right of redemption (so that re-​opening is prevented).142 [7.340] Foreclosure is as much inherent in a general law equitable mortgage as a general

law legal mortgage. It may well be more significant in such cases because of the more limited availability of other remedies for the mortgagee. Where the interest subject to the equitable mortgage is a legal one, foreclosure confers a legal title on the mortgagee. The court may direct a mortgagor to transfer the legal estate to the mortgagee. If the mortgagor is not before the court, in New South Wales there is an express power relating to such cases to make a judgment vesting the legal estate in the mortgagee.143 In other jurisdictions the courts have to rely upon general vesting powers expressed to relate to trustees. Again, as in the case of the exercise by the equitable mortgagee of a power of sale (see [7.330]), argument exists about the scope of these powers. But the effect of the foreclosure order is to vest the full beneficial ownership in the mortgagee and the vesting powers should be sufficient.

137 Twentieth Century Banking Corporation Ltd v Wilkinson [1976] 2 WLR 489. 138 Sykes and Walker, The Law of Securities (5th ed, Law Book Co, Sydney, 1993), p 105. 139 Conveyancing Act 1919 (NSW), s 103(2); Property Law Act 1958 (Vic), s 91(2); Property Law Act 1974 (Qld), s 99(2); Law of Property Act 1936 (SA), s 44(2); Property Law Act 1969 (WA), s 55(2); Conveyancing and Law of Property Act 1884 (Tas), s 27(2); Civil Law (Property) Act 2006 (ACT), s 103(2); Law of Property Act (NT), s 99. 140 Campbell v Holyland (1877) 7 Ch D 166. 141 Lockhart v Hardy (1846) 9 Beav 349; 50 ER 378; Law of Property Act 1936 (SA), s 55B(3). 142 Conveyancing Act 1919 (NSW), s 100; Property Law Act 1958 (Vic), s 87; Property Law Act 1969 (WA), s 53. 143 Trustee Act 1925 (NSW), s 77. 436 [7.340]

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[7.345] As the Torrens system legal mortgage confers only a statutory charge upon the

mortgagee and makes the power of sale fundamental to that charge, the existence of a power of foreclosure represents an adherence to historical tradition, rather than an inevitable part of the transaction. However, in all jurisdictions foreclosure is retained as a remedy of the Torrens system legal mortgagee even though subject to considerable restrictions.144 Foreclosure is available in all jurisdictions except Queensland through application to the Lands Titles Office rather than to the court. Application may be made if the following conditions have been met: 1.

Default in payment of principal or interest must have existed for six months.

2.

The land must have been offered for sale at a public auction by a licensed auctioneer and the highest bid must have been insufficient to meet the mortgage debt together with expenses of sale.

3.

Notice of intention to apply for a foreclosure order must have been served on the mortgagor.

After the application is made and the Registrar is satisfied as to the matters stated, the Registrar offers the land for sale. This offer is made by a notice published for four consecutive weeks in the Government Gazette. After a time specified in the notice, not less than one month after the first publication, the Registrar may issue an order for foreclosure unless a sufficient sum has been raised by a sale to cover the amount of the debt and the costs of the attempted sale and foreclosure. The effect of the order is to vest in the mortgagee the land free of any equity of redemption of the mortgagor and the interest of any person claiming through the mortgagor. In Queensland the Torrens system legal mortgagee is given a power of foreclosure by application to the court.145 Under similar earlier statutes the courts adopted the traditional equitable procedure.146 Upon a foreclosure order being made, they have ordered the mortgagor to execute a transfer or in the absence of the mortgagor utilised the somewhat questionable vesting powers with respect to trustees. In New South Wales, Victoria, Western Australia and the Australian Capital Territory the general law prohibition upon re-​opening foreclosure applies to the Torrens system. In South Australia and Tasmania the statutory statement that foreclosure vests in the mortgage the mortgagor’s interest free from all right and equity of redemption has been held to prevent re-​opening.147 It must be conceded that these statutory words are very similar to those of the traditional equitable order which did not have the effect of preventing re-​opening. If foreclosure cannot thus be re-​opened, the mortgagee should not be able to sue on the personal covenant. In Queensland, although the common law procedure remains applicable to the Torrens system, the final effect of foreclosure is an order vesting the registered interest in the mortgagee and, because there is a transfer, an implied indemnity by the transferee to the

144

145 146 147

Real Property Act 1900 (NSW), s 61; Transfer of Land Act 1958 (Vic), s 79; Land Title Act 1994 (Qld), s 78(2) (c); Real Property Act 1886 (SA), s 140; Transfer of Land Act 1893 (WA), s 121; Land Titles Act 1980 (Tas), s 85; Land Titles Act 1925 (ACT), s 97; Land Title Act (NT), s 85. Land Title Act 1994 (Qld), s 78(2)(c). Finance Corporation of Australia Ltd v Commissioner of Stamp Duties [1981] Qd R 493. Campbell v Bank of New South Wales (1883) 16 NSWLR (E) 285. This decision was approved in Fink v Robertson (1967) 4 CLR 864. The decision in Campbell related to New South Wales legislation since repealed, but equivalent to the current South Australian and Tasmanian legislation. [7.345]  437

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mortgagor seems to prevent an action on the personal covenant by the mortgagee. However, re-​opening of foreclosure does not appear otherwise to be restricted. [7.350]  The equitable mortgagee under the Torrens system has generally been regarded as not being entitled to the statutory powers of the mortgagee. It can however be argued that on a broad reading of Walsh v Lonsdale (1882) 21 Ch D 9 doctrine has previously an equitable mortgagee should be in the same position as a legal mortgagee. The right of an equitable mortgagee to apply for a traditional court order for foreclosure seems to be accepted. As in the case of the equitable mortgage under the general law, the courts’ powers to effect a transfer in the absence of the mortgagor seem to rest on the vesting powers with respect to trustees.

Discharge [7.355]  Upon payment of the mortgage debt the mortgagor will seek to hold the property

free from the mortgage. Courts of equity saw this right as fundamental to implementing the concept that the mortgagee’s rights were of a security nature only. The right was secured by the action of redemption. The protection for redemption extended to a number of doctrines invalidating impediments upon redemption –​they are discussed at [7.50]. Under the general law, the redemption action is the means by which the mortgage can be discharged. In the case of a general law legal mortgage, redemption involves the reconveyance of legal title to the mortgagor. In the traditional form where the contractual date for redemption is artificial, the mortgagor is seeking equitable assistance to procure that to which he or she has no contractual right. Consequently, the success of a redemption action was conditional not only on payment of the debt and interest, but also of the costs of the action itself. Those costs were the price of the exercise of equitable indulgence or relief against forfeiture. [7.360] While the traditional mortgage agreement in its fictional form provided for

redemption after a period of only six months, a mortgage agreement may bind the parties to a program of repayment over a number of years. The parties may seek the certainty of a fixed term and a fixed-​interest rate. Movements in interest rates will mean that the parties may view their agreement as having become more or less attractive. If interest rates decline, the mortgagor may seek to repay and discharge the mortgage before the contractual date for repayment. Under the doctrine of clogs on the equity of redemption, the courts upheld terms for repayment over a stated period of time.148 In New South Wales a mortgagor is allowed to redeem early, but only if he or she pays interest on the principal sum for the unexpired balance of the mortgage term.149 Under the National Credit Code, the mortgagor may discharge a mortgage on tender of the “net balance due”.150 This term is defined so that in effect liability for future interest is extinguished. The applicability of the National Credit Code is considered at [7.120]ff.

148 149

150

Knightsbridge Estates Trust Ltd v Byrne [1939] Ch 441. Conveyancing Act 1919 (NSW), s 93. In Steindlberger v Mistroni (1992) 29 NSWLR 351 it was held that the parties are able to agree on redemption on terms other than the payment of interest for the whole of the term. Where a mortgagor has an option under the agreement to pay out at an earlier time, payment at the earlier time is not an early redemption relying on the power of s 93. National Credit Code, s 77.

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[7.365]  Where the mortgagor is seeking to redeem after the contractual date, the traditional

rule has been that he or she should provide six months’ notice of intention to repay.151 This rule has been asserted to rest on the indefinite time span of the traditional mortgage with an artificial repayment date. Because an indefinite mortgage was intended, the notice period enables the mortgagee to find alternative investments.152 The application of the rule to mortgages with a fixed-​repayment schedule and to Torrens system, as well as general law mortgages, has yet to be resolved. In the High Court Mason J has referred to the rule, but acknowledged criticisms of it.153 In Friend v Mayer [1982] VR 941 at 942–​946, in the Victorian Supreme Court, Young CJ considered the rule to be too well established even in relation to Torrens system mortgages to be overruled. However, Lush and Gray JJ (at 947) both expressly reserved any conclusion on the point. [7.370]  The discharge of a mortgage under the general law would, as a matter of principle,

require the reconveyance of the land to the mortgagor. In New South Wales and Victoria the necessity for reconveyance is avoided by statutory procedures for an endorsed memorandum of discharge and endorsed receipt under seal, respectively. In Western Australia and Tasmania it is probable that if the original mortgage has been registered under the deeds registration system, a certificate of satisfaction may be registered and operates as a discharge. In all States except Western Australia the mortgagor may require the transfer of the mortgage to a third person. Under the Torrens system, the discharge of a mortgage requires notification upon the register. In New South Wales, Victoria, Queensland, Western Australia, the Australian Capital Territory and the Northern Territory the mortgagor must lodge a memorandum of discharge of the mortgage.154 In South Australia and Tasmania the mortgagor must lodge either the mortgage with a memorandum or endorsement thereon of the discharge or a separate discharge.155 [7.375]  The discharge of the mortgage releases the land as security for the debt; this release

is separate from the discharge of the debt. The discharge of the mortgage may not discharge the debt. However, the discharge of the mortgage may purport to do so. In Groongal Pastoral Co v Falkiner (1924) 35 CLR 157 a registered discharge document did so purport. The High Court held that the document was an instrument under the New South Wales Torrens system statute and therefore had the effect of a deed. The expression of full satisfaction of the debt in a deed discharged the debt. The case clearly depends on the statement, in the document, of discharge of the debt as well as of the mortgage, and such a statement is not required in any jurisdiction.156 Moreover, the form of document for discharge may not amount to an instrument within the Torrens system statutes and, therefore, not amount to deed; even in New South Wales the forms have been changed.

151

Grugeon v Gerrard (1840) 4 Y & C Ex 119; 160 ER 945; Cape v Trustees of the Savings Bank of New South Wales (1893) 14 NSWLR (Eq) 204; McColl v Bright [1939] VLR 204. 152 Fox, “The Redemption of Torrens System Mortgages after Default” (1950) 24 ALJ 311; Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), at [11.510]. 53 Hyde Management Services Pty Ltd v FAI Insurances Ltd (1979) 144 CLR 541 at 548. 1 54 Real Property Act 1900 (NSW), s 65(1); Transfer of Land Act 1958 (Vic), s 84(1); Land Title Act 1994 (Qld), s 81 1 (described as an instrument of release); Transfer of Land Act 1893 (WA), s 123; Land Titles Act 1925 (ACT), s 101; Land Title Act (NT), s 83. 55 Real Property Act 1886 (SA), ss 143–​144; Land Titles Act 1980 (Tas), s 89. 1 56 Compare IAC v Torulli [1974] WAR 125. 1 [7.375]  439

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The proposition that an expression of full satisfaction in deed discharges the debt has been challenged. In Perpetual Trustees Estate & Agency Co (NZ) Ltd v Morrison [1986] 2 NZLR 447 the form of discharge read:  “Received from the mortgagor (within named) this 2nd day of December 1974 all moneys intended to be secured by and being in full satisfaction and discharge of the within obligation”. Roper J held that the vital issue was that of estoppel –​whether as a representation the receipt had induced the other party to act to their detriment. As both parties will normally be aware of the true state of facts, it is unlikely, though not impossible, that a receipt will have a prejudicial impact and thus form the basis of an estoppel. He rejected the earlier decision in Broad v Public Trustee [1939] NZLR 140.157 The real issue seems to be whether a deed of discharge has effect of its own force irrespective of its force as a representation. A receipt normally has only evidentiary effect: When the receipt in full was given, it was prima facie evidence against the plaintiff that the amount stated in it was paid. It was not conclusive evidence; because it is competent for the parties to contradict such a receipt, by shewing that the money was not in fact paid.158

The position seems to be the same whether or not the receipt is given under seal.159 However, while a receipt may come close to an implied release of a debt, it does not of itself constitute such an undertaking. A release of a debt supported by consideration is undoubtedly effective and a release under seal should be similarly effective. In some situations the doctrine of mistake may affect the validity of the release. [7.380]  While some doubt exists about the scope of a receipt discharging both the mortgage

and the personal debt, such a discharge is preferable for mortgagors than a mere discharge of the mortgage. Yet it is common in Australia that discharges are limited to the mortgage. Equitable protection for the right of redemption would seem satisfied by such a discharge as its concern is with the unfettered return of the property. There seems to be nothing in the equitable rules to require a statement of discharge of the debt. Consequently, a mortgagor’s claim seems to be no different from that of any other debtor who has fulfilled contractual obligations and any entitlement to a statement of discharge of the debt is lacking.

POWER OF SALE Nature of power [7.385]  The power of sale is today the most significant remedy of a mortgagee in the event of

default by a mortgagor. It is regularly exercised in both commercial and consumer dealings. A sale by a mortgagee has traditionally been regarded as necessarily a sale to someone other than the mortgagee.160 However, in a New Zealand appeal the Privy Council has recently upheld a sale to a company in which the mortgagee held shares as a sale to a different person subject to the requirement of proof of a truly independent bargain.161

57 1 158 159 160 161

Compare Campbell, “Discharge of a Land Transfer Mortgage” [1942] NZLJ 173. Foster v Dawber (1851) 6 Ex 839; 155 ER 785 at 843 (Ex), 787–​788 (ER). Guest, Chitty on Contracts (25th ed, Sweet and Maxwell, London, 1983), pp 811–​812. Farrar v Farrars Ltd (1888) 40 Ch D 395. Apple Fields Ltd v Damesh Holdings Ltd [2004] 1 NZLR 721.

440 [7.380]

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Prerequisites to exercise [7.390]  The Torrens system mortgage differs fundamentally from the general law mortgage

in making the power of sale central to the mortgagee’s security, whereas under the general law it was only one of the powers of a mortgagee. The general law position is borne out by current property law statutes which incorporate the power of sale as an implied power of the mortgagee. Under the Torrens system, the mortgagee is entitled to exercise the power of sale where there has been default in payment of mortgage moneys or where, in observance of any other covenant for a period of one month, notice is served upon the mortgagor and the default is not rectified within one month. Conversely, the property law statutes confer a power of sale in the event of default of payment, but provide that the power conferred by the statute cannot be exercised until failure within one month to comply with a notice of demand for payment or interest is in arrears for one month or there has been breach of some other covenant. [7.395]  The Torrens system statutes expressly allow the periods of default before notice and

of non-​compliance after notice to be varied by the parties. That ability leaves open the question of whether the mortgage may provide for sale without any notice of default at all. In Tasmania there is an express provision that notice may be waived.162 The Torrens system statutes all allow any covenant or power by the statutes implied in any instrument to be negated or modified by express declaration. However, the power of sale is not expressed as something implied in an instrument, but as an inherent right flowing from the existence of the mortgage. Consequently, notice of default can be argued to be an inherent feature of the power of sale conferred by the Torrens system statutes, and an instrument attempting to dispense with notice altogether is inconsistent with the basic structure of the legislation and should be denied registration. This conclusion is supported by Sykes and by recent cases. While authority is not clear cut, more recent cases support this result. In an early New Zealand case, Public Trustee v Morrison (1894) 12 NZLR 423 at 426, Denniston  J stated in relation to the argument advanced above that he could “see nothing in the Act warranting this contention, and the practice has certainly been to the contrary”.163 By contrast, in Hall v Hall [1956] QWN 28 the mortgage did purport to give the mortgagee the right to sell immediately upon default. Money being due and owing, the mortgagee took possession of the property. He then advertised the land for sale without any notice to the mortgagor. Matthews J held that a mortgagee seeking to exercise the statutory power of sale had to give notice in conformity with the Torrens system statute. A  similar approach was taken in the New Zealand case of Jaffe v Premier Motors Ltd [1960] NZLR 146. [7.400]  Under the Torrens system statutes, the notice is a notice of breach –​in the payment

of principal or interest or the observance of any covenant. Again, if this structure is regarded as an inherent part of the mortgage, exercise of the power of sale otherwise than upon breach appears not to be allowed. In Western Australia, express recognition is given to a power of sale in default of payment due on demand.164

162 163 164

Land Titles Act 1980 (Tas), s 80. See also Skinner v Crabb (1878) 5 QSR 131; Campbell v Commercial Banking Company of Sydney (1881) NSWR 375. Property Law Act 1969 (WA), s 59(1); Transfer of Land Act 1893 (WA), s 107. [7.400]  441

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Requirement of notice [7.405]  Traditionally, the parties have been left free to vary the periods of notice and perhaps

even to dispense with any requirement of notice. The idea of compulsory notice before repossession of goods was part of the uniform hire-​purchase legislation of 1959 and has been maintained in the current consumer credit legislation. It is, therefore, not surprising that notice before the exercise of the power of sale be made compulsory in cases of land mortgages at least where the mortgages relate to a private dwelling-​house. In Queensland and New South Wales165 one month’s notice must be given in separate forms according to whether the default is in the payment of money or compliance with other covenants. In South Australia one month’s notice must be given where the mortgage relates to a dwelling or land used for the purpose of primary production.166 The more general notice requirements of the National Credit Code apply to all mortgages made in the course of business to a natural person: see [7.125] as to the sphere of application of the notice requirements. As with the prerequisites to notice, the Torrens system statutes are more specific as to the form of notice than the general law statutes. The latter simply require service of a notice requiring payment. Under the Torrens system statutes, the notice is to be in writing and it is to require the mortgagor to correct the default. It is to state that sale will be effected if the default is continued. Alternative methods of service are provided for:  the mortgagee may leave notice on the mortgaged land or may leave it at the last known place of abode of the mortgagor. However, details of the default and the steps necessary to correct that default are not required. Even the precise date by which the power of sale becomes exercisable does not have to be specified. Today the most burdensome notice requirements are those of the National Credit Code. A mortgagee must serve, at least 30 days before taking any enforcement proceedings, a written notice containing a prominent heading that it is a default notice.167 The notice must specify: (a) the default; (b)  the action necessary to remedy the default; (c)  a period for remedying the default; (d) the date after which enforcement proceedings in relation to the default, and, if relevant, repossession of mortgaged property may begin if the default has not been remedied; and (e)  that repossession and sale of mortgaged property may not extinguish the debtor’s liability. [7.410] The courts have not interpreted the earlier notice requirements so as to provide information for the mortgagor. In the early Victorian case of Ewart v General Finance Guarantee & Agency Society (Australasia) (1889) 15 VLR 625 a notice stating that “the company hereby requires you to pay the money owing on mortgage from you to the company” was accepted as valid. This approach was explicitly approved in Kay’s Leasing Corporation Pty Ltd v CSR Provident Fund Nominees Pty Ltd [1962] VR 429 at 431, where the notice read:

165

166 167

Property Law Act 1974 (Qld), applying to both general law and Torrens system mortgages; Conveyancing Act 1919 (NSW), s 111, applying to general law mortgages; Real Property Act 1900 (NSW), ss 57, 58A, applying to Torrens system mortgages. See also Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), at [11.1180] and Carr v Finance Corporation of Australia Ltd (1982) 150 CLR 139; 56 ALJR 730. In New South Wales the notice with respect to breaches other than those for the repayment of money may be dispensed with by express agreement: Conveyancing Act 1919 (NSW), s 109(2). Law of Property Act 1936 (SA), s 55A. National Credit Code, s 88.

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whereas default has been made in the due payment of interest to [the mortgagee] … Take notice that if the said default continues for a period of 14 days from the date of service of this notice the said mortgagee intends to exercise the powers of sale conferred on it by s 77 of the Transfer of Land Act 1958.

Adam J held that the recital of the fact of default and the notice that the power of sale would be exercised if such default continued fulfilled the statutory requirements. By contrast, a strict construction has been given to the recent South Australian property law notice provisions on the basis that they serve consumer protection purposes. A similar approach is likely in the interpretation of the National Credit Code. In Commonwealth Development Bank of Australia Ltd v Cormack (1983) 108 LSJS 38168 a letter was sent by a mortgagee demanding payment and threatening action. The notice was required by statute to allege a breach and to demand its remedy within one month or a longer stipulated time. The court concluded that, although a threatening letter is normally assumed to reflect a breach, there was in fact no allegation of breach. The letter therefore did not amount to a sufficient notice. Similarly, the requirement that notice must be given to the mortgagor will require evidence of service in accordance with prescribed rules. While alternatives to service upon the mortgagor personally are provided so that registered mail to a last-​known address is in some cases sufficient, one of these alternatives must be properly established.169

Erroneous notice [7.415] If the statutory notice can be short of detail for the mortgagor, the courts have

accepted that even an erroneous notice is not invalid. If a notice demands more than is due, it may still form the basis for the exercise of the power of sale. The mortgagor can only avoid sale by tendering the correct amount due. Tender can only be excused if the mortgagor can show that such tender would not have been accepted. Explicit evidence of non-​preparedness to accept tender of the correct amount has been required. This approach was most clearly adopted in the drawn-​out and bitter litigation in Campbell v Commercial Banking Co (Sydney) (1881) 2 NSWR 375 at 389, 397. In an appeal to the Privy Council from the first trial of this action it was directly held that a notice is not bad because it demands more than is due. Moreover, the Privy Council held that a demand for a larger amount than that due does not do away with the necessity for tendering what is actually due, unless there is at the same time a refusal to receive the correct amount. In two subsequent appeals to the Full Court of the Supreme Court consideration turned to what would amount to evidence of a refusal to accept a lesser sum. In the course of three trials, it emerged that the mortgagee had entered a contract of sale prior to the notice of demand, the mortgagee was in possession and had not responded to the mortgagor’s request for an account and that, when asked what was owing, an assistant accountant of the mortgagee had stated that the money could not be accepted because of the sale. Nonetheless, the Supreme Court held that there was no evidence that the bank would have refused tender of the correct amount owing. The case is an emphatic 19th-​century statement of the debtor’s duty to seek out his or her creditor. It contrasts with the strict construction placed on recent notice requirements with an avowed consumer protection aim. However, the decision was applied in the 1970 New

168 169

Comapre National Australia Bank Ltd v Zollo (1992) 59 SASR 76. Bank of Western Australia Ltd v Shearer [2005] SASC 366. [7.415]  443

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Zealand case of Clyde Properties Ltd v Tasker [1970] NZLR 754. In that case the notice of demand specified a default of failure to pay the principal of 5,500 pounds when the principal owing was 5,000 pounds. Further it required payment of interest when interest had not been specified as in default and thus, arguably, as a result of relevant legislation, could not be the basis of a power of sale. The court applied the Campbell principle even though there was earlier New Zealand authority which had sought to distinguish that case. In Queensland the Supreme Court has held that the essence of the Campbell principle is whether the mortgagor has been given a clear idea of the default.170 [7.420] The matter was further considered by the New South Wales Court of Appeal in

Websdale v S & J D Investments Pty Ltd (1991) 24 NSWLR 573. In that case the court pointed out that the precise requirements of legislation had changed over time, but that the key requirements of notice under the Torrens system statutes were that (a) the notice must specify that it is given pursuant to the relevant provision of the Act; (b)  the notice must require the mortgagor to pay the principal and/​or interest in respect of the payment of which the mortgagor had made default; (c)  if the costs of notice are to be demanded, the notice must state the requirement of a reasonable amount for those costs and specify that amount; and (d) the notice must inform the mortgagor that unless the requirements of the notice are complied within the relevant period after service of the notice it is proposed to exercise the power of sale. The court held that to meet these requirements a notice must correctly identify whether there are defaults with respect to principal and with respect to interest. A  notice which contained an incorrect assertion of non-​payment of principal and a correct assertion of payment of interest would be invalid. On the other hand, identification of the precise amounts owing is not essential to the validity of a notice. The relevant provisions did not require specification of the amounts outstanding. The crucial matter of interpretation is whether the legislation requires identification of the nature of the default (failure to pay interest or principal due) or of the amounts in default.

Nature of the sale [7.425]  By statute the mortgagee is given considerable flexibility in disposing of the land. The

mortgagee may sell by public auction or private contract or by a combination of auction and contract. The mortgagee may sell the land altogether or in lots. The mortgagee may sell subject to such conditions as thought fit. Thus sales on credit are allowed.171 The mortgagee may sell the land or any part of the land. Where a mortgage covers more than one parcel, the mortgagee may sell any one or more parcels, but even where there is only one parcel the sale of part in consequence of subdivision is allowed (subject to planning restrictions). However, although fixtures are part of the land and may be sold with the land, they cannot be sold separately. Once severed, they cease to be part of the land and are therefore beyond that which the mortgagee is entitled to sell.172

170 171 172

Stephenson Developments Pty Ltd v Finance Corporation of Australia Ltd [1976] Qd R 826; Clark v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404. Wright v New Zealand Farmers Co-​operative Assoc of Canterbury Ltd [1939] AC 439. Kay’s Leasing Corporation Pty Ltd v CSR Provident Fund Nominees [1962] VR 429; see also Re Penning; Ex parte State Bank of South Australia (1989) 23 FCR 588; 89 ALR 417.

444 [7.420]

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Title free from encumbrances [7.430]  The Torrens system mortgagee does not hold legal title and the mortgagee’s ability

to pass title depends upon statutory provisions. The statutes provide for an ability to make binding contracts and to pass title free from encumbrances. The statutes provide that, upon registration, a purchaser from the mortgagee will hold free from all mortgages and encumbrances registered after the mortgage. The existence of a registered mortgage does not impose any restrictions, other than economic, upon the mortgagor in dealing with the land. The mortgagor may create any range of interests in the land and these interests will be valid, though subject to the interest of the mortgagee. It is only if the mortgagee sells that these interests are defeated. The subsequent interests may be created by registered dealings or be the result of unregistered dealings. The statutes are clear in conferring protection for the purchaser from the mortgagee against holders of subsequent registered interests. Holders of unregistered interests should be in no better position, yet the statutes are not as explicit in relation to them and particular problems may arise if the holders lodge caveats. [7.435] In Forster v Finance Corporation of Australia Ltd [1980] VR 63 a registered

mortgagee had, pursuant to its power of sale, entered into a contract of sale with Forster. Forster discovered the existence of caveats lodged by subsequent equitable mortgagees and sought to rescind on the basis that the vendor could not make good title. Forster’s argument was upheld. The court concluded that registration of a transfer from the mortgagee would be impossible while the caveats remained. The purchaser would not be protected by statutory priority for the purchaser over the holder of an unregistered mortgage, charge or encumbrance because the caveat was not an encumbrance. The purchaser would be entitled to the benefit of provisions relating to the lapsing of caveats. If the transfer were lodged, the Registrar would be required to give notice to the caveator and the caveator would be required to take proceedings to defend the caveat or it would lapse. The caveator would have no grounds of defence. However, a purchaser may be unwilling to rely upon these rights and could not be forced to accept a title involving such disputation. Prior to any contract, a mortgagee is entitled to bring proceedings for the removal of a caveat as a person adversely affected by the caveat. An early Victorian ruling that removal of a caveat will not be required simply because the caveat will interfere with some future intended dealing with the land has been overruled in Commercial Bank of Australia v Schierholter [1981] VR 292. The Full Court in Schierholter pointed out that, in proceedings challenging a caveat, the court had a wide discretion and that an equitable mortgagee should not be able to interfere with the proper exercise of the power of sale of a registered mortgagee. This decision accords with single instance decisions in other States.173 The court does have a discretion as to the appropriate order and where the propriety of the exercise of the power of sale was in question could allow the caveat to remain. [7.440] If the holder of an interest subsequent to a registered mortgage lodges a caveat

forbidding all dealings in the land, it is arguable that the caveat is defective or improper in

173

Kerabee Park Pty Ltd v Daley [1978] 2 NSWLR 222; Re Stewart Fitzsimmons Projects Pty Ltd’s Caveats [1976] Qd R 187. [7.440]  445

PART 2 Title to Land

form. Such a caveat does prevent registration of a transfer from the mortgagee to a purchaser pursuant to valid exercise of the power of sale. Yet the caveator has no right to prevent such a sale. Thus the caveat can be argued to extend beyond the proper protection of the interest claimed. The caveat should take a more qualified form.

Mortgagee’s duties [7.445] The exercise of the mortgagee’s power of sale has a considerable impact upon the

mortgagor. Not only does the mortgagor lose any interest in the land, but the comparison between the price obtained and the debt owing determines whether the mortgagor remains in debt or receives some surplus. Of course the mortgagee has a financial interest to obtain a price sufficient to cover the debt, especially as the mortgagor is by definition in default. However, it has been clearly established that beyond this financial interest the mortgagee cannot disregard the interest of the mortgagor. [7.450]  From early days of federation Australian courts have imposed a duty on a mortgagee

to act so as not to sacrifice the mortgagor’s interest. Such a duty was asserted by the High Court in Barns v Queensland National Bank Ltd (1906) 3 CLR 925 and again in Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676. Pendlebury’s case involved a mortgagee sale of a block of 640 acres of land in the mallee country of north western Victoria. The land was sold at an auction held in Melbourne. That auction was advertised in two Melbourne newspapers. The advertisement contained only a Land Titles Office reference to the land and a general statement as to its location. The location of the land was not specified and no indication was given of the nature of the soil, that the land was cleared, partially under crop, divided into paddocks, within a mile of a water channel or of the amount of the balance due to the Crown. The court concluded that with respect to both the extent of advertising and the content of the advertisements the mortgagee had acted in absolute disregard of the interests of the mortgagor. The High Court in Pendlebury’s case concentrated upon an analysis of the facts which all pointed to the mortgagee’s attempting only to recapture the amount of the mortgage debt. Indeed there was considerable argument as to collusion between the mortgagee’s agent and the purchaser. The court (at 694) accepted a statement of principle that a mortgagee must not recklessly or wilfully sacrifice the interests of the mortgagor and that if the mortgagee does so, he or she is not to be regarded as having acted in good faith. Barton J suggested that good faith included fairness. On the other hand, Isaacs J stated that lack of good faith did not extend to mere negligence or carelessness. [7.455]  Since the early part of the 20th century debate has ensued as to whether a broader

standard of duty should be imposed upon mortgagees. On four occasions subsequent to Pendlebury’s case the High Court has dealt with the matter inconclusively.174 In Forsyth v Blundell (1973) 129 CLR 477, Menzies J stated that the duty to take reasonable precautions to obtain a proper price was but part of the duty to act in good faith. In Commercial & General Acceptance Ltd v Nixon (1981) 152 CLR 491; 56 ALJR 130 the court had to apply

174

Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265; Forsyth v Blundell (1973) 129 CLR 477; Australian & New Zealand Banking Group v Bangadilly Pastoral Co Pty Ltd (1978) 139 CLR 195; 52 ALJR 529; Commercial & General Acceptance Ltd v Nixon (1981) 152 CLR 491; 56 ALJR 130.

446 [7.445]

Mortgages  Chapter  7

the Queensland statutory duty of a mortgagee to take reasonable care. The court held that the mortgagee did not escape liability for improper exercise of the power merely by employing reputable agents to conduct the sale. Aickin J indicated, however, that he considered that the common law duty equated with that of the Queensland statute. The argument for a broader duty stemmed largely from English decisions where for some time the judicial approach favoured of a negligence style of duty of care being owed by a mortgagee to a mortgagor. In Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] Ch 949 the court held that a mortgagee must take reasonable care to obtain a proper price for the land in the interest of the mortgagor. This duty has been extended in favour of guarantors of the mortgagor; it has been imposed upon a receiver in favour of the mortgagor and guarantor.175 Furthermore whereas the traditional approach has been that a mortgagee may force an immediate sale even if market conditions were poor, the extended duty incorporated the view that the precise timing may have to be chosen with regard to the mortgagor’s interest.176 More recently, English courts have retreated from this position and have abandoned the tort of negligence as the basis of the duty. The mortgagee is now under an equitable duty to have regard to the interest of the mortgagor.177 At all times Australian State and Territory courts have tended to apply a duty of good faith as opposed to a duty of reasonable care.178 Again most recently the Court of Appeal of the Victorian Supreme Court has expressed the view that any review of the duty is a matter for the High Court.179 In the South Australian Supreme Court, Zelling J argued that a duty of care is inappropriate as a mortgagee is doing something the mortgagee is entitled to do and is justified in putting her or his interests first.180 In the Victorian Supreme Court, Lush J argued to the same end: A mortgagee in exercising his powers is entitled to give first consideration to his own interests, a concept which is consistent with having regard to the interests of others or with taking reasonable care to protect the interests of others, what is reasonable being assessed in light of the fact that not only is the mortgagee entitled to give his own interest first consideration, but also that the reason for the existence of the power is to protect those interests.181

The Full Court of the Federal Court in Upton v Tasmanian Perpetual Trustees Limited [2007] FCAFC 57 emphatically followed the traditional Australian approach and the basic position now seems settled. It stated that the taking of reasonable steps to obtain a proper price is part of the duty to act in good faith. The mortgagee was under no obligation to undertake

175

176 177 178

179 180 181

Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410; see McGill and Howell, “Improving the Ability of Guarantors to Make a Real Choice: Lenders’ Practices in Taking Third Party Guarantees” (2013) 24 JBFLP 182. Standard Chartered Bank Ltd v Walker [1982] 1 WLR 1410 at 1415. Silvan Properties Ltd v Royal Bank of Scotland PLC [2004] 1 WLR 997. Expo International Pty Ltd v Chant [1979] 2 NSWLR 820; Brutan Investments Pty Ltd v Underwriting & Insurance Ltd (1980) 39 ACTR 47; Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VR 309; Citicorp v McLoughney and Registrar General of Deeds (1984) 35 SASR 375; Westpac Banking Corporation v Mousellis (1985) 37 NTR 1; Southern Goldfields Ltd v General Credits Ltd (1991) 4 WAR 138; Inkhorn Pty Ltd v Herbert [2000] WASC 333; Carver v Westpac Banking Corporation Ltd [2002] NSWSC 431; MBF Investments Pty Ltd v Nolan [2011] VSCA 144. MBF Investments Pty Ltd v Nolan [2011] VSCA 144. Citicorp v McLoughney and Registrar General of Deeds (1984) 35 SASR 375 at 381. Upton v Tasmanian Perpetual Trustees Ltd [2007] FCAFC 57 at [19]. [7.455]  447

PART 2 Title to Land

improvements which might produce a higher return although the mortgagee had a power to do so if commercially desirable. Consequently the mortgagee was under no duty to subdivide or allow the mortgagor to do so. A selling mortgagee was not required to consult the mortgagor and could refuse to negotiate with the mortgagor. Furthermore these actions did not involve any legal or moral misconduct which would amount to unconscionable conduct.182 Freedom for a mortgagee in selecting the timing of a sale has also been reaffirmed; a delay in sale has been held not to be evidence of bad faith, even though it led to a lower price.183 Similarly, it has been affirmed that the mortgagee may elect not to sell at all even though a sale may bring to an end a spiralling interest liability on a debt.184 [7.460] The strict approach taken by the courts has led to some statutory extensions of

duty. In Victoria and Tasmania in an apparent restatement of the common law position a mortgagor is required to have regard to the interest of the mortgagor.185 In New South Wales and the Northern Territory, a mortgagee is under a statutory duty when exercising a power of sale.186 In New South Wales and the Northern Territory, the duty to take reasonable care relates to the sale price which must be the market value where that figure is reasonably ascertainable or otherwise the best price reasonably obtainable.187 In Queensland, the duty to take reasonable care in exercising the power of sale applies more generally and includes obtaining an independent valuation of the land, selling by auction, providing full details of the land and conditions of sale and drawing the sale to the attention of parties who could be expected to be interested.188 Furthermore, laws relating to corporations require such bodies to exercise reasonable care to obtain market value for the land.

Protection of the purchaser [7.465]  Under the general law, the mortgagee will commonly have the legal estate. Under the

Torrens system, both the mortgagee and the mortgagor commonly both have registered and thus legal interests. The exercise of the power of sale will attempt to pass this legal estate to the purchaser. Any impropriety against the mortgagor may give rise to rights associated with the equity of redemption. The mortgagor may seek to assert these rights against the purchaser. At the time of contract there will be competition between two equitable interests and the principal issue is likely to be whether anything associated with the mortgagor’s conduct causes his or her interest to be postponed to that of the purchaser.189 However, once a conveyance is effected, the purchaser will have legal title and be free of the mortgagor’s claim unless affected by notice. Under the Torrens system, however, the situation is affected because of the mortgagor’s legal interest. The mortgagee also has a legal interest. Whatever rights the mortgagor may

182 183 184 185 186

Commonwealth Bank of Australia Ltd v Lee (1996) 22 ACSR 574. Westpac Banking Corporation Ltd v Kingsland (1991) 26 NSWLR 700. MBF Investments Pty Ltd v Nolan [2011] VSCA 144. Transfer of Land Act 1958 (Vic), s 77(1); Land Titles Act 1980 (Tas), ss 77, 78. Conveyancing Act 1919 (NSW), s 111A (this section is expressed to apply land under the Real Property Act 2000 (NSW)); Law of Property Act 2000 (NT), s 90(1). 187 Pola v Australian and New Zealand Banking Group Ltd [2015] NSWCA 146. 188 Property Law Act 1974 (Qld), s 85(1). 189 This approach was followed in Australian Regional Credit v Mula [2009] NSWSC 325. 448 [7.460]

Mortgages  Chapter  7

have against the mortgagee, the mortgagee can assign an interest, and thus a contract by the mortgagee will confer equitable rights upon the purchaser. The mortgagee has the power to pass, by registered transfer, all the estate and interest of the mortgagor190 and, by means of a contract, can pass the equitable estate which the registered proprietor (mortgagor) could pass if the mortgagor had entered into a specifically enforceable contract.191 At this point any competition between the mortgagor and the purchaser is one between the holder of a legal interest and the holder of a subsequent equitable interest. It will only be if the conduct of the mortgagor is such that the mortgagor is estopped from asserting his or her interest that the interest of the purchaser from the mortgagee will prevail. A transfer from the mortgagee to the purchaser is effected by the registration of the purchaser as proprietor of the land. At this point the purchaser gains the protection of indefeasibility and a mortgagor seeking to set aside the transfer would have to show a lack of good faith; notice would be insufficient. [7.470] The principles relating to the position of a purchaser detailed in the previous two

paragraphs are subject to specific statutory provisions. The Torrens system statutes provide that any contract authorised by the statutory power of sale is as valid and effectual as if it were made by the mortgagor and the receipt by the mortgagee is sufficient discharge for the purchaser.192 The purchaser is not answerable for or obliged to inquire as to whether there has been any default or notice given in accordance with the power of sale.193 Upon registration of the transfer from the mortgagee the mortgagor’s interest vests in the purchaser, who is deemed to be the registered proprietor of that interest. Upon registration, the protection for a purchaser who has acted in good faith appears complete. A dispute between a mortgagor complaining of some irregularity in the sale and a purchaser who has entered a contract, but has not become registered, presents greater difficulty as discussed in [7.475]. [7.475]  Priority where there is a dispute between a mortgagor complaining of some irregularity

in the sale and a purchaser who has entered a contract, but has not become registered, depends on general principles. In addition, differing statutory protection is provided to a purchaser prior to registration in New South Wales, Queensland, South Australia, Western Australia, Tasmania, the Australian Capital Territory, and the Northern Territory.194

190

Upon registration, the interest of the mortgagor passes to the purchaser by virtue of the statutory provisions; the purchaser is not an assignee from the mortgagee: Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1998) 196 CLR 245. 191 See the discussion of this point and of the statement in the first edition of this text in Swanston Mortgage Pty Ltd v Trepan Investments Pty Ltd (1993) V ConvR 54-​487 at 65,655 per Brooking J with whom Southwell and Teague JJ agreed. 92 Real Property Act 1900 (NSW), s 112; Transfer of Land Act 1958 (Vic), s 77(4); Land Title Act 1994 (Qld), s 79; 1 Real Property Act 1886 (SA), s 136; Land Titles Act 1980 (Tas), s 81; Transfer of Land Act 1893 (WA), s 110; Land Titles Act 1925 (ACT), s 95; Land Title Act (NT), s 81. 93 Real Property Act 1900 (NSW), s 112; Transfer of Land Act 1958 (Vic), s 77(4); Land Title Act 1994 (Qld), s 79; 1 Real Property Act 1886 (SA), s 136; Land Titles Act 1980 (Tas), s 81; Transfer of Land Act 1893 (WA), s 110; Land Titles Act 1925 (ACT), s 95; Land Title Act (NT), s 81. 194 The provisions protecting the purchaser from the mortgagee prior to registration are: Real Property Act 1900 (NSW), s 112; Land Title Act 1994 (Qld), s 87; Real Property Act 1886 (SA), s 134; Transfer of Land Act 1893 (WA), s 108; Land Titles Act 1980 (Tas), s 77; Land Titles Act 1925 (ACT), s 94(3); Land Title Act 2000 (NT), s 81. [7.475]  449

PART 2 Title to Land

In Forsyth v Blundell (1973) 129 CLR 477 a mortgage had been granted in March 1968 over a petrol station site for $125,000 by Blundell to Associated Securities Ltd (ASL). In November 1968 a second mortgage was granted to ASL for $10,000. Subsequently Blundell defaulted and ASL proceeded to exercise the power of sale. In March 1970 ASL entered a contract to sell the petrol station to the Shell Company for $120,000. Another petrol company had earlier indicated that it was prepared to pay $150,000 for the site. No notice of the sale was given to Blundell or the other company. Blundell sought to redeem. The court held that ASL had acted in deliberate disregard of the rights of the mortgagor and was thus not bona fide. The Shell Company, however, was held to have been unaware of any impropriety. The court concluded that on general principles there was no ground on which the right of mortgagor was postponed to that of the purchaser. Blundell had not contributed to any assumption by the purchaser that the mortgagee was acting bona fide. Even treating the matter as a dispute between competing equitable interests, Blundell’s interest was prior in time and nothing in Blundell’s conduct caused him to be postponed. The provisions of the Australian Capital Territory Torrens System Ordinance did not provide any additional protection for the particular purchaser prior to registration. The ordinance provided that contracts were as effectual as if made by the mortgagor. This provision was held, however, merely to ensure that the mortgagee could contract to give title, even though the mortgagee did not have title. No protection against any irregularity was given to the purchaser. Some protection was given in relation to payment of the purchase money and its subsequent application by the mortgagee. Further, protection was given against failure to make inquiries with respect to the fact of any default and the giving of notice. But no protection was given from failure to make inquiry as to whether the power was otherwise being properly and regularly exercised. Blundell therefore was entitled to redeem even against the Shell Company. [7.480]  Forsyth v Blundell (1973) 129 CLR 477 is a case of lack of good faith on the part of

the mortgagee. Lesser improprieties do lead to situations in which the purchaser is protected even before registration. Protection is given by the provisions discussed in Forsyth’s case. In Emerald Securities Pty Ltd v Tee Zed Enterprises Pty Ltd (1981) 101 LSJS 101 the mortgagor alleged that the appropriate notice of intention to sell had not been given. The Full Court of the South Australian Supreme Court held that any deficiency of notice did not entitle the mortgagor to challenge the contract with the purchaser or restrain a transfer to him. Forsyth v Blundell was a case of lack of good faith by the mortgagee; where the attack is in relation to the notice, the purchaser was given immunity by the statute. The purchaser depends upon the statute for protection and the issue is, therefore, whether the situation is one within the express terms of the statute. Only serious defaults by the mortgagee will, prior to a transfer and registration, leave a purchaser subject to redemption by the mortgagor.

450 [7.480]

DEALINGS IN LAND

PART III

CHAPTER 8

Dispositions [8.05] [8.25]

ORIGINAL ACQUISITION AND ACQUISITION BY SUCCESSION................................... 453 GIFTS AND WILLS........................................................................................................ 456 [8.25] Proprietary effect of gifts............................................................................... 456 [8.30] Proprietary effect of wills............................................................................... 456 [8.45] Gifts and equitable intervention..................................................................... 457 [8.65] CONTRACTS AND TRANSFERS.................................................................................... 460 [8.65] The land transfer process.............................................................................. 460 [8.105] Formalities................................................................................................... 465 [8.125] Proprietary effects of contracts....................................................................... 468 [8.150] INFORMALITY AND INEQUITY..................................................................................... 471 [8.150] Statute of Frauds.......................................................................................... 471 [8.155] Doctrine of part performance........................................................................ 472 [8.175] INCOMPLETENESS AND INEQUITY............................................................................. 474 [8.175] Types of trusts.............................................................................................. 474 [8.190] Incomplete arrangements............................................................................. 474 [8.195] Doctrine of estoppel...................................................................................... 475 [8.240] AUCTIONS.................................................................................................................. 480 [8.275] STATUTORY REGULATION OF LAND SALES.................................................................. 483 [8.275] Basis of regulation........................................................................................ 483 [8.285] Disclosure by the vendor............................................................................... 485 [8.300] Cooling-​off rights.......................................................................................... 486 [8.310] Passing of risk.............................................................................................. 487 [8.325] Terms contracts............................................................................................ 488 [8.340] PROPERTY DEALINGS BETWEEN DOMESTIC PARTNERS............................................... 489 [8.340] Recognition of relationships........................................................................... 489 [8.365] Financial agreements.................................................................................... 491 [8.385] Adjustments on relationship breakdown......................................................... 493

ORIGINAL ACQUISITION AND ACQUISITION BY SUCCESSION [8.05]  Other chapters of this book examine the nature of interests in land and the means

of establishing ownership of land. These issues arise most commonly because a purchaser seeks to ensure that he or she has acquired an unchallengeable title. Conversely, the right of disposition is one of the basic features of ownership and thus any owner is a potential vendor. Property law provides for the passing of interests in land from one person to another. Often this process has involved a role for legal practitioners, though the need for this involvement with its inherent costs is a matter of public debate. The transfer of land from one person to another is a process of succession. The purchaser succeeds to the interest of the vendor. Commonly, succession involves the conclusion of an agreement between strangers. The agreement results from the operation of the free market process in Australian society and the owners desiring to sell land may hold an auction of the property or may simply advertise their intention and negotiate with potential buyers. It is common for owners to employ an intermediary –​a real estate or land agent –​to assist with the process of sale. But succession may not involve contracts. An owner may wish to [8.05]  453

PART 3 Dealings in Land

exercise beneficence in favour of a family member or close associate or in favour of charity. The transfer of land may thus occur to give effect to a gift. Both sales and gifts result from voluntary acts of the parties, at least in the sense that the parties willingly entered the transaction: a vendor, for instance, may feel that this voluntary act was forced upon him or her by economic circumstances. Subject to this qualification, the sales and gifts can be classified as consensual transactions. However, there are situations in which an interest in land may be transferred without the consent of the parties or at least without the consent of the person who is being deprived of ownership. Non-​consensual transactions occur on the death of an owner without a will, or when an owner is deprived of assets to meet debts, or on compulsory acquisition by public authorities. [8.10]  The transfer of property on death usually involves a series of steps. Death terminates

ownership because the person who was the owner no longer exists. The deceased person is given a measure of control over arrangements following death and medical advances mean that even decisions with respect to the use of body organs are significant. The law balances the wishes of the deceased (with procedures to record those wishes) alongside those of relatives and legal representatives. With respect to land, the issue is the power of the deceased to direct the future ownership of the land. In so far as such power is recognised, the disposition of the land may be regarded as consensual even if the occurrence of death may not be regarded as consensual. The power to direct the disposition of land on death was totally denied by the common law in the period following the Norman conquest; land passed to the deceased’s heir.1 The Statute of Wills of 1540 gave the power to direct the transfer after death. In the case where there is no direction or no direction meeting the formal requirements of a will, land is transferred non-​ consensually –​until the 19th century to the heir and since that time to next of kin.2 Only in the absence of a will or next of kin does land pass to the Crown as bona vacantia.3 Where the phrase “land passes to the person nominated in the will” is used, the assumption is that the deceased held a fee simple interest and, strictly speaking, that interest passes to the beneficiary. Other interests can be transmitted on death. However, not only did the common law restrict the disposition of fee simple interests on death, but the common law in combination with statute recognised the fee tail estate, and it was a feature of this estate that on death there was no interest remaining for the deceased to dispose of.4 Even today a life estate may have been granted so that on the life tenant’s death a remainder vests in those

1

2

3

4

As explained at [2.100], the concept of an heir involved a preference for males over females and among males for the eldest or elder over younger brothers. The general power of disposal by the holder of a fee simple estate is a first step in the weakening of the strict feudal structure. Succession Act 2006 (NSW), Ch 4; Administration and Probate Act 1958 (Vic), Pt I, Div 6; Succession Act 1981 (Qld), Pt III;, Administration and Probate Act 1919 (SA), Pt IIIA; Administration Act 1903 (WA), Pt II; Administration and Probate Act 1935 (Tas), Pt V; Administration and Probate Act 1929 (ACT), s 45; Administration and Probate Act (NT), s 62. See generally, Atherton and Vines, Succession: Families, Property and Death: Text and Cases (LexisNexis, Sydney, 2009). In abolishing the preference for the heir, and thus the male, New South Wales acted ahead of England: see [1.65]. Succession Act 2006 (NSW), Ch 4; Administration and Probate Act 1958 (Vic), s 55; Succession Act 1981 (Qld), Sch 2, Pt II; Administration and Probate Act 1919 (SA), s 72G(e); Administration and Probate Act 1935 (Tas), s 45; Administration and Probate Act 1929 (ACT), Sch 6; Administration and Probate Act (NT), Sch 6. In Western Australia the principle of escheat still applies: Escheat (Procedure) Act 1940 (WA). The fee tail estate is explained at [2.105].

454 [8.10]

Dispositions  Chapter  8

holding the interest pursuant to the instrument which created the life estate (or a reversion in favour of those entitled at the time of the instrument).5 [8.15]  On death, assets pass to the beneficiaries only if other obligations of the deceased are

met. Thus, all land and other property initially passes to the deceased’s legal representatives.6 Beneficiaries are properly regarded as acquiring only an equitable interest in land on the death of the former owner.7 No assets will pass to beneficiaries until debts have been paid and the gathering together and transmission of the deceased’s assets can involve significant burdens to be met from the estate. Furthermore, a disposition by will may be challenged by dependants or relatives of the deceased who can establish that the deceased has made inadequate provision for them.8 But overall, today in Australia the power of disposition is in effect probably greater than at any other time in the history of the common law because of the absence of any demands by the state. The only demands apart from the debts of the deceased are those of capital gains taxation. The abolition of death duties throughout Australia in recent times means that persons do stand to gain the land of their parents. The social impact of this situation merits examination and analysis. [8.20]  Once a person has died that person can no longer own land or anything else. The

person’s wishes as to future ownership may or may not be respected. With respect to land, the basic principle of the Torrens system is that title depends upon registration. In a sense the register of titles needs to be altered to transfer the deceased’s title. In most cases the occurrence of death without immediate alteration to the register causes only a theoretical awkwardness as to the analysis of ownership while procedures are carried out. However, in some instances these procedures are never put into operation. Times of economic decline or changes in the environmental conditions may lead to a parcel of land becoming worthless. Civil instability, such as wartime, may focus attention away from the land. In such cases, many years later, interest in ownership may be revived. The law may recognise claims based on possession and in all jurisdictions a possessor may seek a Torrens title where no claim is made on behalf of the apparent registered owner.9 If there is no possessor, someone seeking to acquire the land may have to instigate the administration of the estate of the person registered as owner and deal with that estate.10 5 6

7 8

9

10

The life estate is explained at [2.135]. Probate and Administration Act 1898 (NSW), s 44; Administration and Probate Act 1958 (Vic), s 13; Succession Act 1981 (Qld), s 45; Administration and Probate Act 1919 (SA), s 46; Administration Act 1903 (WA), s 8; Administration and Probate Act 1935 (Tas), s 4; Administration and Probate Act 1929 (ACT), s 39; Administration and Probate Act (NT), s 52. Re Beavis; Beavis v Beavis (1906) 7 SR (NSW) 66; Re Campion [1908] SALR 1; In the Will of Malin [1912] VLR 259; Barrett v Barrett (1918) 18 SR (NSW) 637. Succession Act 2006 (NSW), Ch 3; Administration and Probate Act 1958 (Vic), Pt IV; Succession Act 1981 (Qld), Pt IV; Inheritance (Family Provision) Act 1972 (SA); Inheritance (Family and Dependents Provisions) Act 1972 (WA); Testator’s Family Maintenance Act 1912 (Tas); Family Provision Act 1969 (ACT); Family Provision Act (NT). In Victoria, Western Australia and Tasmania the adverse possessor is protected even against the registered proprietor: Transfer of Land Act 1958 (Vic), s 42(2)(b); Transfer of Land Act 1893 (WA), s 68; Land Titles Act 1980 (Tas), s 117. In New South Wales, Queensland and South Australia the adverse possessor may apply for a registered title: Real Property Act 1900 (NSW), Pt 6A; Land Title Act 1994 (Qld), s 99; Real Property Act 1886 (SA), Pt VIIA. In the Australian Capital Territory and the Northern Territory title cannot be lost by adverse possession; Land Titles Act 1925 (ACT); Limitation Act 1985 (ACT), s 5(a); Land Title Act (NT), s 198. Compare Spark v Meers [1971] 2 NSWLR 1. [8.20]  455

PART 3 Dealings in Land

GIFTS AND WILLS Proprietary effect of gifts [8.25] A transaction without consideration would not be enforced in equity, although a

voluntary deed would create personal obligations at common law. However, once executed, that transaction cannot be revoked simply because it was without consideration. A perfected gift thus passes a proprietary interest. What equity does not enforce is the expression of intention to make a gift. The essential question with respect to a transaction without consideration is what steps are necessary to complete that transaction. In relation to a legal transfer of land at common law the maxim “signed, sealed and delivered” applies: the transferor must execute and hand over a deed of transfer. Under the Torrens system, the requirement of registration means that the documents must be lodged with and acted upon by the Land Titles Office. Similarly, a transfer of equitable property could be effected by a dealing without consideration. An equitable interest in land could be transferred by a written document (the writing being required by the Statute of Frauds); a trust could similarly be declared by a written document.11

Proprietary effect of wills [8.30] The transfer of an interest in land on death by will is similar to a gift, in that the

beneficiaries do not provide consideration for their interests. Traditionally wills have required formality. Different rules applied to wills with respect to freehold land and those with respect to other property. In England in 1837 a uniform rule was established: signature by the testator in the presence of two witnesses who must also sign the document.12 Even at common law some exceptions to the formalities were recognised, for example, in the case of soldiers on active duty.13 Recently several jurisdictions have experimented with the relaxation of the formal requirements.14 Once a will has been properly executed and is not revoked, it is given legal recognition on the death of its maker. Until death, a will has no operation and named beneficiaries have only a potential interest or expectancy, they do not have even a contingent interest in the property. Even after death their interest may be displaced by the prior claims of creditors of the deceased. [8.35] Under the Torrens system, a legal interest will only pass on registration. The first

transfer is not to the beneficiaries, but to the person responsible for the management of the deceased estate. This position applies whether or not there is a valid will. Except in New South Wales and Queensland, the Torrens system statutes provide that the estate of a registered proprietor shall on death be transmitted to the executor, administrator or Public Trustee and 11

12 13 14

Conveyancing Act 1919 (NSW), ss 23C, 23D, 23E; Property Law Act 1958 (Vic), ss 53–​55; Property Law Act 1974 (Qld), ss 11, 12; Law of Property Act 1936 (SA), ss 29–​31; Property Law Act 1969 (WA), ss 34–​36; Conveyancing and Law of Property Act 1884 (Tas), s 60; Civil Law (Property) Act 2006 (ACT), s 201(2); Law of Property Act (NT), ss 9–​11. Wills Act 1837 (UK), s 3. See Haines, Succession Law in South Australia (LexisNexis Butterworths, Sydney, 2003), Chs 7 and 8. Succession Act 2006 (NSW), s 8; Succession Act 1981 (Qld), s 9; Wills Act 1936 (SA), s 12(2); Wills Act Amendment Act 1987 (WA), s 9. See Palk, “Informal Wills: From Soldiers to Citizens” (1976) 5 Adel L Rev 382; Lang, “Formality v Intention –​Wills in an Australian Supermarket” (1985) 15 MULR 82.

456 [8.25]

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that party is directed to make application to become the registered proprietor.15 When entry of title is made, that title is expressed in three jurisdictions to relate back to and take effect from the date of death.16 The interest of a beneficiary under a will, and apparently that of a relative entitled on intestacy is, on the death of the former registered proprietor, an equitable interest in that land17 which should be sufficient to support a caveat. The person may apply for an order for the transfer of land by the executor, administrator or Public Trustee. In New South Wales the person entitled under a will may apply for a direct transfer to him or her without intervening registration of the personal representative.18 In Queensland the personal representative may apply to become registered, or with the consent of the personal representative a beneficiary may apply to become registered without registration of the personal representative.19 [8.40]  The rights of a remainderman after a life tenant or of a co-​owner holding an interest

as a joint proprietor derive from the instrument creating the successive interests or the co-​ ownership. These interests cannot be affected by any purported disposition on death by the life tenant or joint owner. In the case of the Torrens system the successive interests or the co-​ownership may be registered. On death, the remainderman or surviving co-​owner should establish the fact of death to the satisfaction of the Registrar of Titles and an appropriate entry is then made in the register.20

Gifts and equitable intervention [8.45]  Once executed, a voluntary transaction is as effective in equity as at law. A transaction

with consideration may be effective in equity despite failure to complete all formalities necessary at law. For voluntary transactions the issue arises whether a transaction may be effective in equity prior to completion of formalities necessary at law. The standard starting point for analysis of the equitable approach to transactions without consideration is that of Turner LJ in Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185 at 274 (De GF & J), 1189 (ER): I take the law of this court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him. He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provisions will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of a settlement, or declares that he holds out in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order

15 16 17 18 19 20

Transfer of Land Act 1958 (Vic), s 49; Real Property Act 1886 (SA), ss 176–​178; Transfer of Land Act 1893 (WA), s 187 Land Titles Act 1980 (Tas), s 99; Land Titles Act 1925 (ACT), s 135. Transfer of Land Act 1958 (Vic), s 49; Real Property Act 1886 (SA), s 178; Transfer of Land Act 1893 (WA), s 187. Re Beavis; Beavis v Beavis (1906) 7 SR (NSW) 66; Re Campion [1908] SALR 1; In the Will of Malin [1912] VLR 259; Barrett v Barrett (1918) 18 SR (NSW) 637. Real Property Act 1900 (NSW), s 93. Compare Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 203–​213. Land Title Act 1994 (Qld), ss 111, 112. Transfer of Land Act 1958 (Vic), s 50; Real Property Act 1900 (NSW), s 101; Real Property Act 1886 (SA), s 188; Transfer of Land Act 1893 (WA), s 227; Land Titles Act 1980 (Tas), s 100; Land Titles Act 1925 (ACT), s 55. There appears to be no corresponding provision in Queensland or the Northern Territory. [8.45]  457

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to render the settlement binding, one or other of these modes must, as I understand the law of this court, be resorted to, for there is no equity in this court to perfect an imperfect gift.

Applied strictly, this passage would provide a relatively simple means of analysing dealings without consideration. There must be a transfer of the property to the desired donee or to a trustee for that donee or a declaration of a trust. Importantly, equity will not attempt to give effect to the settlor’s intention by treating an incomplete transfer as a declaration of trust. The temptation to implement intention in this way occurs because a complete transfer of a legal interest requires the execution of a deed and, in the case of the Torrens system, registration of the memorandum of transfer, whereas a trust can be declared by writing. However, while the settlor’s intention is to confer a benefit upon another, it is often clear that the intended means of implementing this beneficence is a transfer of the complete legal interest. At the same time it is possible to declare an immediate trust with the intention of subsequently transferring legal title. Furthermore, a settlor may only have an equitable interest, in which case an equitable transfer in writing is all that is possible for the transfer of that interest. It is possible that a legal owner intends to deal only with the equitable interest, but this action is indistinguishable from a declaration of trust, which is a transfer of the equitable title without transfer of the legal title. [8.50]  A transfer of property may require some formality, but that formality may be something

which can be effected only by actions of the transferor. A conveyance of land under the general law requires the execution and handing over of a deed –​acts that can be performed only by the transferor. In such cases the sole issue arising from the absence of the formality is whether a court is prepared to give effect to a less formal act as sufficient for an equitable dealing. In the case of land under the general law a writing not constituting a deed may be the basis of a claim as to the declaration of a trust. However, where the transfer involves a series of steps of which only some are within the exclusive power of the transferor, issues arise as to what may be done once the steps within the exclusive power of the transferor have been completed. The transfer of land under the Torrens system is a typical example of this transfer process. The transferor must execute a memorandum of transfer and normally hands it and the duplicate certificate of title to the transferee. Normally the transferee takes the documents to the Land Titles Office to have them registered. In the case of a sale the purchaser exchanges the purchase price for the documents and bears the costs associated with transfer. In the case of a gift the transferor may carry out these steps himself or herself. But if the documents are handed over to the intended transferee, no legal title has passed, but the transferee seems to be in a position to secure that legal title. If at this point the transferor has a change of mind, the transferor has no apparent power to prevent the transferee from completing the gift. The death of the transferor may affect the position in that the document of transfer may not be effective after death.21 The issues were considered by the High Court in Brunker v Perpetual Trustee Company (1937) 57 CLR 555. Robert Sellar had been the registered proprietor of a piece of land subject to a mortgage. Arthur Fuller was a friend of Robert Sellar and by occupation a law stationer. Bessie Brunker was a housekeeper for Robert Sellar. The day before his death Robert Sellar signed a transfer of the land to Bessie Brunker. This transfer was handed to Arthur Fuller. Subsequently Arthur Fuller handed the transfer to Bessie Brunker’s solicitor who entered

21

A point suggested by Kitto and McTiernan JJ in Cope v Keene (1968) 118 CLR 1 at 7.

458 [8.50]

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particulars of the mortgage on it. Robert Sellar’s executor entered a caveat against registration of the transfer and brought an action to have the transfer declared to be void. In the dissenting judgment Latham CJ first stated the principle that equity would do nothing to perfect an imperfect gift and, secondly, his conclusion that the execution and delivery of the transfer (if there was a delivery) did not give Bessie Brunker any estate in the land, legal or equitable. However, he pointed out that she had possession of an executed transfer and was prima facie entitled to attempt to procure registration. The principle that equity would not assist a volunteer only applied if the donee was seeking assistance. On the other hand, a person who has made a gift cannot recall it simply because it is a gift. The addition of the reference to the mortgage was not an unauthorised material alteration as the alteration only expressed the effect of the transfer as it originally stood. The possession of the duplicate certificate of title by the mortgagee was not decisive as the Registrar of Titles could require its production. Bessie Brunker was, therefore, entitled to attempt to register the document which she had in her possession. On the other hand, Dixon J considered that while the intended donee was the owner of neither a legal nor an equitable estate in the land, the Torrens system allowed a volunteer to acquire an indefeasible right to registration of an instrument in that person’s favour. This was a right of a new description arising under the statute. However, the existence of this right required more than the mere execution of the transfer by the donor. Dixon J inclined to the view that a person did not require a right to obtain registration without the duplicate certificate of title. But he held that Bessie Brunker certainly had no such right, first, because possession of the transfer was held by Arthur Fuller as bailee for Robert Sellar and his authority to hold it was revoked by Sellar’s death and, secondly, because the instrument at Sellar’s death was not in registrable form because it did not contain a memorandum referring to the mortgage. McTiernan J agreed that Arthur Fuller’s possession was as bailee for Robert Sellar. The Torrens system statutes in Queensland, South Australia and the Northern Territory do state that an unregistered instrument signed by the registered proprietor confers upon the intended transferee a right or claim to registration. Nonetheless, there is much attraction to Latham CJ’s approach that the donee is in a position where the donee might or might not complete the gift, but the courts will neither assist or prevent the donee from taking any legal steps desired. [8.55]  One point upon which the judgments in Brunker v Perpetual Trustee Company (1937)

57 CLR 555 are unanimous is that Bessie Brunker may have had the right to registration, but did not have a legal or equitable interest in the land. The transfer of Torrens system land has not been the sole situation where only some of the steps in the process of transfer are within the exclusive power of the transferor. Any property for which title depends upon registration will present a similar situation. Thus, the question whether a transaction without consideration has any effect in equity has arisen in other contexts. The courts have seised upon the words in Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185 (see [8.45]) that the settlor must have done everything which according to the nature of the property was necessary to be done. It is difficult to read these words as propounding any independent property effect; rather, they appear to introduce the succeeding sentence whereby either property is transferred or a trust declared. Nonetheless, courts have said that an equitable interest passes when the transferor has done all that must be done by the transferor. This approach was advanced by the High Court in 1907 in Anning v Anning (1907) 4 CLR 1049, a case involving dealings with a range of types of property. Griffith CJ stated that a [8.55]  459

PART 3 Dealings in Land

gift is complete when all that remains to be done can be done by the donee himself. Higgins J stated that equity would compel completion of a gift where the donor had done all that was in the donor’s power to do. Isaacs J held to the stricter interpretation of Milroy v Lord, that where property was transferable at law, equity would not intervene if the transfer was not complete at law. Subsequently the English Court of Appeal in Re Rose [1952] Ch 499 held that a purported gift of shares would be complete in equity when the donor had done all that was necessary for the donor to do. Kitto J in Cope v Keene (1968) 118 CLR 122 seems to have accepted this equitable transfer theory in the case of Torrens system land, but cites the judgment of Dixon J in Brunker as authority for the proposition. [8.60]  The approach of Griffith CJ in Anning v Anning (1907) 4 CLR 1049 and of the courts

in relation to assignments of choses in action has now been adopted by the Australian High Court in preference to the views in Brunker v Perpetual Trustee Company (1937) 57 CLR 555, and particularly in preference to those of Dixon J in that case. In Corin v Patton (1990) 169 CLR 540; 92 ALR 1 the issue was whether a joint tenancy had been severed. One of the ways23 in which severance was claimed to have occurred was by way of an assignment of the interest in equity. Again, a signed instrument of transfer was handed to a third party, but the duplicate certificate of title remained with a mortgagee without an authority being given to the mortgagee to hand over the certificate for the purpose of completing the transfer. In this event the court held that the purported donor had retained the means to thwart the transfer and that, therefore, the gift was incomplete in equity. Nonetheless, the High Court held that where a donor has done all that is necessary to be done by the donor to complete the gift, the donee acquires an equitable estate or interest in the subject matter of the gift. The court argued that once the transaction was complete so far as the donor was concerned the donor should have no opportunity to call back the gift. The approach was said to give effect to the clear intention and actions of the donor, rather than insisting on strict compliance with legal forms. The result was consistent with the statutory statement that under the Torrens system an instrument passes an interest only on registration on the basis that the equitable rights flowed from the dealing between the parties.

CONTRACTS AND TRANSFERS The land transfer process [8.65] A contract for the sale of land is subject to the general rules of the law of contract

which control such matters as the capacity of the parties to make a contract, the degree of finality and essential contents before a contract is regarded as concluded and the consequences of deliberate deceit by one party. Contracts for the sale of land were regarded as more serious than most other contracts and this approach affected required formalities, the impact of non-​ deliberate misrepresentation and the duties of inquiry by a purchaser.

22

23

See also Re Ward; Gillet v Ward [1968] WAR 33; Taylor v Deputy Federal Commissioner of Taxation (1969) 123 CLR 206; Seddon, “Imperfect Gifts of Torrens Title Land” (1974) ALJ 13; Halliwell, “Perfecting Imperfect Gifts and Trusts; Have We Reached the End of the Chancellor’s Foot” [2003] Conv 192. The means whereby a joint tenancy can be severed (converted into a tenancy in common) are discussed at [12.320]ff.

460 [8.60]

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While a number of contracts were required by the Statute of Frauds of 1667 to be evidenced in writing, today the significant contract that is still subject to these restrictions is that for the sale of land. The traditional provision states: No action shall be brought upon any contract for the sale or other disposition of land or of any interest in land, unless an agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some person thereunto by him lawfully authorised.24

This provision is one which relates to the enforceability of agreements and requires not a written agreement, but a memorandum signed by the party against whom enforcement is sought. Moreover, the doctrine of part performance allows the enforcement of some unwritten contracts. The scope of the Statute of Frauds and the doctrine of part performance are examined at [8.150]ff. [8.70]  Contracts for the sale of land are commonly brought into existence by an exchange of

documents. In Eccles v Bryant [1948] Ch 93 Lord Greene MR pointed out that in many cases the practice was that the exchange of contracts was the vital fact which brought a contract for the sale of land into existence. Though the parties might have agreed in writing that land is sold for a specified price, where this practice applies, it is presumed that no binding contract exists until contracts are exchanged. In some jurisdictions in Australia this method of performance of the contract is in force. In fact these views are consistent with conveyancing practice in New South Wales. In Khan v Khan (2004) 62 NSWLR 229, Barrett stated at 244: Where parties have agreed a price and general terms for the sale and purchase of land and proceed in the normal way towards an exchange of contracts according to ordinary and usual conveyancing practice, the expectation that they do not intend to enter into any legally binding oral agreement in advance of exchange of contracts is particularly strong.

In Queensland two identical copies of the contract are prepared and delivered to the purchaser for signature. After the purchaser has executed both copies, they are delivered to the vendor for the vendor’s signature. Each copy is an entire document and the contract comes into existence at the point of time when the vendor communicates the fact of his, her or its execution to the purchaser.25 On the other hand, in Encino Plaza Pty Ltd v Wilson International Pty Ltd [1988] V ConvR 54-​308 Ormiston J questioned the accuracy of these statements and stated that there was no authority for them in Victoria. In Roy v Waterton [1989] V ConvR 54-​334 Tadgell  J stated that the manner in which the parties become bound depended upon their intention and if exchange was intended, then that was the manner in which the contract was to be completed. However, in Victoria today the practice of exchange of contracts has fallen into disuse and the contract is normally concluded by the parties executing the Real Estate Institute of Victoria Common Form of Contract. [8.75] A seller of land is required to provide good title to that land,26 but, conversely, a

person who disparages that title commits the tort of slander of title. In Young v Owners of 24

5 2 26

Conveyancing Act 1919 (NSW), s 54A; Instruments Act 1958 (Vic), s 126; Property Law Act 1974 (Qld), s 59; Law of Property Act 1936 (SA), s 26; Conveyancing and Law of Property Act 1884 (Tas), s 36; Civil Law (Property) Act 2006 (ACT), s 204; Law of Property Act (NT), s 62. The original statute remains in force in Western Australia (as amended by the Law Reform (Statute of Frauds) Act 1962 (WA)). The statute has been held to apply to Torrens system land: Wallis v Moreton (1932) 32 SR (NSW) 659. Duncan and Jones, The Sale of Land in Queensland (4th ed, Law Book Co, Sydney, 1996), p 69. The seller’s common law obligations and additional statutory requirements are discussed at [8.275]ff. [8.75]  461

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Strata Plan 3529 [2001] NSWSC 1135 the sale of a strata unit was postponed because of a claim that a strata by-​law would take away the right to use a swimming pool on the common property. The court held that to constitute slander of title, a claim had to be false, be published and disparage the plaintiff’s title and cause special damage to the plaintiff. All these elements except malice were made out; the claim was made under the belief that the by-​law could be made. [8.80]  Apart from remedies for fraud, the remedy of rescission was developed by courts of

equity with respect to innocent misrepresentation. However, one of the bars to the remedy was that the contract was executed. A contract for the sale of land was regarded as executed once legal title vested in the transferee.27 Moreover, the remedy of rescission was the only remedy for innocent misrepresentation. Some of the equitable rules have been modified by statute, but a significant change has been wrought by the Australian Consumer Law (ACL)28 and the State and Territory Fair Trading Acts.29 Under s 31 of the ACL and the equivalent provisions of the Fair Trading Acts, it is an offence to make false or misleading representations, in trade or commerce, in connection with the sale or grant of an interest in land. This prohibition does not require intention or negligence. Consequently, while in Young v Owners of Strata Plan 3529 [2001] NSWSC 1135, a claim for slander of title failed for lack of malice, a claim under the Fair Trading Act 1987 (NSW) succeeded because intention or negligence is irrelevant. Breach of s 31 of the ACL has civil consequences in that any person who suffers loss or damage by conduct in contravention of the section may recover the amount of the loss or damage,30 or may apply to the court, which may make such orders as it considers appropriate:31 see [9.25]. Today, therefore, a misrepresentation in relation to the sale of an interest in land may give rise to an action in damages under these provisions or an appropriate order may amount in effect to rescission or some other remedy. Many sellers of land are persons who acquired the land for its use, rather than for the purpose of dealing in the land. Such a private seller of land would not ordinarily be subject to trade practices or fair trading liability. The legislation is confined to representations in trade or commerce. However, the private seller commonly employs an agent who is in business and any representations are likely to be made by the agent whose actions are subject to the statutes. Relevant reported decisions involving actions under the sections have been most common with respect to statements by developers of shopping centres.32 In these cases the interest involved is a leasehold interest. The consequence of the statutes has been to expand markedly the remedies available to the purchaser –​particularly in that completion of the contract is no longer a significant barrier.

27 8 2 29

30 31 32

This result follows from the rule in Seddon v North Eastern Salt Co Ltd [1905] 1 Ch 326. See Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), pp 410–​413. The scope of this legislation is explained at [9.45]ff. Fair Trading Act 1987 (NSW); Fair Trading Act 1999 (Vic); Fair Trading Act 1989 (Qld); Fair Trading Act 1987 (SA); Fair Trading Act 1987 (WA); Fair Trading Act 1990 (Tas); Fair Trading Act 1992 (ACT); Consumer Affairs and Fair Trading Act (NT). Australian Consumer Law, s 237. Australian Consumer Law, s 243. The leading cases are Henville v Walker (2001) 206 CLR 459 and Mister Figgins Pty Ltd v Centrepoint Freeholds Pty Ltd (1981) 36 ALR 23. See also Pavick v Bobra Nominees Pty Ltd (1988) ASC 55-​684; Munchies Management Pty Ltd v Belperio (1989) ASC 40-​926.

462 [8.80]

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[8.85]  The principle of caveat emptor has been applied with especial rigour to purchasers of

interests in land. From the mid-​19th century, the common law developed implied terms by which the seller of goods gave guarantees to the purchaser –​these terms became the implied conditions of merchantable quality and fitness for purpose of the Sale of Goods Acts. The root of modern negligence law, Donoghue v Stevenson [1932] AC 562, involved duties of care upon a seller of goods. No implied contractual terms as to the quality of premises have developed at common law even in relation to leases of flats, where the condition of the premises could not be discovered by a purchaser of a leasehold interest and was beyond that purchaser’s power to take corrective action.33 The courts stated that there was no law against letting a tumble-​down house.34 This doctrine was finally laid to rest by the High Court in Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313. Similarly, the existence of a duty of care by a seller of a freehold interest in land to the buyer was denied even when that seller was the builder.35 The absence of a duty of care was applied to excuse the seller of a leasehold interest who failed to block the gas after removing a gas heater.36 The existence of a duty of care between a landlord and a tenant and persons lawfully on the premises was proclaimed by the High Court in Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313. In that case a duty of care by a landlord was held to have been breached where a tenant’s son was electrocuted by improperly earthed electrical wiring. Subsequently in Jones v Bartlett (2000) 205 CLR 166 the High Court affirmed the existence of a duty of care between landlords and occupants but stressed that the duty was not absolute. In that case a son of the tenants injured himself by putting his knee through a glass door in the rented premises. The claim of negligence was based on a lack of laminating or other strengthening of the glass. The glass met the Australian standard applicable at the time of construction of the house but not that at the time of injury. The High Court stated that there is no such thing as absolute safety. Safety had to be balanced against factors including cost, convenience, aesthetics and practicality. A  requirement of an expert safety assessment of the premises at the time of granting the lease went beyond what could be expected. Statutory obligations to maintain premises in a habitable condition were imposed by slum control legislation of the 1930s and today residential tenancies legislation requires premises to be maintained in a reasonable state of repair.37 A duty of care has been imposed upon builders, architects and building supervisors in respect of buildings and is owed even by a builder/​seller of a freehold interest to a buyer.38 In some jurisdictions extensive disclosure must be made by

33

34 35 36 37 38

Cruse v Mount [1933] Ch 278. The only exception was in the case of furnished premises and there the implied condition was only as to the condition of the premises at the commencement of the lease: Smith v Marrable (1843) 11 M & W 5; 152 ER 693; Pampris v Thanos [1968] 1 NSWR 56 (this case is one where on the facts it would seem that a dangerous condition existed on commencement –​loose wiring –​which subsequently manifested itself –​electrocution of a member of tenant’s family). The landlord’s obligations to maintain residential premises in reasonable repair are analysed at [15.90]ff. Robbins v Jones (1863) 15 CB (NS) 221 at 240. Otto v Bolton [1936] 2 KB 46. Davis v Foots [1940] Ch 751. Bradbrook, MacCallum and Moore, Residential Tenancy Law and Practice –​Victoria and South Australia (Law Book Co, Sydney, 1983), pp 39–​40, 359–​419. Anns v Merton BC [1978] AC 728; Sutherland SC v Heyman (1985) 59 ALJR 564. [8.85]  463

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a prospective seller (see [8.285]) and further disclosure of non-​compliance with building codes and energy efficiency ratings is contemplated.39 [8.90]  Where a sale of an interest in land or other dealing is made in the course of business,

some responsibility is imposed on the seller by s 61 of the ACL. Under this section, the interest transferred must be reasonably fit for its purpose. Although expressed to apply to dealings by corporations, the section also applies to dealings by individuals as a result of the extended operation of the Australian Consumer Law prescribed by s 1 of the ACL. The application to sales of land and other land dealings flows from the definition of “services” in s 2 to include interests in land. Sales to persons who are themselves buying for the purposes of trade in the land are excluded from the operation of the section. Section 61 in its application to land dealings is likely to give additional impact to remedies for advertising claims such as “Walk in and enjoy relaxed living”. Such claims appear to suggest that the property is fit for immediate residential enjoyment. But the section may have greater impact in relation to grants of residential interests or interests in retirement villages. In these cases the enjoyment of the land is a more central focus of the dealing and reasonable enjoyment more central to the fitness for purpose of the grant of the interest. Section 61 provides a potential basis for attack on State or Territory laws which restrict rights of grantees, such as residential tenants or retirement village residents. The right of a residential tenant to redress for injury caused by structural defects is subject to the prior giving of notice of the defect to the landlord.40 Similarly, at least in some jurisdictions a retirement village administrator may be able to require that structural repair be done at the resident’s expense:  see [15.210]. The consistency of these laws with s  61 is at least arguable and, if there is real inconsistency, Commonwealth law will prevail. In Re Credit Tribunal (SA); ex parte GMAC (1977) 137 CLR 545 the High Court pointed out that although the Trade Practices Act 1974 remedies are expressed to be in addition to those of State or Territory laws, this expression allows multiple obligations, but not the derogation of any Trade Practices Act 1974 obligation. State or Territory laws are invalid where their operation is inconsistent with the provisions of the Trade Practices Act 1974; it is not necessary that they express any derogation from s 74. In Wallis v Downard Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 a provision of the Carriage of Goods by Land Act 1962 (Qld) imposed a condition on the liability of a carrier. This condition was struck down as inconsistent with the then s 74 of the Trade Practices Act 1974, which was the predecessor of s 61 of the ACL. [8.95]  Private sellers may have had no involvement in the building of any structures on the

land. There is no obvious superiority of knowledge or skill or commercial activity by which the seller should be taken to assume responsibility for the quality of the structures in relation to the buyer. No implied terms (excludable or otherwise) relating to the quality of structures are imposed in a contract for the sale of a freehold interest and no duty of care is owed towards the purchaser with respect to the structural safety of buildings on the land.41 [8.100] The process of the sale of land commonly involves a significant period between a

contract and completion of the sale. In the case of Torrens system land, completion involves

39 40 41

See Civil Law (Sale of Residential Property) Act 2003 (ACT), ss 22, 23. Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313. Bottomley v Bannister [1932] 1 KB 458. Some statutory obligations now exist: see [7.260].

464 [8.90]

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the registration of the purchaser as the proprietor of the fee simple estate. This space of time is primarily designed to allow the buyer to satisfy himself or herself that the seller has a good title to the land. The time period is also often allowed so that the buyer may arrange finance for the purchase. Completion then involves the grant of a mortgage to the provider of finance. The period also allows the seller to fulfil various statutory obligations as to the provision of information and includes a time for reconsideration (or cooling off) by the buyer. Although no promises as to the quality of premises are implied, the seller has an obligation to show and prove that the seller has a good title to the land contracted to be sold.42 If the seller cannot establish that the seller will be able to transfer a title free of all encumbrances except those disclosed in the contract, the buyer is under no obligation to complete the contract. In relation to the Torrens system, the buyer should search the register of title and be satisfied as to the seller’s identity, the description of the land and the absence of any interests affecting the land. The search of title is commonly one for which the buyer employs a legal practitioner. This employment is not compulsory and the task may be performed by the buyer personally. In recent times various “do-​it-​yourself” kits have been produced to assist such a buyer. However, the preparation of documents for the transfer of land is regarded as part of legal practice and may not be performed by someone who is not a qualified legal practitioner. The monopoly of the legal profession in relation to land transfer work has been seriously challenged in recent times. In South Australia the role has been shared between lawyers and land brokers since the introduction of the Torrens system. This South Australian practice does not, however, stem from any modern scheme to restrict the impact of licensing, but from the legal profession’s refusal to co-​operate with the introduction of the Torrens system.43 The profession refused to handle any dealings under the system: consequently another group –​land brokers –​were licenced to handle those dealings.

Formalities [8.105]  The Torrens system requires the registration of an instrument before any legal interest

may pass.44 Outside the Torrens system, a deed is required to pass a legal interest in land.45 In Queensland, the Australian Capital Territory and the Northern Territory a written instrument suffices.46 Furthermore, under the Statute of Frauds,47 a contract for the sale of an interest in land is unenforceable unless evidenced in writing; see [8.150].

42 43

44

45

46 47

Bell v Scott (1922) 30 CLR 387; Re Ridgeway and Smith’s Contract [1930] VLR 111; Re Roe and Eddy’s Contract [1933] VLR 427; see also [8.295]. See Pike, “Introduction of the Real Property Act in South Australia” (1961) 1 Adel L Rev 169 at 182. For a detailed analysis of the regulation of land brokers, see Moore, “Protection for Mortgage Investors” (1990) 13 UNSWLJ 118. Real Property Act 1900 (NSW), s 41; Transfer of Land Act 1958 (Vic), s 40(1); Land Title Act 1994 (Qld), s 181; Real Property Act 1886 (SA), s 67; Transfer of Land Act 1893 (WA), s 58; Land Titles Act 1980 (Tas), s 49(1); Land Titles Act 1925 (ACT), s 57; Land Title Act (NT), s 184. Conveyancing Act 1919 (NSW), ss 23B(1), 23D; Property Law Act 1958 (Vic), s 52(1); Law of Property Act 1936 (SA), s 28(1); Property Law Act 1969 (WA), s 33(1); Conveyancing and Law of Property Act 1884 (Tas), s 60(1). The application of these provisions to incorporeal hereditaments is a matter of some difficulty. Property Law Act 1974 (Qld), s 10(1); Civil Law (Property) Act 2006 (ACT), s 201; Law of Property Act (NT), s 9(1). Conveyancing Act 1919 (NSW), s 54A; Instruments Act 1958 (Vic), s 126; Property Law Act 1974 (Qld), s 59; Law of Property Act 1936 (SA), s 26; Conveyancing and Law of Property Act 1884 (Tas), s 36; Civil Law (Property) Act 2006 (ACT), s 204; Law of Property Act (NT), s 62. The original statute remains in force in Western Australia (as amended by the Law Reform (Statute of Frauds) Act 1962 (WA)). [8.105]  465

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In New South Wales, Victoria, South Australia, Western Australia and Tasmania where some land outside the Torrens system remains, a deed is still essential to pass a legal interest in land under the general law.48 Originally a deed was a document which was sealed and delivered. In the five jurisdictions a deed must now be signed.49 In addition, in New South Wales and Western Australia a deed must be attested by at least one witness not being a party to the deed.50 Sealing involves the placing on the document of some mark intended as a seal.51 Commonly a plain red wafer has been used but the courts have liberally accepted almost any impression inscribed on the document.52 In all States except Tasmania a document not sealed in the traditional sense may, in some circumstances, be deemed to be sealed. In New South Wales a document expressed to be an indenture or a deed or to be sealed, and signed and attested by one witness not a party to the deed, is deemed to be sealed.53 In Victoria a document signed and expressed to be sealed is deemed to be sealed.54 In Western Australia a deed does not have to be sealed –​it is enough that it is intended to be a deed.55 Delivery is constituted not by a physical handing over but by an act evincing an intention to be bound.56 If a party unilaterally reserves the right to recall or revoke a deed, there is no delivery.57 Delivery is no longer required in Western Australia.58 Delivery may not occur, for example, if a document is not intended to have effect until a formal exchange.59 Although delivery may occur then, delivery may be conditional or what is described as “in escrow”. Delivery in escrow occurs when the effectiveness of the deed depends on the occurrence of an event not referred to in the deed. Normally the deed is deposited with a third party pending the happening of the event. The condition upon which the deed is to take effect cannot be the grantor’s death60 and must be beyond the unilateral control of the grantor.61 [8.110] The requirement of registration for the passage of a legal interest under the Torrens

system means that both parties are commonly involved in the process of effecting a transfer. The transferor hands registrable documents (an executed memorandum of transfer together with the duplicate certificate of title) to the transferee. Securing the registration is then a matter for the transferee, who is at risk so long as the documents are not lodged for registration, in that

48 49 50 51 52 53 54 55 56 57 58

59 60 61

Conveyancing Act 1919 (NSW), ss 23B(1), 23D; Property Law Act 1958 (Vic), s 52(1); Law of Property Act 1936 (SA), s 28(1); Property Law Act 1969 (WA), s 33(1); Conveyancing and Law of Property Act 1884 (Tas), s 60(1). Conveyancing Act 1919 (NSW), s 38; Property Law Act 1958 (Vic), s 73; Law of Property Act 1936 (SA), s 41; Property Law Act 1969 (WA), s 9(1)(c); Conveyancing and Law of Property Act 1884 (Tas), s 63. Conveyancing Act 1919 (NSW), s 38(1); Property Law Act 1969 (WA), s 9(1)(b). Re Sandilands (1871) LR 6 CP 411. First National Securities Ltd v Jones [1978] 2 WLR 475; cf Vann, “To Deed or Not to Deed” (1980) 54 ALJ 424. Conveyancing Act 1919 (NSW), s 38. Property Law Act 1958 (Vic), s 73A. Property Law Act 1969 (WA), s 9(2). Xenos v Wickham (1867) LR 2 HL 296. Beesly v Hallwood Estates Ltd [1961] 1 Ch 105. Property Law Act 1969 (WA), s 9(3). The rules on delivery have also been changed in South Australia by s 41AA of the Law of Property Act 1936 (SA), but these rules are not relevant for current purposes because of the absence of general law land. Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109. Foundling Hospital (Governors and Guardians) v Crane [1911] 2 KB 367. Beesly v Hallwood Estates Ltd [1961] 1 Ch 105.

466 [8.110]

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someone else could lodge documents for registration. Priority depends upon the time of lodgment of documents, rather than the time of execution of the documents,62 so that the transferee is at risk from an undisclosed prior document or a later but more speedily lodged document. The priority according to the timing of lodging rule does eliminate any risk from quirks within the Land Titles Office. At the time the documents are handed over the transferee does not have legal title but is in a position to secure for himself or herself that legal title. The Real Property Act 1886 (SA) describes the transferee at this point as having a right to registration.63 Whether this right changes the position resulting from the law of sale or gifts is considered at [8.50]. A registered document under the Torrens system is deemed to be a deed64 and thus property rules as to implications from the execution of a deed apply to the registration of a transfer. However, a deed does not suffice to transfer an interest under the Torrens system. Under the common law, a deed has special significance in that a transaction expressed in a deed is enforceable whether or not there is consideration;65 this significance did not, however, attach in equity. With respect to Torrens system lands a deed will still create, at common law, binding personal obligations in the absence of consideration, but it will not have any proprietary effect because of the need for registration to pass legal title and the need for consideration to pass any equitable interest. The Torrens system does recognise some situations where registration is not required. Short-​term leases are exempt in all jurisdictions from the requirement of registration and the interests of tenants in possession are protected against subsequent registered proprietors.66 In most jurisdictions easements are recognised as arising by implication from a transfer67 and in most jurisdictions from a course of conduct over a period of time.68 In most jurisdictions a person in possession adversely to the registered proprietor for a period of 12 years is regarded as obtaining a title to the land.69 These rights are not registered but are recognised by statute

62

63 64

5 6 66

67

68

69

Real Property Act 1900 (NSW), ss 36(5), (9); Transfer of Land Act 1958 (Vic), s 34(1); Land Title Act 1994 (Qld), s 12; Real Property Act 1886 (SA), s 56; Transfer of Land Act 1893 (WA), s 53; Land Titles Act 1980 (Tas), s 48. See also Farrier-​Wamak Ltd v Bank of New Zealand [1965] AC 376. Real Property Act 1886 (SA), s 246. The position in Queensland and the Northern Territory is similar. Real Property Act 1900 (NSW), s 36(11); Transfer of Land Act 1958 (Vic), s 40(2); Land Title Act 1994 (Qld), s 161; Real Property Act 1886 (SA), s 57; Transfer of Land Act 1893 (WA), s 85; Land Titles Act 1980 (Tas), s 48(7); Land Titles Act 1925 (ACT), s 48(8); Land Title Act (NT), s 179. See Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), p 140. Real Property Act 1900 (NSW), s 42(1)(d); Transfer of Land Act 1958 (Vic), s 42(2)(e); Land Title Act 1994 (Qld), s 185(1)(b); Real Property Act 1886 (SA), s 69VIII; Transfer of Land Act 1893 (WA), s 68; Land Titles Act 1980 (Tas), s 40(3)(d); Land Titles Act 1925 (ACT), s 58(1)(d); Land Title Act (NT), s 189(1)(b). The acquisition of an easement by this means in respect of land under the Torrens system in New South Wales was denied in Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738 and that denial has been given added strength by the decision in Williams v State Transit Authority (2004) 60 NSWLR 280; see also [17.185] and Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 863–​865. The position in Queensland is also doubtful: see Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), pp 737–​737, 740–​741. The acquisition of an easement by this means in respect of land under the Torrens system in New South Wales was denied in Dewhirst v Edwards [1983] 1 NSWLR 34 and that view was adopted by the New South Wales Court of Appeal in Williams v State Transit Authority (2004) 60 NSWLR 280 from which decision leave to appeal was denied by the High Court: see [17.205] and Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 865–​867. In South Australia acquisition of an easement by prescription or long user was denied in Anthony v Commonwealth (1973) 47 ALJR 83 but allowed in Golding v Tanner (1991) 56 SASR 482, at least so long as there was no subsequent good faith registered proprietor. The protection for claims based on adverse possession is discussed in detail in Ch 3. [8.110]  467

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and not the result of equitable doctrine and are enforceable against all third parties. It is, therefore, probably accurate to describe these rights as legal interests, even though the general tendency is to equate registered with legal interests and unregistered with equitable interests.70 [8.115]  The Torrens system statutes deny any proprietary effect to documents until registration.

The High Court recognised that equitable interests flowed from unregistered transactions.71 There was a division of opinion72 as to whether this result flowed from an implied exception within the Torrens system statutes themselves or because equitable interests were created by the transaction, not the document, the document being the thing denied proprietary effect. Both rationalisations appear sound. The caveat system in particular has no meaning unless unregistered dealings create equitable interests and the theoretical position that equitable rights stem from the transaction not the document is strongly supported. [8.120]  The enforceability of a contract is significant both for the capacity to take legal action

and as an element towards equitable proprietary interests. Even though unenforceable, a contract not sufficiently evidenced to satisfy the Statute of Frauds remains valid and a justification for actions by parties in performance of that contract. To satisfy the statute not all the terms of the contract must be set out in writing, but only the essential elements –​a description of the land, identification of the parties and a statement of the transaction.73 Separate documents may be read together so long as there is some cross-​reference between them.74 Signature involves some mark of the party against whom the contract is to be enforced.75 In ANZ Banking Group Ltd v Widin (1990) 26 FCR 1; 102 ALR 289 a bank sought to enforce a mortgage document which did not contain any title details. Hill  J in the Federal Court held that details of the land as the subject matter of the mortgage had to be included in the document signed by the party against whom the document was sought to be enforced. Where express reference was made to another document, the two documents could be read together. The bank sought to incorporate diary notes of a bank manager in relation to the transaction. However, the notes could only be related to the mortgage document by oral evidence and such evidence was not permissible. Hill J recognised a division of views as to whether oral evidence was permissible to clarify an ambiguity as to what document was referred to in the signed document, but in the case before him there was no reference to any document without the oral evidence.

Proprietary effects of contracts [8.125] A contract for the sale of land confers more than common law contractual rights,

the contract is specifically enforceable in equity and those equitable rights are an interest in land. The equitable rights arise on the making of the contract whereas in terms of the express

70 71 72 73 74 75

See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 21–​23. Barry v Heider (1914) 19 CLR 197. Between Griffith CJ and Isaacs J in Barry v Heider (1914) 19 CLR 197. See also Chan v Cresdon Pty Ltd (1989) 168 CLR 242; 89 ALR 522. Toogood v Mills (1896) 23 VLR 106; see Voumard, The Sale of Land in Victoria (5th ed, Law Book Co, Sydney, 1996), pp 84–​91. Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd [1997] SASC 6391; Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302; cf Thomson v McInnes (1911) 12 CLR 562. Clohesy v Maher (1880) 6 VLR (L) 357.

468 [8.115]

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intention of the parties, the proprietary dealing occurs upon the transfer of legal title, the declaration of a trust or the transfer by an equitable owner of an equitable interest. This creation of equitable rights is known as the doctrine of conversion. The scope of the doctrine of conversion has recently been reviewed by the High Court in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. The issue before the court was whether relief against forfeiture should be granted to a purchaser in default in payment on time. The payment was only a day late, but the contract stated that time was of the essence. In the course of consideration of forfeiture the nature of the purchaser’s interest as the thing subject to forfeiture was examined. The court stated that the vendor had the right to say “pay me the purchase money or lose the estate”. The purchaser was considered to acquire beneficial ownership only to an extent. Analogies drawn over a century ago with the trust and mortgage were stated to be “no longer accepted”. The interest of the purchaser was said to be commensurate with the availability of specific performance. The court rejected the view that the purchaser was like a mortgagor with the consequence that failure to complete on the due date would never debar the intervention of equity to order specific performance. A purchaser could not insist upon specific performance where the purchaser was in serious breach of the purchaser’s obligations. Loss of specific performance was differentiated from the ability to recover payments made. The purchaser had a lien to recover part payments and amounts in excess of a reasonable deposit. This recovery was more a protection against penalty clauses. In the result forfeiture was allowed to stand. [8.130]  A more extreme scope for the doctrine of conversion had been expressed in the late

19th century as part of what may be seen as an overstatement of the impact of the Judicature Acts. In particular Jessell MR in Lysaght v Edwards (1876) 2 Ch D 499 stated that the moment you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase-​money, a charge or lien on the estate for the security of that purchase money, and a right to retain possession of the estate until the purchase money is paid. After Tanwar the interest of a purchaser prior to the time for completion seems more like an equitable lien for recovery of payments made than a full equitable interest.76 Following the decision in Lysaght v Edwards (1876) 2 Ch D 499 doctrine of conversion was recognised as having a number of effects. Fundamentally the vendor becomes a trustee of the vendor’s interest for the purchaser. The contract creates an equitable proprietary interest vested in the purchaser. Because the purchaser is regarded as the equitable owner, the property is regarded as at the risk of the purchaser so that if in any way it is accidentally damaged the loss falls on the purchaser.77 The purchaser has the responsibility of taking out insurance if protection against loss is desired.78 The doctrine means that the purchaser’s rights under the contract are proprietary rights. The contract thus survives the death of either party. The vendor’s interest is characterised as personalty (a right to payment), whereas the purchaser’s

76 77

78

In Golden Mile Property Investments Pty Ltd v Cudgegong Australia Pty Ltd [2015] NSWCA 100, the New South Wales Court of appeal indicated that the doctrine of a trust relationship had “fallen out of favour”. The position has been changed by statute in New South Wales so that risk, prima facie, does not pass until the transaction is completed: Conveyancing Act 1919 (NSW), ss 66J–​66O; Lukies v Reply (1994) 6 BPR 13, 471. In Victoria and Queensland where property has been significantly damaged the purchaser is given a right to rescind: Sale of Land Act 1962 (Vic), ss 34–​40; Property Law Act 1974 (Qld), s 64. The benefit of an insurance of the vendor does not flow to the purchaser: Ziel Nominees Pty Ltd v VACC Insurance Co Ltd (1975) 180 CLR 173. [8.130]  469

PART 3 Dealings in Land

interest is realty (the land). Consequently, on the death of either party the devolution of that party’s interest will reflect this characterisation so that if a will provides for the testator’s realty to go to one person and personalty to another, an interest as a purchaser would pass to the first person, and one as a vendor would pass to the second. Because the purchaser becomes the beneficial owner a trust relationship arises between vendor and purchaser and the parties’ rights and remedies reflect this relationship. Any attempted transfer of the legal estate by the vendor will be restrained. Whilst the High court’s decision in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 restricts the extent of the purchaser’s equitable interest, these other consequences have become firmly entrenched. [8.135]  The doctrine of conversion is connected with the equitable maxim that equity treats

as done that which ought to be done. However, this maxim does not explain why equity should intervene when a later formal transfer is intended and the parties are working towards the passage of the legal proprietary interest at that time. The absence of an intended legal dealing does gives scope for the maxim and the question arises as to the extent to which equity will treat the equitable owner in the same way as a legal owner. In Walsh v Lonsdale (1882) 21 Ch D 9 an agreement was made for the lease of a factory for a period of seven years. The parties intended that a lease (in the form of a deed) would be drawn up, but it was not. However, the tenant took possession. The landlord brought an action for distress for rent. Distress is a legal remedy entitling a landlord to seise chattels of tenants in arrears with rent payments. The Court of Appeal upheld the landlord’s action; the parties were to be treated as if a formal lease had been drawn up. On the other hand, in Chan v Cresdon Pty Ltd (1989) 168 CLR 242; 89 ALR 522 the High Court preferred the view that a lease and an agreement for a lease are two different things and can only be equated in equity for certain purposes. The court stated that an agreement for a lease will be treated by a court of equity as an equitable lease for the term agreed upon and, between the parties, as the equivalent of a lease at law, though the lessee does not have a lease at law in the sense of having a legal interest. [8.140]  The doctrine of conversion was expressed in Lysaght v Edwards (1876) 2 Ch D 499

to arise whenever there is a valid contract. However, even an unenforceable contract is valid and equitable intervention is normally regarded as dependent upon a specifically enforceable contract. As stated by Mason J in Chang v Registrar of Titles (1976) 137 CLR 177:79 “It is accepted that the availability of the remedy of specific performance is essential to the existence of the constructive trust which arises from a contract of sale”. The availability of specific performance may not be apparent at the time of the contract. In Bahr v Nicolay (No 2) (1988) 164 CLR 604 the difficulty with specific performance was whether the purchaser was ready and willing to perform. The other parties sought to withdraw not because of any competing attractions, but because they believed that the purchaser lacked the financial resources to complete. The issue of capacity and willingness to perform could only be resolved at the time for completion, which was some three years after the contract was made. If conversion operates only when specific performance is available, then its meaning is very different from what appeared from Lysaght v Edwards to be an immediate creation of an equitable interest on conclusion of a contract.

79

This view was accepted in Chan v Cresdon Pty Ltd (1989) 168 CLR 242.

470 [8.135]

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Completion of contracts commonly involves more than the willingness and ability of the parties to perform. Conditions may be inserted whereby the actions of a third party are required: the grant of finance to allow the purchaser to complete; the approval of a planning authority for subdivision of land; the consent of a minister or licensing authority for a transfer. Furthermore, statutes today as a matter of consumer protection allow a purchaser cooling-​off rights. The courts have said that no equitable proprietary interest exists prior to the satisfaction of conditions, such as ministerial consent or planning approval.80 It would seem that here reference is being made to conditions that relate to the existence of the contract, rather than those relating to performance of obligations, but the distinction is not easily drawn. The lack of a proprietary interest has the impact under the Torrens system of an insufficiency of interest to sustain a caveat and the courts have said that a purchaser under a conditional contract lacks the capacity to lodge a caveat.81 The ramifications of such qualifications to the doctrine of Lysaght v Edwards are immense as conditional contracts are most common. [8.145] Resolution of priority disputes may be affected by the scope of the doctrine of

conversion. The purchaser has more than rights against the vendor alone and these equitable rights may come into conflict with other equitable rights created by other informal dealings by the vendor. It is even possible that because equity treats the purchaser as the owner, that purchaser may have some rights of a legal owner. Consideration of priority disputes involving a purchaser under a contract of sale occurred in the decision of Kourakis J in Rasch Nominees Pty Ltd v Bartholamaeus [2012] SASC 70.82 In the case the third defendant was a lessee of parcels of land and had a right of pre-​emption subject to certain conditions. The owners then made a contract of sale with the plaintiff. Kourakis J held that the right of pre-​emption conferred an equitable interest in the land  –​in particular an entitlement to an equitable injunction to prevent a sale to a third party such as the plaintiff. As an equitable right, the right of pre-​emption had priority over a subsequent equitable right under a contract of sale. The interest under the contract of sale was not the equivalent of beneficial ownership of the land but an equitable interest to be able to call for a transfer of the land. Consequently in a priority dispute two equitable interests existed and the first in time (the right of pre-​emption) should have priority. However the third defendant could not enforce the right of pre-​emption because it was in breach of its conditions.

INFORMALITY AND INEQUITY Statute of Frauds [8.150] The impact of the Statute of Frauds is that a purely oral contract for the sale of

any interest is unenforceable no matter how compelling the evidence is as to its existence or how complete the agreement is as to its terms. The devices of resulting and constructive trusts have been, in part, developed to overcome formality issues –​not those for contracts,

80 81 82

McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656; Brown v Heffer (1967) 116 CLR 344; Shanahan v Fitzgerald [1982] 2 NSWLR 513. Re CM Group Pty Ltd’s Caveat [1986] 1 Qd R 381; see Note (1987) 61 ALJ 195. The decision was upheld on appeal but the appeal concentrated on other grounds; see Rasch Nominees Pty Ltd v Bartholomeus [2013] SASCFC 23; discussed at [9.160]. [8.150]  471

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but the similar requirements for the creation of express trusts in relation to land. The basis for non-​application of the writing requirements has been expressed to be fraud on the part of the person denying the existence of the trust, though more recent High Court decisions have adopted the broader concern of unconscionability. In the resulting and constructive trust cases the parties have executed some dealing with the land on the basis of an undertaking or understanding as to future events. The courts in these cases have not simply returned the parties to their original position, but have, because of the changed circumstances, enforced the undertaking or understanding. The Statute of Frauds makes a contract for the sale of an interest in land not invalid, but merely unenforceable. In the absence of a dispute this unenforceability will not be of concern to the parties. Consequently the purely executory contract will often be put into effect. Again, once the contract has been fully executed the parties will have no cause for concern, and in the case of contracts for the sale of an interest in land it is difficult to contemplate how execution would not involve sufficient writing for the Statute of Frauds. Thus, the difficult cases are those where the contract has been partly executed. Just as in the resulting and constructive trust cases, a point is reached when the parties have changed position on the basis of the contract to the extent that the courts are not prepared to allow denial of the contract.

Doctrine of part performance [8.155] The doctrine of part performance allows the enforcement of an oral contract for

the sale of an interest in land when the contract has been sufficiently acted upon by the party seeking to enforce the contract. The basis of equitable intervention in part performance cases can be clouded because the party seeking enforcement is often asserting simply that the contract should be enforced. The Statute of Frauds is often described as an evidentiary rule, but it is clear that part performance does not avoid the impact of the statute because there is some independent evidence of the contract. Rather, the actions done in execution of the contract by the party seeking to enforce the contract make it unjust to deny enforcement of the contract. As was said by the Earl of Selbourne in the seminal case of Maddison v Alderson (1883) 3 App Cas 467 at 475: “In a suit founded on such part performance, the defendant is really ‘charged’ upon the equities resulting from the acts done in execution of the contract, and not (within the meaning of the statute) upon the contract itself”. If part performance is a doctrine relating to the inequity to a party who has changed position on the basis of a contract, then focus should seemingly turn to the definition of a sufficient detriment to require enforcement of the contract. However, in defining sufficient acts of part performance the courts have reintroduced evidentiary concerns. The acts of part performance must provide some evidence of the contract. Again the words of the Earl of Selbourne (at 479): “All the authorities show that the acts relied upon as part performance must be unequivocally, and in their own nature, referable to some such agreement as that alleged”. In Maddison v Alderson a woman served as a housekeeper without wages for many years on the basis of a promise that a will would be made leaving her a life estate in land. A will to this effect was in fact signed but not properly witnessed. The court refused to enforce the agreement: her actions were equivocal. There have not been wanting recorded cases in which time and care have been bestowed by one person upon another, even from a vague anticipation that the affection and gratitude so 472 [8.155]

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created would, in the long run, ensure some indefinite reward. And legal tribunals have refused in those cases to turn courtesy into contract and compel any payment although such service had been performed.83 [8.160] Attention has therefore turned to the definition of acts of unequivocal referability.

Payment of money is argued never to be a sufficient act of part performance because it is always equivocal: it never points to any particular kind of contract. The House of Lords has, however, concluded that the payment of a deposit and the forwarding of a deed of transfer were sufficient acts of part performance.84 [8.165]  In Australia the authoritative pronouncement of the doctrine of part performance

has come from the High Court in Regent v Millett (1976) 133 CLR 679. In that case a couple purchased a house for $4,500 including a loan for $3,500 secured by a mortgage. Subsequently they agreed with their daughter and son-​in-​law that, in consideration of the children agreeing to pay off the mortgage, the children could go into possession and have the house transferred to them when the mortgage was paid off. The children went into possession, began paying off the mortgage and effected repairs. The High Court held that there were sufficient acts of part performance. The High Court ruled that it was sufficient that the acts unequivocally and in their own nature were referable to some contract of the general nature of that alleged. The acts did not have to be compelled by the contract but should be pursuant to the contract. Entry into possession alone, or the taking of possession coupled with the expenditure of money by one party on the improvement of the property, with the cognisance of the other party, constituted in many cases sufficient part performance. The taking of possession could be explained as referable to some authority other than the contract alleged, but, in the absence of such explanation, was the act of part performance par excellence. [8.170]  The scope of the doctrine of part performance in Australia was reviewed by Hill J

in ANZ Banking Group Ltd v Widin (1990) 26 FCR 1; 102 ALR 289. A bank which was seeking to enforce a mortgage performed the whole of its side of the bargain by endorsing or accepting bills which provided funds to the borrower. Hill  J concluded that these acts clearly referred to some contract and were consistent with the alleged contract. The acts of endorsing or accepting the bills were done pursuant to an agreement whereby the bank was to be indemnified by the borrower and as security for the promise to indemnity a mortgage had been granted. Hill J held that the bank’s acts were unequivocally and in their own right referable to a contract of the general nature of that alleged by the bank. It was not necessary, therefore, to determine whether in Australia it is enough that the acts refer to a contract of some kind. Hill  J concluded by stating that the bank had altered its position on the faith of the oral agreement and that it would be a fraud on the borrower to set up the legal invalidity of the oral contract on the faith of which he induced the bank to act and expend its money. Hill  J thus drew the part performance principle close to those of the doctrine of estoppel.

83 84

Maddison v Alderson (1883) 3 App Cas 467 at 486 per Lord O’Hagen. Steadman v Steadman [1976] AC 536. Doyle CJ in Epic Feast Pty Ltd v Mawson KLM Holdings Pty Ltd [1997] SASC 6391 indicated that at present Australian Law is not as liberal as that stated in Steadman. [8.170]  473

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INCOMPLETENESS AND INEQUITY Types of trusts [8.175] An express trust arises where the parties intend a separation of the legal and

equitable proprietary interests. The trust arises from a transfer to another who is to hold on trust or from the expression that a current owner is to hold for the benefit of another.85 An express trust of land requires written evidence: a declaration of trust must be evidenced in writing and the transfer of an equitable interest must be evidenced in writing.86 A broad division between express trusts and constructive trusts was set out by the High Court in Korda v Australian Executor Trustees (SA) Ltd [2015] HCA 6. The court pointed out that whereas an express trust must always arise by reference to intention, a constructive trust is imposed by the courts as a remedy to achieve justice between the parties regardless of intention. An express trust need not be explicitly declared; it may be inferred or imputed on the basis of assumed intention. A promise for the benefit of a third party will only give rise to a trust of the promise in favour of the third party where the language of the parties in light of all the circumstances gives rise to an inference of intention of the parties to create a trust. [8.180]  A resulting trust arises when the legal title to property is transferred to someone, but

that person is not intended to be the beneficial owner of the property.87 The person is intended to hold for the transferor or for a person who has advanced the money for the purchase or for a third party. A resulting trust does not require written evidence –​either because of an express exception to the Statute of Frauds or an exception implied on the necessity to overcome fraud. The imposition of a resulting trust reflects the view in equity that a party’s interest should correspond with the party’s contribution to the price. [8.185] A constructive trust, on the other hand, arises whenever a trust must be imposed

by the courts to do justice between the parties.88 It is a remedial device and operates independently of intention. Because it operates to prevent fraud it is outside the writing requirement. Traditionally it has been applied where an existing trustee makes a profit out of the trust, but the circumstances in which a constructive trust will be imposed have not been completely defined. The Australian High Court in Baumgartner v Baumgartner (1987) 164 CLR 137 has indicated that it is appropriate to impose a constructive trust whenever it would be unconscionable for someone to retain the beneficial interest in property.

Incomplete arrangements [8.190] If parties act upon unenforceable agreements to their detriment, they also act

upon understandings which have not been sufficiently complete to constitute contracts. Incompleteness may also arise because of a lack of reciprocity of consideration. Consideration represents a quid pro quo, however, and actions in consequence of but not in return for an

85 86 87 88

Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 140–​141, 143–​145. See the discussion of formalities at [8.105]. Sidhu v Van Dyke [2014] HCA 19, discussed at [8.195]. Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 149–​151.

474 [8.175]

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undertaking will not amount to consideration.89 Lack of consideration for an undertaking has commonly been present in cases where a party agrees to make a concession in relation to an existing contractual obligation:  the concession confers a benefit on the other party who provides nothing in return. In contract analysis attention has focused on the doctrine of estoppel and the extent to which a promise is enforceable once it is acted upon. In Regent v Millett (1976) 133 CLR 679 (see also [8.165]) the children undertook to pay off the mortgage in return for the promise of a future transfer. Consideration was provided by this undertaking. However, the situation could readily be one where an interest in land is promised not in return for a reciprocal undertaking but simply in return for performance of some desired action. “If you look after the land, I will transfer it to you”. It is possible to analyse such undertakings in contractual terms: a promise is given in return for performance, and performance constitutes both acceptance and consideration. The contract is a unilateral one in that the promisee does not undertake to perform, but is given an undertaking in return for performance. Revocability of the offer once performance has been commenced, but not completed, causes conceptual difficulty.90 Since any benefit can amount to consideration, an advantage such as children living nearby can be a sufficient return for a promise to convey to them that nearby land.91

Doctrine of estoppel [8.195] In relation to undertakings about land,92 authority has always existed for the

proposition that where an owner of land creates or encourages an expectation in another that the other will have an interest in the land, and the other acts upon that expectation, then the owner will be compelled to give effect to it.93 The Privy Council applied the principle in 1884 in a case where an individual constructed a jetty at the instigation of the New Zealand government. The expenditure at the encouragement of the landowner gave rise to an equity which would be satisfied by the grant of a perpetual licence.94 This doctrine has been distinguished from contractual estoppel generally through titles such as “proprietary estoppel” and the “equity of acquiescence”. The subject matter of land has provided a special circumstance; the estoppel did not merely provide a defence to an action, but could be the basis of creation of an interest. The doctrine of estoppel has been applied to situations where children have been encouraged to develop land in return for a promise of an interest in the future.95 In Sidhu v Van Dyke [2014] HCA 19, an elderly mother was assured that part of her son’s property would be hers when the property was subdivided. The court stated that the category of equitable estoppel is to vindicate expectations of the representee against a party who seeks unconscionably to resile

89 90 91 92 93 94 95

Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424; Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), p 146. Compare Errington v Errington [1952] 1 KB 290; Abbott v Lance (1860) Legge 1283; Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), pp 133–​135. Raffaele v Raffaele [1962] WAR 29. See Finn (ed), Essays in Equity (Law Book Co, Sydney, 1985), Ch 4; Bennett, “Equitable Estoppel and Related Estoppels” (1987) 61 ALJ 540. Ramsden v Dyson (1866) LR 1 HL 129. Plimmer v Wellington Corporation (1884) 9 AC 699. Dillwyn v Llewelyn (1862) De GF & J 517; 45 ER 1285; Inwards v Baker [1965] 2 QB 29. [8.195]  475

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from an expectation created by that party. The representee had to establish a detriment from acting on the representation. The belief must be a contributory cause to the course of action taken by the representee. The relief granted is protection against the detriment suffered by a change of position as a result of the representation. The mother’s claim was successful. The doctrine has been applied in commercial situations where parties may be thought to have foolishly committed themselves before details were finalised. In Crabb v Arun District Council [1976] 1 Ch 179 a landowner sought from a council a second access point and right of way along a private road. He believed this access would be granted and constructed appropriate gates. He then sold off part of his land so that this second access point was the sole access point for the remaining land. The Court of Appeal held that the council had encouraged the landowner to act to his detriment, thereby raising an equity in his favour, and this equity would be satisfied by the grant of a right of access and right of way. In Re Basham [1987] 1 All ER 405 the plaintiff worked for her mother’s second husband for many years and stayed on in return for a promise that she would get a cottage on her stepfather’s death. He died intestate. It was held that the plaintiff’s belief that she would inherit the cottage had been encouraged by the stepfather and she had acted to her detriment on the basis of this understanding. She was held entitled to the cottage on the basis of proprietary estoppel. If the promise had been sufficiently certain to form a contract, the facts would be difficult to distinguish from Maddison v Alderson (1883) 3 App Cas 467: see [8.155]. It would seem anomalous that the vaguer undertaking gives rises to obligations, but the more defined does not. [8.200]  The place of proprietary estoppel in Australian law was settled by the High Court

in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; 76 ALR 513. In that case the owners of land and a business operator negotiated for the lease of land. It was envisaged that the landowner would demolish an existing building on the land and replace it. The new building was designed for the business operator. The parties realised negotiations had to be concluded. Solicitors for the business operator wrote to solicitors for the landowner enclosing documents for the lease. The solicitors for the business operator intimated that some changes had been made without their client’s authority but if they were not agreed that fact would be conveyed the following day. Four days later the documents were returned executed by the landowners. They were never executed by the business operator and returned some months later with an expression of intention not to proceed. By this point demolition was finished and the new building 40% completed. The High Court held that an equity may be brought into existence by a person whose conduct creates or lends force to an assumption by another that the other will obtain an interest in the first person’s land and, on the basis of that expectation, the other person alters that person’s position or acts to that person’s detriment. An equity arises in favour of the other person and the nature and extent of the equity depend on the circumstances. In Waltons Stores the landowner was encouraged to believe that completion was a formality and that in a context of urgency nothing was done for some time and demolition allowed to proceed. It was unconscionable for the business operator, knowing the landowners were exposed to detriment by acting on the basis of a false assumption, to adopt a course of inaction. In his judgment Brennan  J sets out six principles which he considers a plaintiff must establish to make out a claim for estoppel. They are: (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected 476 [8.200]

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legal relationship; (2)  the defendant has induced the plaintiff to adopt that assumption or expectation; (3)  the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4)  the defendant knew or intended him to do so; (5)  the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.

In later cases96 the courts have tended to use these elements as a basis for an assessment of the facts before them. The High Court held that the business operator could not deny the existence of the contract. However, damages were awarded in lieu of specific performance. Furthermore, the Statute of Frauds was dismissed as irrelevant. The business operator was estopped from denying not just the existence of contract, but that of a formally executed contract. Alternatively, the action was not one on the contract, but on the equities arising from the parties’ actions. [8.205]  The decision in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; 76 ALR

513 provides a general statement of the principles of estoppel and deals with both promissory and proprietary aspects of the doctrine. The application of the proprietary estoppel doctrine in a more traditional setting of broken expectations occurred in Giumelli v Giumelli (1998) 196 CLR 101, where a second son worked on an orchard property belonging to his parents. The parents owned the property under a partnership agreement. He received no money apart from pocket money and keep. Later the elder brother and the second son were admitted to the partnership without payment. Subsequently a third and younger son was also admitted to the partnership, but the eldest son left the partnership. In 1974 the second son was promised a portion of the orchard property for working without wages. In 1980 he was told that he could build a residence on the property and the residence would be his. The residence cost $47,000, of which $25,000 was advanced from the partnership. After his marriage the second son was promised a portion of the orchard property containing the residence if he stayed on the property. However, in 1985 his marriage ended in divorce and he chose a wife of whom his parents disapproved. He was told that he would have to choose between the woman and the property. In 1990 he commenced an action against his parents claiming a beneficial interest in the promised part of the orchard property. The High Court held that the son had acted on the promise to his detriment by working on the property. Consequently he was entitled to equitable relief. Prima facie that relief was the carrying out of the promise by the conveyance of the promised part of the orchard property. However, further proceedings relating to the family partnership and unfairness to the third son who also lived on the property made this remedy inappropriate. The appropriate relief was payment of a sum representing the value of the promised part imposed as a charge on the whole of the property. The other members of the family could not in good conscience retain a beneficial interest in the whole of the property. A constructive trust is a remedial response to the claim for equitable intervention. The holder of the legal title is obliged to surrender the property to enable a determination of the rights and interests of the parties. The equity founding the relief was based on an assumption as to the future acquisition of ownership of the property induced by representatives upon which there was detrimental reliance by the second son. This was a well-​established variety of estoppel. 96

A good illustration is S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637. [8.205]  477

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[8.210]  The need to establish inducement and detriment remain key aspects of the estoppel

doctrine. In Maxted v LC Smith and Co Pty Ltd [2008] QSC 165 the defendant purchased semi-​rural property in 1990. The plaintiffs moved into the property in 1992 and entered a residential tenancy agreement at a rent of $160 per week. There was no representation when they moved in, but subsequently the defendant indicated to the plaintiffs that they would be well taken care of. The plaintiffs claimed that they then refrained from buying a similar property for themselves. Their claim was rejected. There was no inducement by the defendant. The representation was no more than an assurance that the plaintiffs would not need to buy and would be looked after as tenants. Any improvements made by the plaintiffs were small items and part of their care for the property. They were not sufficient to amount to a detriment. This factual analysis does suggest a reluctance to allow a proprietary claim to arise from equivocal conduct. [8.215]  The remedy in cases of proprietary estoppel depends on what best satisfies the justice

of the situation.97 In some cases the remedy will be the formal transfer of the interest promised. But particularly where the promise has been vague the courts have a greater discretion to shape a remedy. ’An obvious alternative to a transfer is to allow a charge on the land for the value of work and money expended on the basis of the representation. The representation must at least be a factor in the change of position. In Jackson v Crosby (No 2) (1979) 21 SASR 280, representations were made by a woman to a man as to the transfer of land on which the man was doing building work. The woman was giving an undertaking on the basis of marriage. In dissent Cox J argued against relief on the basis that the man had no understanding of the marriage condition. [8.220]  The equity that arises from estoppel or from an unconscionable dealing leads to

relief that does justice to the party affected. In Giumelli v Giumelli (1998) 196 CLR 101 it is recognised that in cases of expectations acted upon to a party’s detriment the appropriate relief is normally the fulfilling of the expectations but injustice even to third parties must be avoided. Where a party is induced to enter a disadvantageous transaction by unconscionable conduct, often the relief will the setting aside of the transaction. In Bridgewater v Leahy (1998) 194 CLR 457,98 a case of undue influence, setting aside the transaction would have produced a result at odds with the intentions of all parties. To cause a setting aside would have changed the impact of the benefits of the will of the party responsible for the unconscionable dealing. Therefore, an account was directed to ascertain the value of the intended benefit of the affected party, but the account was subject to assessment of a claim which could otherwise have been made by other parties under testator family maintenance provisions. [8.225] The principle of proprietary estoppel is now clearly applicable in cases of

encouragements or expectations acted upon to the detriment of the other party. An estoppel in relation to assertion of an interest in land has long been established in cases of action upon a mistake encouraged by another. Thus a person (believing land to be his or her) building on that land will estop a real owner who allows that building to proceed.99 This doctrine

97 98 99

Sidhu v Van Dyke [2014] HCA 19. This case is discussed at length at [8.170]. Willmott v Barber (1880) 15 Ch D 96.

478 [8.210]

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requires knowledge of the mistake by the true owner.100 These cases have been explained as ones of estoppel without reference to remedy. If they should be analysed as cases of proprietary estoppel, then there is a flexibility of remedy. Mistake will often arise as to the position of a boundary: estoppel could provide a remedy in place of adverse possession or the encroachments legislation101 of some States. The relations between the parties may fall short of mutual mistake. They may simply be ignorant of the true position of a boundary and agree to act upon an approximation. These cases may also be analysed as action on the basis of a representation. [8.230] The doctrine of proprietary estoppel provides a remedy which can lead to a

proprietary interest. A party could be compelled to execute a document registerable under the Torrens system. However, even though an equity is said to arise in favour of a party acting to that party’s detriment, the right seemingly has limited proprietary impact upon subsequent transferees under the Torrens system. The protection of indefeasibility should accrue to someone who becomes the registered proprietor in good faith and for value in succession to the party creating the estoppel. Possible protection for good faith volunteers further weakens the scope of the right. In Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 a claim based on estoppel was enforced against the holder of a later equitable interest who had notice of the claim on which the estoppel was based. In that case the court held that the claimants had an interest in the nature of a profit à prendre. If the equity is only satisfied by the grant of a proprietary interest, the person in whose favour the equity is created does seem to have a proprietary interest and thus possibly sufficient basis to lodge a caveat.102 On the other hand, if the equity can be satisfied without the grant of a proprietary interest (and the subject matter of a constructive trust could be a personal obligation), then the existence of any proprietary interest and thus capacity to caveat, at least prior to an action, becomes more doubtful. Remedies such as personal occupation of premises103 are hard to sustain in proprietary terms, though they may be explained as conditional life estates. One situation in which a subsequent party could be bound despite indefeasibility is that of mutuality of arrangements, for example, where a concession in relation to drainage is made in return for a concession in relation to access. In such a situation a subsequent owner would not be allowed to claim the benefit without accepting the burden.104 [8.235] The High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 76 ALR 513

(see [8.205]) denied that the doctrine of proprietary estoppel had any effect upon that of part performance. But in both cases there is an undertaking acted upon by another. In the part performance cases that undertaking must satisfy contractual criteria (certainty, finality, intention to be bound, consideration) and the consequent action must be referable to a contract of the kind alleged. In proprietary estoppel cases, however, there need be only a creation of an expectation and a consequent detriment. It is difficult to envisage any situation

100 Brand v Chris Building Society [1957] VR 625. 101 The encroachment legislation is discussed at [16.280]ff. 102 On the other hand, Re Pile’s Caveats [1981] Qd R 81 suggests the claim to an equity to set aside a transaction for fraud is not sufficient to support a caveat. See [4.435] as to the capacity to caveat. 103 Cases such as Errington v Errington [1952] 1 KB 290 and Binions v Evans [1972] Ch 359. 104 ER Ives Investment Ltd v High [1967] 2 QB 379. [8.235]  479

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in which the proprietary estoppel elements will not be easier to establish than the part performance elements. The only drawback of a proprietary estoppel argument is that the appropriate remedy to satisfy the equity is discretionary whereas part performance leads to the enforcement of the contract in total. This relationship between the doctrines was confirmed by the High Court in Giumelli v Giumelli (1998) 196 CLR 101. The High Court described the distinction as one between the enforcement of promises on the basis of part performance and the implementation of assumptions on the basis of estoppel. In part performance cases the promise becomes enforceable, but conversely the substantive doctrine of estoppel permits a court to do what is required to avoid detriment, and does not in every case require the making good of the assumption. The doctrine of estoppel has a variety of applications. Increasingly it is connected with the concept of unconscionability. However, when presented with an opportunity to state a single overarching principle in Commonwealth v Verwayen (1990) 170 CLR 394 at 409, Mason CJ expressly rejected the opportunity. The varied application of the doctrine is reflected in the circumstances of that case which were very different to other cases in this context. Verwayen involved a personal injury claim by a defence forces person injured in the Melbourne/​Voyager collision. The estoppel concerned the oft-​repeated statements by the Australian Government that it would not raise the statute of limitations in such litigation. The Government then sought to retract that commitment.

AUCTIONS [8.240]  The principles governing the conduct of auctions of land were surprisingly ill-​defined

at common law and only recently been subject to statutory regulation.105 Auctions of land in Australia have commonly been held in the open and subject to bidding by any interested party. Bids are commonly able to be withdrawn until the closure of the auction by the fall of the hammer. At the fall of the hammer, a binding contract is regarded as concluded even though there appears to be an oral contract for the sale of land. Auctions may be subject to a reserve whereby the vendor reserves the right not to sell unless a particular price is obtained. Auctioneers may reserve the right to receive bids from the vendor but the fact of such a bid may not be disclosed and thus persons bidding may be regarded as being under a misapprehension as to the true state of the bidding. [8.245]  The difficulty of the lack of any written memorandum at the conclusion of an auction

is argued to be overcome by an implied authority of the auctioneer. The auctioneer is regarded as having authority to sign the contract concluded at the fall of the hammer on behalf of either the purchaser or the vendor. Commonly the auctioneer will get the parties to sign themselves, but, if either party refuses to do so, the auctioneer has authority to sign on that person’s behalf. Furthermore, it is clear that the authority arises not on any part performance (such as the payment of a deposit), but on the fall of the hammer itself. In Phillips v Butler [1907] 2 KB 1 an auctioneer signed on behalf of the vendor and the purchaser signed in person. However, the documents were not exchanged as it was agreed that the purchaser could post a cheque the following day in payment of the deposit. Before 105 See generally, Lang, Estate Agency Law and Practice in New South Wales (3rd ed, Law Book Co, Sydney, 1988), Ch 13. 480 [8.240]

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receipt of the cheque the vendor communicated to the auctioneer an instruction not to exchange contracts and not to receive the deposit. Romer  J held that the auctioneer had validly concluded an enforceable contract before the question of payment of the deposit arose and, therefore, any lack of authority to accept delayed payment was irrelevant to the existence of a contract. The court did refer to the qualification to the auctioneer’s authority in that the auctioneer can only sign in connection with the auction, but the precise time limits involved in this qualification were left open. [8.250]  The common law position seems to be that any auction of land may be subject to a

reserve and it is not mandatory to announce the reserve in the conditions of sale mandatory. Any form of communication of a reserve appears to be sufficient and any forms of words to the effect that there is a reserve is sufficient.106 Once a reserve is announced, any purported sale below that reserve is unenforceable against the vendor because of lack of authority of the auctioneer. Any such sale does not give rise to an action against the auctioneer for breach of warranty of authority as the existence of the reserve puts any prospective bidder on notice as to the auctioneer’s lack of authority to sell for less.107 [8.255]  With respect to an auction expressed to be without reserve, it has been suggested that

once such an auction has commenced, the auctioneer is liable in damages to the highest bidder if the auctioneer refuses to knock the property down to that bidder.108 This suggestion is based on the theory that an auctioneer who puts a property up for sale without reserve makes an offer to sell to the highest bidder and the highest bidder accepts that offer by making the highest bid. On the other hand, the suggestion faces some difficulties. The bid is only complete upon acceptance by the auctioneer and possibly upon the fall of the hammer and thus it can be argued that the offer to put the property up for sale can be withdrawn until that time. It is generally accepted that a bidder can withdraw a bid before the fall of the hammer and this argument concerns the reciprocal right of the auctioneer or vendor. But, in addition, the question of the highest bid cannot be resolved without the fall of the hammer. Until that time it is open to anyone else to make a higher bid and so prior to the fall is it difficult to see how anyone can establish that that person is the highest bidder.109 [8.260]  At common law it seems that any undisclosed bidding by the vendor means that the

contract is voidable at the option of the purchaser. It seems to follow that where bidding by the vendor exceeds what is disclosed or what is authorised, the contract is similarly voidable. Furthermore, it has been established that the reservation of the right to bid does not mean that the auctioneer may pluck fictitious bids out of the air in an attempt to create an atmosphere of competitive bidding; again such conduct seems to render the contract voidable. The clearest statement of principle has been made in relation to the sale of goods by Cooper J in the New Zealand Supreme Court:110

106

Torrance v Bolton (1872) LR 8 Ch A 118; see Butt, “Sale of Land by Auction in New South Wales” (1980) Law Soc J (NSW) 720. 107 McManus v Fortescue [1907] 2 KB 1. 108 Warlow v Harrison (1859) 1 El & El 295; 120 ER 925 at 316 (El & El), 928 (ER); Harris v Nickerson (1873) LR 8 QB 286 at 288–​289; Johnston v Boyes [1899] 2 Ch 73 at 77; Butt, “Sale of Land by Auction in New South Wales” (1980) Law Soc J (NSW) 720 at 721–​722. 109 Slade, “Auction Sales of Goods without Reserve” (1952) 68 LQR 238; (1953) 69 LQR 21. 10 Christie v Quaite (1906) 26 NZLR 495 at 496; see also Heatley v Newton (1881) 19 Ch D 326 at 327. 1 [8.260]  481

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At common law a sale by auction where the vendor had puffed the price by his own bidding was, unless the right to bid was reserved to him, a fraudulent sale, and could be avoided by the purchaser. Section 59 of subs 3 (sic) of the Sale of Goods Act not only enables the purchaser to avoid the sale, but makes the bidding by the vendor unlawful.

It is far from clear that such bids do not infringe the misleading or deceptive conduct provisions of the ACL (see [9.45]). [8.265] In New South Wales, Victoria, Queensland, South Australia, Western Australia,

Tasmania and the Australian Capital Territory statutory provisions111 make undisclosed bidding by the vendor unlawful. In Queensland the consequence that the contract is regarded as fraudulent is also restated. In all seven jurisdictions it is an offence to make unlawful bids or for the auctioneer to receive them. In New South Wales and Western Australia the terms of sale must reserve the right to make a specified number of bids. In Queensland the terms of sale must reserve the right for the vendor or any one person to bid. Subject to these additional requirements, the terms of sale must reserve the right for the vendor or persons acting on behalf of the vendor to bid. Bidding not authorised by these provisions would render any contract voidable at the option of the purchaser. A more thorough attempt to regulate auction sales by statute has occurred in Victoria, South Australia and the Australian Capital Territory. Prior to an auction, records must be available for inspection; these records must disclose the terms of the auction.112 Details must be taken of all registered bidders and bidding is confined to those persons who have registered.113 All vendor bids must be disclosed.114 In South Australia if an agent states a likely price, that price must be expressed as a single figure and must not be less the prescribed minimum selling price.115 [8.270] Disruptions to auctions are outlawed in some jurisdictions. Persons must not

hinder or harass other persons participating in an auction or disrupt an auction.116 Victorian Regulations describe forbidden activities at auctions in some detail; the law forbids any of the following: • any person bidding for a vendor other than—​ • the auctioneer (who can only make bids for a vendor who does not intend to purchase the property from their co-​owner or co-​owners); or • a representative of a vendor who is a co-​owner of the property wishing to purchase the property from their co-​owner or co-​owners;

111

112 113 114 115 116

Conveyancing Act 1919 (NSW), s 65; Sale of Land Act 1962 (Vic), s 38; Property Law Act 1974 (Qld), s 60; Land and Business (Sale and Conveyancing) Act 1994 (SA), s 24N; Auction Sales Act 1973 (WA), s 29; Auctioneers and Estate Agents Act 1959 (Tas), s 19; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 29. Sale of Land Act 1962 (Vic), s 43; Land and Business (Sale and Conveyancing) Act 1994 (SA), s 24J; Civil Law (Sale of Residential Property) Act 2003 (ACT), ss 31A, 32. Land and Business (Sale and Conveyancing) Act 1994 (SA), s 24K; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 28. Sale of Land Act 1962 (Vic), s 41; Land and Business (Sale and Conveyancing) Act 1994 (SA), s 24O; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 30. Land and Business (Sale and Conveyancing) Act 1994 (SA), s 24A(2); further obligations are set out in ss  24A–​24H. Civil Law (Sale of Residential Property) Act 2003 (ACT), s 30; Land and Business (Sale and Conveyancing) Act 1994 (SA), s 24M; Sale of Land Act 1962 (Vic), s 47.

482 [8.265]

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• the auctioneer taking any bid that the auctioneer knows was made on behalf of the vendor, unless it is made by a vendor (or their representative) who is a co-​owner wishing to purchase the property; • the auctioneer acknowledging a bid if no bid was made; • any person asking another person to bid on behalf of the vendor, other than a vendor who is a co-​owner engaging a representative to bid for them; • any person falsely claiming or falsely acknowledging that they made a bid; • an intending bidder (or a person acting on behalf of an intending bidder) harassing or interfering with other bidders at a public auction of land.117 [8.272] Auctions are conducted by an auctioneer. In all States except South Australia an

auctioneer must have a licence.118 Generally an applicant for a licence must be a person of good character and licences may be suspended or cancelled for illegal activity or failure to keep proper records. The licensing regime for auctioneers can be traced from an order issued by the Governor of the colony of New South Wales on 15 January 1801. This order imposed a duty of one-​half of 1% on the proceeds of sale by auctions and prohibited persons from acting as auctioneers unless they were licenced. The good character of auctioneers has been a matter of concern from that time onwards. The licensing function has been entrusted to Magistrates Courts on the basis of the special knowledge of magistrates of the characters of local residents. The licensing systems have generally not been updated as part of the fair trading and consumer protection functions which have assumed significance in the past 20  years. The licensing regimes have included various rules as to the conduct of auctions, such as prohibitions on auctions at night and given various powers, immunities and responsibilities to auctioneers. In South Australia the deregulation movement resulted in the repeal of the licensing system for agents from 1 April 1982.119

STATUTORY REGULATION OF LAND SALES Basis of regulation [8.275] The application of the Statute of Frauds has until recently been the only respect

in which contracts for the sale of land required anything other than the application of the normal rules of contracts based on the concept of freedom of contract. Even the Statute of Frauds tended to create problems more for dealings in limited interests, such as leases for a term of years rather than dealings involving fee simple interests, which were not only set out in writing, but expressed in detailed terms. In relation to contractual formation the issue to be resolved has tended to be the point at which the parties intended to be bound. Phrases such as “subject to contract” have been subject to extensive analysis.120 The significant implied term in contracts for the sale of land was that of the vendor to make good title.121 The construction

117 118

119 120 121

Sale of Land (Public Auctions) Regulations 2014 (Vic), Sch 5. Property, Stock and Business Agents Act 1941 (NSW), s 20; Auction Sales Act 1958 (Vic), s 4; Auctioneers and Agents Act 1971 (Qld), s 14; Auction Sales Act 1973 (WA), s 6; Auctioneers and Estate Agents Act 1959 (Tas), s 13. Appraisers Act and Auctioneers Act Repeal Act 1980 (SA). Masters v Cameron (1954) 91 CLR 353. Bell v Scott (1922) 30 CLR 387; Voumard, The Sale of Land in Victoria (5th ed, Law Book Co, Sydney, 1996), pp  347–​350. [8.275]  483

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of terms has presented difficulties and the courts have struggled with conditions such as those relating to finance and consent from government agencies.122 One special damages rule was that which limited liability for failure to make good title;123 this rule was developed because of the complexity of title under the general law and does not comfortably apply to the Torrens system.124 The principle of freedom of contract has allowed the parties scope to frame agreements as they see fit. Invariably practices develop among lawyers specialising in the conveyancing area and associated persons, particularly real estate (or land) agents. In each State standard contracts of sale have been developed.125 One significant divergence in practice has been the willingness of parties to sign a binding contract before reference to legal advisers. In New South Wales in particular, it has been common for the parties to conclude an agreement subject to the preparation of formal documents by lawyers. Such an agreement does not create binding obligations and leaves the vendor free to accept a subsequent higher offer –​ a practice described as gazumping.126 At the other end of the scale immediate entry into a binding agreement has been very common in South Australia (with consequent emphasis upon pre-​performance conditions) and land brokers have had a long-​established role in preparing all documents to enable title to be transferred. [8.280]  Over the past 50 years –​dating from the Sale of Land Act 1962 (Vic) –​regulation of the contractual process has become extensive except in Western Australia, Tasmania and the Northern Territory. The legislation can be described as having four major points of concern. First, although the common law implied an obligation that the vendor provide good title and registration under the Torrens system generally provided immunity from unregistered interests, purchasers found themselves subject to a range of unexpected burdens and obligations. The problem arose because government authorities availed themselves of the privilege to override the registered title in the imposition of a range of burdens on the land127 and because the increasing controls on land use (such as the zoning requirements of planning laws) were not regarded as a matter relating to title.128 Secondly, entry into a contract imposes marked responsibilities on ordinary home purchasers (on one view they all become petty capitalists, on another they exchange freedom for serfdom to the banks). The magnitude of these obligations may not be fully realised until subsequent reflection free from the blandishments of the real estate agent. Thirdly, the common law provided that risk passed on formation of the contract.129 Any accidental loss thereafter must be borne by the purchaser. Insurance against such losses is today widespread and the passing of risk rule forces the purchaser to insure from the time of the contract while the vendor is unable to relinquish his or her insurance

122

Meehan v Jones (1982) 149 CLR 571; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), Ch 22. 123 Voumard, The Sale of Land in Victoria (5th ed, Law Book Co, Sydney, 1996), pp 467–​473. 124 Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529. 125 Butt, The Standard Contract for Sale of Land in New South Wales (Law Book Co, Sydney, 1985); Duncan and Weld, The Standard Land Contract in Queensland (2nd ed, Law Book Co, Sydney, 1984). 126 Butt, “New Anti-​Gazumping Laws in New South Wales” (1988) 62 ALJ 707. 27 South-​Eastern Drainage Board (South Australia) v Savings Bank of South Australia (1939) 62 CLR 603. 1 128 Yammouni v Condidono [1959] VR 479; Voumard, The Sale of Land in Victoria (5th ed, Law Book Co, Sydney, 1996), pp 410–​413. 129 Lysaght v Edwards (1876) 2 Ch D 499; Fletcher v Manton (1940) 64 CLR 37. 484 [8.280]

Dispositions  Chapter  8

until performance of the contract is completed. Fourthly, completion of the contract involves the exchange of title for payment in full. Some time between contract and transfer of title is usually allowed to enable legal details to be attended to, but in some cases the vendor is providing finance. It is possible for the vendor to accept a promise from the purchaser to pay by instalments over a number of years. Such a purchaser was vulnerable because the vendor’s obligation was to provide title only at the time of completion130 and in the event of default the purchaser had little protection because the purchaser had only contractual rights and the proposed vendor may have transferred the land to another and disappeared.

Disclosure by the vendor [8.285]  In New South Wales, Victoria, South Australia and the Australian Capital Territory

a vendor of land is required to provide information about the land to the purchaser. If that information is not correct, the purchaser is given rights to rescind the contract or claim compensation. Disclosure in these four jurisdictions concentrates on matters affecting title, but outside the items recorded on the register. They are predominantly restrictions imposed by statutory authorities and derive from what have been held to be statutes inconsistent with and thus overriding the Torrens system indefeasibility of title.131 The lists include aspects of title, planning controls, charges of government authorities and details of the vendor’s insurance.132 The relevant lists also set out title information to be disclosed (including details of mortgages, easements and covenants), the form of description of planning controls and the inquiries to be of government agencies. The range of government authorities obviously reflects bureaucratic arrangements in each State, but compliance with the disclosure requirements has necessitated a procedure for the obtaining of certificates from each of the authorities. This necessity has in turn helped to promote interest in a register not just of land title details but for all relevant data about each parcel of land.133 In Victoria and the Australian Capital Territory disclosure extends to matters concerned with the quality of improvements on the land. In Victoria a statement of matters affecting the land must be provided.134 The statement must include details such as the insurance cover, planning particulars, whether listed services are connected and in the case of a strata title particulars of the operation of the owners’ corporation.135 In the Australian Capital Territory the list includes an energy efficiency rating statement, a building and compliance inspection report, an asbestos assessment report and, in respect of a strata unit, minutes of the two most recent annual meetings of the corporation.136

130 131

132 133 134 135 136

Meehan v Jones (1982) 149 CLR 571; Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), Ch 22. South-​Eastern Drainage Board (South Australia) v Savings Bank of South Australia (1939) 62 CLR 603 (charge on land for unpaid rates due to the drainage board); Pratten v Waringah Shire Council [1969] NSWLR 161 (drainage reserve in favour of the council). Conveyancing Act 1919 (NSW), ss 52A, 66R; Sale of Land Act 1962 (Vic), s 31(1); Land and Business (Sale and Conveyancing) Act 1994 (SA), s 7; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 10. See Godfrey Constructions Pty Ltd v Kanangra Park Pty Ltd (1972) 128 CLR 529. Sale of Land Act 1962 (Vic), s 32. Sale of Land Act 1962 (Vic), ss 32A–​32L. Civil Law (Sale of Residential Property) Act 2003 (ACT), s 9. [8.285]  485

PART 3 Dealings in Land

[8.290] In New South Wales and Victoria the information must be provided before entry

into a contract by the purchaser. In South Australia the information must be provided at least 10  days before settlement; cooling-​off rights are related to the date on which information is provided. In the Australian Capital Territory the information must be available before a prospective purchaser makes a bid.137 If the information is inaccurate, the purchaser is generally entitled to rescind up until acceptance of title, but some qualifications to the right of rescission are imposed. In New South Wales the vendor is taken to provide warranties as to the accuracy of the information provided and the purchaser is given a right to rescind for breach of warranty. In Victoria rescission may be denied if the court is satisfied both that the vendor has acted honestly and reasonably and ought fairly to be excused for the contravention and, secondly, that the purchaser is substantially in as good a position as if all the requirements had been met. In South Australia the remedy is at the discretion of the court, which may award damages by way of compensation or avoid the contract as it sees fit. In the Australian Capital Territory a purchaser has a right to rescind or to claim damages for material errors.138 [8.295]  In Queensland and the Australian Capital Territory the obligation on a vendor to

provide good title is statutorily restated and remedies for breach given to the purchaser.139 The Queensland provisions repeat details of the vendor’s common law duty to provide good title. They cover the provision by the vendor of particulars of title, payment by bank cheque and substitution for performance due on a Saturday, Sunday or public holiday. Any qualification to liability for failure by the vendor to make good title is removed by the imposition of liability for all damages reasonably foreseeable and the loss liable to result.

Cooling-​off  rights [8.300]  A purchaser of land is given an opportunity to reconsider his or her position in New

South Wales, Victoria, South Australia and the Australian Capital Territory. A purchaser may rescind the contract or exercise cooling-​off rights at will. Notice of the rights must be given to the purchaser. There is a monetary limit on the contracts to which the Victorian rights apply. In New South Wales and the Australian Capital Territory a purchaser may serve a notice of rescission within five business days of the signing of a contract for the sale of land.140 In

137 138 139 140

Conveyancing Act 1919 (NSW), s 66R; Sale of Land Act 1962 (Vic), s 31(1); Land and Business (Sale and Conveyancing) Act 1994 (SA), s 7; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 10. Conveyancing Act 1919 (NSW), s 52A(6), (7); Sale of Land Act 1962 (Vic), s 31; Land and Business (Sale and Conveyancing) Act 1994 (SA), s 15; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 11(1)(h). Property Law Act 1974 (Qld), ss 61, 68; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 10. Conveyancing Act 1919 (NSW), s 66S; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 12(3). In New South Wales, the cooling-​off rights replace a complicated system of preliminary and later contracts. Under that system the first step was a preliminary agreement which must be in a prescribed form and which must have attached to it the proposed contract (the later agreement that binds both parties). The purchaser’s only liability on signing this agreement was with respect to a preliminary deposit. Once a preliminary agreement had been made, the purchaser had a choice either to do nothing or to enter a later agreement. The vendor, however, had to provide to the purchaser before the end of five days from the preliminary agreement, a contract in the form of the proposed contract with details of the purchaser and the price added. The purchaser had five days from service of the later agreement in which to execute that agreement; if the purchaser did so, the vendor had also to execute the later agreement on the following business day. The vendor had five days from the preliminary agreement to serve a later agreement but might do so immediately or nearly so; if the later agreement was concluded within two days of the preliminary

486 [8.290]

Dispositions  Chapter  8

Victoria, after a purchaser signs a contract for the sale of land, that purchaser may give notice at any time before the expiration of three clear business days that he or she wishes to terminate the contract.141 In South Australia the period is two days, but because information disclosure may take place after the contract and as late as 10 days before settlement, time runs from the later date of the day of making of the contract or the day of provision of information.142 [8.305]  The exercise of the cooling-​off rights frees the purchaser from all liability except loss

of a small preliminary deposit. In New South Wales and the Australian Capital Territory upon rescission a purchaser is entitled to the return of all money paid except 0.25% of the purchase price.143 In Victoria the exercise of the cooling-​off rights frees the purchaser from all liability except loss of an amount which is the greater of $100 or 0.2% of the price.144 In South Australia the vendor may retain money paid by the purchaser by way of deposit in respect of the sale if the deposit does not exceed $100 or any greater amount fixed by regulation.145 The cooling-​off rights are excluded in a range of situations, the most significant being sales at auction and cases where the purchaser has received independent legal advice before signing the contract and the legal practitioner has signed a certificate in the approved form as to the giving of that advice.146

Passing of risk [8.310]  The time at which risk passes to the purchaser is a matter for the parties to stipulate

in the sale contract. Common law only provides that risk prima facie passes at the time of the contract. In fact, in Western Australia both the Real Estate Institute and the Law Society contracts have provided that risk will remain with the vendor until completion. The contractual freedom to define the passing of risk has been modified in New South Wales. The impact of passing of risk is that any accidental loss falls on the purchaser, but this consequence has been modified in Victoria and Queensland where the loss involves the destruction of a dwelling-​ house. The impact of loss is affected by insurance and national legislation and legislation in Victoria and Queensland gives the purchaser the benefit of insurance cover held by the vendor. New South Wales legislation has postponed the passing of risk to the purchaser. Risk is not to pass until completion of the sale or an earlier time stipulated by the parties, but only if that earlier time is one by which the purchaser has become entitled to possession.147 This rule cannot be varied in the case of the sale of a dwelling-​house.148 If, before risk passes to

141 142 143 144 145 146 147 148

agreement, the purchaser might withdraw up to five days from the preliminary agreement. The vendor was under a liability from the time of the preliminary agreement and had to provide the purchaser with the opportunity of entering a later agreement. Breach of the preliminary agreement by the vendor left the vendor open to an action for specific performance or damages: see Conveyancing Act 1919 (NSW) former ss 66Q–​66W; Butt, “New Anti-​Gazumping Laws in New South Wales” (1988) 62 ALJ 707. Sale of Land Act 1962 (Vic), s 31(2). Land and Business (Sale and Conveyancing) Act 1994 (SA), s 5. Conveyancing Act 1919 (NSW), s 66S; Civil Law (Sale of Residential Property) Act 2003 (ACT), s 14. Sale of Land Act 1962 (Vic), s 31(4). Land and Business (Sale and Conveyancing) Act 1994 (SA), s 5(8). Civil Law (Sale of Residential Property) Act 2003 (ACT), s 12(3); Conveyancing Act 1919 (NSW), s 66T; Land and Business (Sale and Conveyancing) Act 1994 (SA), s 5(7); Sale of Land Act 1962 (Vic), s 31(5). Conveyancing Act 1919 (NSW), s 66K. Conveyancing Act 1919 (NSW), s 66O. [8.310]  487

PART 3 Dealings in Land

the purchaser, the land is substantially damaged, the purchaser has at least 28  days from becoming aware of the damage in which to rescind the contract.149 If, before risk passes to the purchaser, the land is damaged (whether or not that damage is substantial), the purchase price is reduced by the amount which is just and equitable.150 If, before risk passes to the purchaser, the land is substantially damaged, the vendor may be relieved from performance where it would be unjust or inequitable to require performance.151 [8.315]  In Victoria and Queensland the passing of risk remains a matter to be determined by

the parties but limited rights of rescission are given to the purchaser in the case of accidental loss. The rights exist in relation to contracts for the sale of land on which there is a dwelling-​ house and the dwelling-​house is destroyed or damaged so as to be unfit for occupation before the purchaser becomes entitled to possession. In that event the purchaser may rescind in Victoria within 14 days of becoming aware of the damage152 and in Queensland not later than the date for completion or taking possession.153 [8.320]  While an insurance policy held by the vendor may provide cover against accidental

loss, that policy is one between the vendor and the vendor’s insurance company. On traditional analysis the policy can only be enforced by the vendor and the vendor may be unable to establish any loss if the purchaser can be forced to complete the contract. The Insurance Contracts Act 1984 (Cth) gives the purchaser rights under the vendor’s insurance policy. Where a purchaser agrees to purchase a building which the purchaser will have a right to occupy, the purchaser is deemed to be insured under the vendor’s insurance policy for loss or damage to the building in respect of which the risk passed to the purchaser.154 This right exists only in relation to such insurance cover as the vendor has. Similar rights to the benefit of the vendor’s insurance cover have been given to purchasers of land generally by legislation in Victoria and Queensland.155

Terms contracts [8.325] A purchaser who has agreed to pay over time and who acquires title only on

payment in full is in a weaker legal position than a purchaser who has obtained title subject to a mortgage for the unpaid balance of the purchase price. This difference flows from the established equitable protection for a mortgagor without clear similar protection for a terms purchaser. Where the purchase price under a contract for the sale of land is to be provided by instalments over a period of time, completion may be delayed until all instalments have been met. During that period the purchaser has equitable rights, but is not entitled to call upon the vendor to show title until the time of completion and may be adversely affected by a subsequent dealing by the vendor, particularly the grant of a mortgage. On default the contract may provide for forfeiture of both the deposit and instalments paid.

149 150 151 152 153 154 155

Conveyancing Act 1919 (NSW), s 66L. Conveyancing Act 1919 (NSW), s 66M. Conveyancing Act 1919 (NSW), s 66N. Sale of Land Act 1962 (Vic), s 34. Property Law Act 1974 (Qld), s 64. Insurance Contracts Act 1984 (Cth), s 50. Sale of Land Act 1962 (Vic), s 35; Property Law Act 1974 (Qld), s 63.

488 [8.315]

Dispositions  Chapter  8

[8.330]  In South Australia the vulnerability of the purchaser’s position has led to a prohibition

upon instalment contracts for the sale of land.156 Any vendor providing finance and wishing to have a legal proprietary interest in the land must therefore take a mortgage back from the purchaser. Translation from a purchaser under a terms contract to a fee simple owner subject to a mortgage to the vendor is not compulsory in Victoria,157 New South Wales158 and Queensland159 but may be insisted upon by the purchaser. In New South Wales the right to call for a transfer subject to a mortgage back for the unpaid purchase price is limited to a purchaser who has paid 15% of the price; in Queensland it is limited to a purchaser who has paid one-​third of the price. In Victoria160 and Queensland161 a vendor who has entered a terms contract may not grant a mortgage over the land; in New South Wales162 a vendor must give notice of any proposed mortgage or charge over the land. In Western Australia, where there is no right to call for a transfer subject to a mortgage, the vendor may not grant a mortgage without the consent of the purchaser or leave of the court.163 [8.335]  So long as a terms contract continues, the right of the vendor to terminate for breach

by the purchaser (commonly failure to pay the instalments due) depends on the terms of the contract and subject to the power of the court to grant relief against forfeiture.164 In Queensland and Western Australia the vendor must give written notice of breach before exercising the right to terminate.165

PROPERTY DEALINGS BETWEEN DOMESTIC PARTNERS Recognition of relationships [8.340] Where persons have entered an ongoing domestic partnership, their claims to

property may be affected by the existence of that relationship. In some overseas countries, but not in Australia, some domestic relationships result automatically in shared property. In Australia there are two major issues: first, the power of the parties to govern their financial future through a personal relationship agreement;166 secondly, the power of the courts to adjust property interests on the breakdown of the relationship.

156 157 158 159 160 161 162 163 164 165 166

Land and Business (Sale and Conveyancing) Act 1994 (SA), s 6. Sale of Land Act 1962 (Vic), s 4. Land Sales Act 1964 (NSW), s 13. Property Law Act 1974 (Qld), s 75. Sale of Land Act 1962 (Vic), s 7. Property Law Act 1974 (Qld), s 73; see Coast Securities No 9 Pty Ltd v Bondoukou (1986) 69 ALR 385. Land Sales Act 1964 (NSW), s 14. Sale of Land Act 1970 (WA), s 8. Legione v Hateley (1983) 152 CLR 406; Stern v McArthur (1988) 81 ALR 463. Property Law Act 1974 (Qld), s 72; Sale of Land Act 1970 (WA), s 6. No universal term has been adopted to describe such agreements. The right to make such agreements has been extended to wider classes of relationships. This book uses the term “personal relationship agreements” as comprehensive and elegant. The other possibility is “domestic partnership agreements”. Either is preferable to the demeaning and ugly terms “pre-​nuptial agreement” and “de facto agreement” which deserve to be abandoned. [8.340]  489

PART 3 Dealings in Land

In Australia any two persons may agree to be married; marriage is defined in the following terms; it “means the union of 2 people to the exclusion of all others, voluntarily entered into for life”.167 Marriage follows a formal ceremony; that ceremony may be conducted within a religious setting or by a civil celebrant. The property rights of such persons are regulated by the Family Law Act 1975 (Cth). The term “de facto” partners was applied to persons of opposite sexes who carried on a long-​term relationship but who did not enter a formal ceremony of marriage. The Family Law Act 1975 (Cth) in the second half of the 20th century gave the Family Court and other specified courts powers to make orders concerning their property rights and financial responsibilities between one another. In the current century these powers were extended to parties living as a couple whatever their relative sexes. [8.345] At common law, upon marriage a husband and wife became one person. In the

19th century legislation introduced a regime which ensured a system of separation of property. The married women’s property legislation introduced in England and in all Australian States168 overturned the insidious system pursuant to which the rights of a woman to the use, management and control of her property were lost upon marriage.169 After the reforms a husband and a wife could each hold their own property and were able to institute court proceedings to have any property dispute between them settled. [8.350]  It was intended that the legislation provide an equality in law for marriages between

men and women, but the social context within which the relevant issues arose meant that the concept of separation of property very often did not result in an equal division of property upon separation of the parties to a marriage. Usually the wife involved herself in homemaking activities which did not result in the acquisition of funds with which to purchase her own separate property. On the other hand, the financially productive partner, usually the husband, was in a position to build up assets as his own separate property. Also that partner usually had greater access to the supply of credit and indeed be favoured by the policies of credit providers. Although in recent years changing social patterns have altered the traditional roles of husband and wife, it is still more likely that the wife will use a greater proportion of her time in financially non-​productive homemaking and parenting than the husband. [8.355]  In 1959 the Commonwealth used its constitutional powers to legislate in the area

of family law and produced a different system for property determination. The Matrimonial Causes Act 1959 (Cth) confined itself to regulation for married persons who had to be of opposite sexes and had gone through some form of marriage ceremony. The Act provided a number of grounds for divorce and gave the courts wide discretionary powers to redistribute the property of the parties to a marriage when the proceedings for property relief were ancillary to proceedings for principal relief. In order to reach a just and equitable result, a number of factors such as the means and needs of the parties were taken into account. In 1975 the Commonwealth replaced the Matrimonial Causes Act 1959 (Cth) with the Family Law

167 168

Marriage Act 1961 (Cth), s 5. The eight jurisdictions maintained married women’s property legislation as follows: Married Persons (Equality of Status) Act 1996 (NSW); Marriage Act 1958 (Vic); Property Law Act 1974 (Qld), s 33; Law of Property Act 1936 (SA), ss 92–​111; Married Women’s Property Act 1892 (WA); Married Women’s Property Act 1935 (Tas); Married Persons Property Act 1986 (ACT); Married Women’s Property Act (NT). 169 For a detailed account of the position before the introduction of the married women’s property legislation, see Hardingham and Neave, Australian Family Property Law (Law Book Co, Sydney, 1984), Ch 1. 490 [8.345]

Dispositions  Chapter  8

Act 1975 (Cth) which provides only one ground for dissolution of marriage: irreconcilable differences as evidenced by 12  months separation. As in the earlier legislation, the court is given power to order an alteration of the property interests of husband and wife to achieve a just and equitable result. [8.360]  Powers with respect to property rights and financial responsibilities apply wherever

persons are living as a couple on a genuine domestic basis.170 A list of factors to be taken into account to determine if persons are living as a couple on a genuine domestic basis is set out in the legislation. Those factors are: (1) the duration of the relationship; (2) the nature and extent of their common residence; (3) whether a sexual relationship exists; (4) the degree of financial dependence or interdependence, and any arrangements for financial support, between them; (5) the ownership, use and acquisition of their property; (6) the degree of mutual commitment to a shared life; (7) whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship; (8) the care and support of children; (9) the reputation and public aspects of the relationship.171 Furthermore, the legislation provides that for the purposes of Family Law Act 1975 (Cth) a de facto relationship can exist between two persons of different sexes and between two persons of the same sex; and can exist even if one of the persons is legally married to someone else or in another de facto relationship.172

Financial agreements [8.365]  Today persons in a long-​term relationship, whether married or unmarried may enter

a financial agreement. Future rights and responsibilities can be planned through a binding financial agreement.173 An agreement may be made before174 or during a relationship175 or on the breakdown of the relationship.176 Although a personal relationship agreement can be set aside in special circumstances, in the normal course it provides the basis for the provision of maintenance and the distribution of property when the relationship comes to an end. [8.370] A financial relationship agreement is most desirable in a range of situations. They

include relationships where one partner is bringing much more property or money to the relationship than the other and is not committed to dividing these resources equally with

170 171 172 173 174 175 176

Family Law Act 1975 (Cth), s 4AA(1). Family Law Act 1975 (Cth), s 4AA(2). Family Law Act 1975 (Cth), s 4AA(51). Family Law Act 1975 (Cth), s 90G (married persons); s 90UJ (de facto couples). Family Law Act 1975 (Cth), s 90B (married persons); s 90UB (de facto couples). Family Law Act 1975 (Cth), s 90C (married persons); s 90UC (de facto couples). Family Law Act 1975 (Cth), s 90D (married persons); s 90UDJ (de facto couples). [8.370]  491

PART 3 Dealings in Land

the other. Partners wish to keep their financial lives separate and formally agree accordingly. Partners may have made definite financial arrangements and want these arrangements to be binding. Partners may be contributing to the financial basis in different ways (one may pursue increasing income, the other organising daily matters and caring for children and property) but want a financial division to be equal. Special arrangements may be needed for the care of children are involved (such as care for a disabled child). [8.375]  Three main types of financial agreement are available. The first sets out how, in the

event of a partnership breakdown, all or any of the property or financial resources of either or both of the parties is to be dealt with. The second covers the maintenance of either partner during the relationship and after its break up. Thirdly, any other incidental or ancillary matters to those above, such as the payment of one partner’s credit card bills or the contribution to a child or stepchild’s education, can be provided for. If any provision is made in the financial agreement dealing with the maintenance of a partner, child or children to the agreement, it must specify the name of the person (partner, child etc) for whose maintenance provision is made and the monetary sum or value of property attributable to the maintenance of the person. Any agreement on child maintenance can be overridden by an assessment made by the Child Support Agency. A financial agreement survives the death of a party to the agreement and becomes binding upon the legal personal representative of that party. A binding agreement must be signed by both parties and must contain a statement that each party obtained independent advice from a legal practitioner about the effect of the agreement on the rights of that party; the advantages and disadvantages, at the time the practitioner provided the advice, to the party of making the agreement; whether or not it was prudent for that party to make the agreement; and whether the provisions of the agreement are just and equitable. An attachment to the agreement must contain a certificate signed by the legal practitioner stating that such advice on the above matters was provided. An attachment to the agreement must contain a certificate signed by the legal practitioner stating that such advice on the above matters was provided. [8.380] A court can set aside a personal relationship agreement177 if it is satisfied that the

agreement was obtained by fraud (eg, non-​disclosure of a material matter) or that the agreement is void, voidable or unenforceable, including due to failure to fulfil the binding requirements. If circumstances have arisen since the agreement was made, that make it impracticable for the agreement or part of the agreement to be carried out or if, since the agreement was made, a material change in circumstances that relate to the care, welfare and development of a child of the partnership has occurred, the agreement may be set aside. Such a change will exist if a child or someone who has caring responsibility for the child (parent, person with residence order or specific issues order in relation to care, welfare and development) or a party to the agreement will suffer hardship if the court does not set the agreement aside. Finally, an agreement may be set aside if a party to the agreement engaged in unconscionable conduct in the process of developing the financial agreement.

177

Family Law Act 1975 (Cth), s 90K (married persons); s 90UM (de facto couples).

492 [8.375]

Dispositions  Chapter  8

Adjustments on relationship breakdown [8.385]  If a relationship breaks down, the parties have to disentangle a number of personal

and property matters. They include the division of assets, maintenance of the other party and children and custody of children. Traditionally divorce is the procedure for the dissolution of marriage. Today, breakdown occurs in any form of personal relationship. Under the Family Law Act 1975 (Cth), the court has power to make an order for maintenance between married and de facto couples.178 The court is given power to order an alteration of the property interests of married and de facto persons to achieve a just and equitable result.179 In any property settlement proceeding the court may make such order as it considers appropriate. In the exercise of the discretion as to a property settlement order, the court is directed to take into account the financial and non-​financial contributions made directly or indirectly to the acquisition, conservation or improvement of the property of the parties or either of them.180 Further, the court is directed to take into account the contribution made by a party to the marriage to the welfare of the family, including any contribution in the capacity as homemaker or parent. All of the factors referred to above comprise the retrospective or “contribution” element of a property order. The court is further directed to take into account a number of prospective or “maintenance” elements. The effect of a proposed order on the earning capacity of either party to the marriage, the age and state of health of the parties, the general means and needs of the parties, the duration of the relationship and the extent to which it has affected the respective earning capacities, and any child support under the Child Support (Assessment) Act 1989 (Cth) that a party provides for a child of the marriage are some of the factors to which the court must direct its attention.

178 179 180

Family Law Act 1975 (Cth), s 74 (married persons); s 90SE (de facto couples). Family Law Act 1975 (Cth), s 78 (married persons); s 90SL (de facto couples). Family Law Act 1975 (Cth), s 79(4) (married persons); s 90SM (de facto couples). [8.385]  493

CHAPTER 9

Defeasible Transactions [9.05] [9.25] [9.30] [9.55]

[9.100] [9.135] [9.155] [9.175] [9.195]

STATUTORY AND EQUITABLE INTERVENTION............................................................. 495 STATUTORY CONSUMER LAW..................................................................................... 496 RESTRAINT OF TRADE................................................................................................. 498 DISPROPORTIONATE CONTRIBUTIONS TO PURCHASE PRICE..................................... 500 [9.55] Nature of a resulting trust............................................................................. 500 [9.60] Transfer to a volunteer.................................................................................. 500 [9.75] Purchase in the name of another................................................................... 502 FAILURE OF AN UNDERTAKING................................................................................... 504 TAKING ADVANTAGE OF ANOTHER............................................................................ 507 MISLEADING OR DECEPTIVE CONDUCT..................................................................... 509 UNCONSCIONABLE OR UNFAIR CONDUCT................................................................ 511 UNCONSCIENTIOUS EXERCISE OF RIGHTS................................................................. 514

STATUTORY AND EQUITABLE INTERVENTION [9.05] Improper conduct may lead to another party entering into a transaction which is

detrimental to that other party. That impropriety may involve improper business tactics or misleading or deceptive or unfair conduct. An interest may be transferred without payment or for less than a fair return to another exerting improper pressure. A dealing may raise doubts about the free exercise of choice of the party making a transfer of property. Relationships between parties can cause such doubts. Furthermore, a person may be induced to borrow money and grant a mortgage for the resulting debt on unfavourable terms. The transfer may be instigated not by a party to the transaction, but by another person whose acts are known to or encouraged by the contracting party. Thus a mortgage may be granted in favour of a financial institution by a person who is being urged to act to guarantee a loan by a relative or friend. The mortgaged property is often the mortgagor’s home, which is providing security for risky business enterprise. Reported cases suggest that husbands or sons can more readily induce wives or mothers to support their ambitions and the transactions result in what is described as “sexually transmitted debt”. Finally, rights may be exercised in ways that may be regarded as oppressive. These types of transactions and the law’s preparedness to release the injured party are the focus of this chapter. [9.10]  Chapter  8 examines the transactions by which interests in land may be transferred

from one person to another. The transfers can be by gift (both during the donor’s lifetime and on death by will) and by sale. Some formalities must be met for these transactions to be effective. The need for formality may create a gender bias in favour of males because females are more likely to contribute to a purchase through in kind assistance, such as household maintenance or other domestic work, and these contributions are less likely to be formally recorded than money payments or obligations. In a range of transactions beyond real property, formalities are often used for a consumer protection purpose so as to ensure that a party understands the content of a transaction and the obligations imposed. In land dealings such motives lie behind the requirement that [9.10]  495

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a prospective retirement village resident be given details of ongoing commitments to pay contributions for maintenance and similar services (see [15.215]) or that a mortgagor be given details of repayment obligations:  see [7.395]. The traditional basis for formalities for land dealings is the Statute of Frauds, which aimed to prevent fraud occurring by false claims as to the existence of a transaction. But equity intervened on the basis that the Statute of Frauds should not itself become an instrument of fraud; the doctrine of part performance meant that where there was alternative evidence of the existence of a dealing involving detrimental reliance on the existence of the dealing, that dealing would be enforced. In this way an informal dealing has legal effect. Although once there are sufficient acts of part performance, informality is not an objection to the existence of a dealing, a recognised proprietary transaction still has to be established to progress beyond a contractual obligation. Confusion on this point following the Judicature Acts (with the readier availability of equitable relief) was the basis of the High Court’s rejection of earlier cases on contractual licences in Cowell v Rosehill Racecourse Co Ltd (1936) 56 CLR 605: see [1.215]. Whereas part performance allows the enforcement of a property dealing, the doctrine of estoppel means that the lack of a concluded contract can be overcome where a representation has been acted upon to the detriment of the representee. However, this doctrine does not lead to the remedy of the enforcement of promises, but to an entitlement to compensation to make good the loss suffered through the acts in detrimental reliance. Both part performance and estoppel are equitable doctrines achieving the enforcement of a dealing that was unenforceable at common law. These doctrines thus create obligations and are part of the analysis of dispositions in Chapter 8. [9.15] The ability to set aside a transaction induced by improper conduct has been given

recent impetus by the assertion of statutory and equitable doctrines. The Competition and Consumer Act 2010 (Cth), provides remedies for acts in restraint of trade, such as understandings to restrict competition, abuse of market power to impose unfavourable terms and resale price maintenance. The Australian Consumer Law (ACL) which is set out as Sch 2 to the Competition and Consumer Act 2010 (Cth) gives relief for transactions induced by misleading or deceptive conduct, commonly a misrepresentation, by unfair terms in a standard form contract and by unconscionable conduct. Equity has reaffirmed long-​established but sometimes neglected doctrines and has developed new approaches. Equity has in effect applied a presumption against gifts outside the family circle. In these cases the doctrine of resulting trusts means that a purported gift may in equity flow back to the donor. In addition, even contributions to a purchase price beyond the nominal share of the contributor may create an interest proportionate to the contribution. Where parties purchase property on the basis of a project or an ongoing relationship and that project or relationship breaks down, equity may, under the doctrine of constructive trusts, distribute the property on the basis of contributions, both monetary and in kind, to the property.

STATUTORY CONSUMER LAW [9.25]  The ACL which is set out in Sch 2 provides standards of behaviour aimed at consumer

protection. Its significant provisions include prohibitions on misleading or deceptive conduct (s 18), unconscionable conduct (s 20), imposition of unfair terms (s 23) and harassment and 496 [9.15]

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coercion (s 50). The ACL which came into force on 1 January 2011 replaced the consumer protection provisions, in particular Pt V of the Trade Practices Act 1974 (Cth). In the 1974 Act the general proscription of misleading or deceptive conduct engaged in by a corporation in trade or commerce in s 52 represented a significant legislative innovation. The section was supported by penalties and civil remedies for affected parties. The ACL applies not only to acts of corporations but extends to acts of individuals dealing with Commonwealth agencies, engaging in interstate trade or commerce or using post or telegraphic services. Many of the provisions of the ACL are copied but extended to acts of individuals generally by State and Territory fair trading legislation.1 Whilst private individuals may not be selling in the course of trade or commerce, they will often employ agents who are acting in trade or commerce. In Benlist Pty Ltd v Olivetti Australia Pty Ltd (1992) ATPR 41-​168 an agent’s brochure referred to the possibility of strata conversion. The brochure was held to be deceptive or misleading because it omitted to state that conversion would be difficult because of building encroachments. The concepts of misleading and deceptive conduct, unconscionable conduct and of unfair terms are explained later in this chapter (see [9.155] and [9.175]). [9.27]  Breach of the ACL leads to a range of civil remedies under that law. They are injunction

(s 232), compensation (s 236) and other remedies at the court’s discretion (s 243). Criminal sanctions include the making of undertakings (s 218), substantiation notices (s 219), pecuniary penalties (s 224) and injunctions (s 232). The scope of civil remedies in the context of land transactions was considered by the High Court in Henville v Walker (2001) 206 CLR 459. In that case a real estate agent gave inaccurate advice which induced a purchaser to buy land for a development project. The court pointed out that the project involved risk and factors other than the misrepresentation contributed to the loss. The statutory test was whether the injured party suffered loss “by” impugned conduct. The court had to measure the causative effect of the misrepresentations; that meant the difference between what the lots would have sold for had the representations been accurate and what they actually sold for. The entitlement to recovery of losses caused by prohibited conduct was further emphasised by the High Court in I and L Securities Ltd Pty v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109. The case again involved deceptive conduct in representations as to the value of land. The appellant lent money by way of mortgage following these representations. The respondent argued that the appellant had not made proper inquiries as to the financial capacity of the mortgagor and that damages should be reduced by reference to this failure. The respondent’s argument was rejected. The court (Kirby J dissenting) reasoned that the then damages section (s 82) was not restrained by common law principles such as mitigation or contributory negligence and should not be read down by reference to other pecuniary remedies in the Act. What was important was the causative connection between the conduct and the loss. Contributory negligence was only relevant in so far as that conduct could be regarded as a cause of all or part of the loss. The current damages provision (s 236) is expressed in similar terms to the previous s 82 though it is expressed as awarding compensation for loss or damage suffered because of offending

1

Fair Trading Act 1987 (NSW); Australian Consumer Law and Fair Trading Act 2012 (Vic); Fair Trading Act 1989 (Qld); Fair Trading Act 1987 (SA); Australian Consumer Law (Tasmania) 2010 (Tas); Fair Trading Act 1987 (WA); Fair Trading (Australian Consumer Law) Act 1992 (ACT); Consumer Affairs and Fair Trading Act (NT). A useful chart of comparative provisions is set out in Miller, Annotated Trade Practices Act (37th ed, Thomson Reuters, Sydney, 2015), Table 6. [9.27]  497

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conduct. Section  236 is similarly complemented by a general power to make appropriate orders against an offending party.

RESTRAINT OF TRADE [9.30] Land dealings are a part of national commercial activity that is regulated by the

Competition and Consumer Act 2010 (Cth). That legislation controls a number of restrictive trade practices that impede competition in the supply of goods and services. Part IV of the Competition and Consumer Act 2010 (Cth) regulates restrictive practices and on their face its sections apply to actions of corporations. But as a result of the extended operation enacted by s 6, Pt IV applies to the actions of individuals where the individuals are acting in international or interstate trade or by supply to a Commonwealth authority. As well as the substantive rights, the Competition and Consumer Act 2010 (Cth) provides remedies for any infringement of its prohibitions. These remedies cover much of the ground of the traditional legal and equitable remedies. In many cases, however, they are more extensive because they are not subject to qualifications applicable to the traditional remedies. The Competition and Consumer Act 2010 (Cth) remedies are: damages (s 82), injunctions (s 80), information disclosure (s 80A) and rescission and variation of a contract (s 87). [9.35]  The land dealings most affected by the Competition and Consumer Act 2010 (Cth) are

land sales, leases, and mortgages. Covenants in leases and mortgages may infringe the restraint of trade rules. Contracts of sale or lease may be affected by misleading or deceptive conduct. Loans secured by a mortgage may be the result of unconscionable conduct. [9.40] There are two sets of provisions regulating covenants affecting competition:  ss  45

and 45B of the Competition and Consumer Act 2010 (Cth). These sections are expressed to be mutually exclusive: s 45(5). Section 45B applies to covenants, whereas s 45 applies to provisions in a contract. Section 45B is therefore the section applicable to land dealings. It provides: A covenant, whether the covenant was given before or after the commencement of this section, is unenforceable in so far as it confers rights or benefits or imposes duties or obligations on a corporation or on a person associated with a corporation if the covenant has, or is likely to have, the effect of substantially lessening competition in any market in which the corporation or any person associated with the corporation supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the covenant, supply or acquire, or be likely to supply or acquire, goods or services.

Section 45B(2) prohibits a corporation from requiring the giving of a covenant, or giving a covenant, if the proposed covenant has the purpose, or would have or be likely to have the effect, of substantially lessening competition in any market for the supply or acquisition of goods or services in which the corporation is involved. A  person is deemed to require the giving of a covenant, within the meaning of s 45B(2), where he or she issues an invitation or an offer to another person to enter into a contract containing a covenant, or makes it known that he or she will not enter into a contract of a particular kind unless the contract contains a covenant of a particular kind or in particular terms: s 45B(3). Section 45B does not apply to any covenant if the sole or principal purpose for which it is required to be given is to restrict the use of the relevant land to residential purposes:  s  45B(9). Section  45B also has no application where the person requiring the covenant to be given is a religious, charitable 498 [9.30]

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or public benevolent institution or its trustees: s 45B(9). “Covenant” is defined in s 4(1) as meaning a covenant “annexed to or running with an estate or interest in land (whether at law or in equity and whether or not for the benefit of other land)”. [9.45]  Sections 45 and 45B of the Competition and Consumer Act 2010 (Cth) prohibit conduct

which has the purpose or is likely to have the effect of substantially lessening competition. The sections are therefore concerned with the reasons for conduct. Purpose has been distinguished by the courts from motive and expressed as meaning the end in view of conduct.2 Evidence of this end in view may include surrounding circumstances. A community of action may lead to an inference of a common purpose.3 On the other hand, parallel petrol pricing has not been taken to reflect collusive action but is explicable as simply the observation of the conduct of others because fluctuations are apparent.4 [9.50]  Exclusive dealing is regulated by s  47 of the Competition and Consumer Act 2010

(Cth). Section  47(1) states that a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing. The relevance of this provision to landlord-​tenant law is explained in s 47(8) and (9). Section 47(8) states: A corporation also engages in the practice of exclusive dealing if the corporation grants or renews, or makes it known that it will not exercise a power or right to terminate, a lease of, or a licence in respect of, land or a building or part of a building on the condition that another party to the lease or licence or, if that other party is a body corporate, a body corporate related to that body corporate;

(a) will not, or will not except to a limited extent;



(i) acquire goods or services, or goods or services of a particular kind of description, directly or indirectly from a competitor of the corporation or from a competitor of a body corporate related to the corporation; or



(ii) re-​supply goods, or goods of a particular kind or description, acquired directly or indirectly from a competitor of the corporation or from a competitor of a body corporate related to the corporation;



(b) will not supply goods or services, or goods or services of a particular kind or description, to any person, or will not, or will not except to a limited extent, supply goods or services, or goods or services of a particular kind or description –​



(i) to particular persons or classes of persons or to persons other than particular persons or classes of persons; or



(ii) in particular places or classes of places or in places other than particular places or classes of places; or



(c) will acquire goods or services of a particular kind or description directly or indirectly from another person not being a body corporate related to the corporation.

Section  47(9) deals with the converse situation of actions based on past practices.5 The subsection includes within the meaning of “exclusive dealing” a refusal by a corporation to grant or renew or exercise a power or right to terminate a lease on the ground that the tenant is engaged in one or more of the practices referred to in s  47(8). Section  47(11) contains

2 3 4 5

News Ltd v South Sydney District Rugby Club (2003) 215 CLR 563. News Ltd v Australian Rugby Football League Ltd (1996) ATPR 41-​568. ACCC v Mobil Oil Australia Ltd (1997) ATPR 41-​568. The subsection was held to be constitutionally valid by the High Court in Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397. [9.50]  499

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similar exemptions to these granted by s 45B(9) in favour of trustees for religious, charitable or public benevolent institutions. None of the conduct of the corporation referred to in s 47(8) and (9) constitutes an infringement of s 47(1) unless it has the purpose, or has or is likely to have the effect, of substantially lessening competition: s 47(10).

DISPROPORTIONATE CONTRIBUTIONS TO PURCHASE PRICE Nature of a resulting trust [9.55] There are generally accepted to be three classes of trust:  express, resulting and

constructive. An express trust arises where the parties intend a separation of the legal and equitable proprietary interests. The trust arises from a transfer to another who is to hold on trust or from the expression that a current owner is to hold for the benefit of another. An express trust of land requires written evidence. A declaration of trust must be evidenced in writing and the transfer of an equitable interest must be evidenced in writing.6 A resulting trust arises when the legal title to property is transferred to someone, but that person is not intended to be the beneficial owner of the property.7 A resulting trust does not require written evidence? either because of an express exception to the Statute of Frauds or an exception implied on the necessity to overcome fraud. A constructive trust, on the other hand, arises whenever a trust must be imposed by the courts to do justice between the parties.8 It is a remedial device and operates independently of intention. Again, because it operates to prevent fraud, it is outside the writing requirement. Resulting trusts are significant because equity adopts the position that parties intend to hold property in proportion to their contribution to the purchase price. Where a party takes as a volunteer or holds a share greater than the party’s contribution, a resulting trust is inferred in favour of the transferor or the contributor of the greater proportion.

Transfer to a volunteer [9.60]  A simple transfer of land from one party to another without any consideration being

provided by the transferee would appear to be such a common situation that the relevant legal principles should be well established. A transaction cannot be recalled simply because it is a gift: see [8.25]. Once a gift has been perfected, the donee can enforce the rights conferred by it. A gift of land requires the transfer of the legal estate. Consequently, at common law, once an executed deed has been handed to the donee, or under the Torrens system the donee has become registered as the proprietor of the land, the donee can claim that a gift has been completed. This analysis of the effect of a purported gift is not concerned with situations where there is a clear intention to make a gift and the issue was whether effect had been given to that intention but with situations where the legal estate has been transferred, but the intention is unclear. Probably because some evidence as to intention will always exist, situations in the absence of intention have not been clearly analysed. The issue is whether there is a presumption against a gift: whether in the absence of evidence of intention the transferor is to be taken to 6 7 8

See the discussion of formalities at [8.65]ff. See Evans, Jones and Power, Equity and Trusts (4th ed, LexisNexis Butterworths, Sydney, 2016), Ch 26. See Evans, Jones and Power, Equity and Trusts (4th ed, LexisNexis Butterworths, Sydney, 2016), Ch 46.

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intend to retain the beneficial ownership. A presumption against a gift leaves the beneficial ownership with the transferor. The transferee acquires legal title subject to a trust in favour of the transferor. Such a situation is one to which the term “resulting trust” is most appropriately applied. However, the presumption of a resulting trust is most clearly established in cases where the purchase price is provided not by the transferee, but by a third party, and a trust results in favour of that third party. This situation must be analysed along with competing presumption –​the presumption of advancement. The presumption is that, prima facie, a gift is indeed intended in cases of dealings with close relatives and that presumption also applies to voluntary transfers to close relatives. The High Court has recently reiterated the approach that between husband and wife uneven contributions to a purchase price should not be presumed to be significant as a balance may derive from financial and other contributions.9 The court further considered that equality of ownership should lead to a presumption of a joint tenancy. [9.65]  The question of a presumption against a gift was considered by Cussen J in the Full

Court of the Victorian Supreme Court in House v Caffyn [1922] VLR 67. In that case a deceased person transferred land under the Torrens system to his brother and the brother became the registered proprietor of the land. The transfer was expressed to be in consideration of 950 pounds paid by the defendant to the intestate. The deceased’s administrator claimed a beneficial interest in the land on the basis that a presumption of a resulting trust arose from non-​payment of the expressed consideration. Cussen J referred to dicta that an implication of a resulting trust does not arise on a voluntary conveyance of land under the general law. Cussen J considered that the statements were limited to situations where a trust in favour of the transferee was expressed and that no further trust would be implied. Under the general law, this express trust would be executed by the Statute of Uses. Consequently, a statement “To and unto the use of X and his heirs” sets out the express though nominal trust. However, a memorandum of transfer under the Torrens system would not set out such a trust. Cussen  J, therefore, inclined to the view that a presumption of a resulting trust applied to voluntary transfers of land under the Torrens system. However, the presumption could be negated and the expression of a substantial consideration would exclude the presumption. He concluded that the transfer passed the legal and beneficial title to the brother. [9.70]  The issue came before the High Court in Wirth v Wirth (1956) 98 CLR 228. In that

case an engaged couple had purchased as joint tenants a parcel of land. Subsequently, but prior to the marriage, the male partner transferred his interest to his fiancee. A consideration of 100 pounds was expressed in the transfer. Dixon J (with whom McTiernan J agreed in the result) referred to what he described as the “valuable and important judgment” in House v Caffyn [1922] VLR 67. He indicated some doubt about the proposition that by reason of the expression of a substantial consideration there was no resulting trust. Dixon J pointed out the expression would be either true or false. A true statement of consideration would mean that if no consideration was paid, the transferor held a lien for the unpaid price. If the expression was false, the reason for its inclusion would provide an indication as to actual intention. Dixon J concluded, however, that the fact that the transfer was made in contemplation of the marriage for which the parties had agreed was sufficient reason to exclude the presumption 9

Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278; [2006] HCA 6. [9.70]  501

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of a resulting trust. Dixon J conceded that the presumption of advancement (a presumption in favour of a gift) had not been applied in cases of engaged persons, but considered that it would be paradoxical to treat a transfer to an intended spouse differently from a transfer to a recently joined spouse. He concluded that the legal and equitable title had passed. It can, therefore, be stated that a transfer of land under the Torrens system to a stranger without consideration and without any expression of consideration, and in the absence of any evidence of intention, passes a legal estate subject to a resulting trust in favour of the transferor. However, this conjunction of factors seems to be more remote than the combination of numbers needed to succeed in a game of Lotto. This unsatisfactory position is overcome by legislation in New South Wales and Western Australia, which provides that no use shall be held to result merely from the absence of consideration in a conveyance of land in which no uses or trusts are declared.10

Purchase in the name of another [9.75]  The real world does have people buying land in the name of another. In these cases the

law is clear that a resulting trust arises in favour of the person providing consideration. Similarly, joint owners may provide contributions of the purchase price in unequal proportions. In these cases the owners hold in trust for themselves as tenants in common in shares proportionate to their contributions. The presumption of a resulting trust in these cases is displaceable by a common intention to the contrary or a presumption of advancement. The presumption of advancement is that where the dealing is between close relatives a gift is intended. [9.80]  The operation of the presumption of a resulting trust and the scope of the presumption

of advancement came before the High Court in Calverley v Green (1984) 155 CLR 242. In that case a couple had, in 1968, commenced to live together without marriage. They lived in a house whose legal title was vested in the male partner. He made some contribution to living expenses, but the female partner bore the major share of the expenses necessary for household provisions. In 1973 they decided to move to another house. The male partner indicated that finance was only available on a joint application. They both joined in the application. They became the joint owners subject to a mortgage under which they were both jointly and severally liable. The balance of the purchase price was provided from part of the proceeds of the sale of the former home. The male partner thereafter paid the instalments due under the mortgage; the female partner paid the bulk of the household expenses. Two factual matters cloud the application of the presumptions. First, the money was provided substantially through a joint loan, but that joint loan was repaid by one of the partners. Secondly, the parties’ intentions were not made express. The High Court concluded that the case was one of unequal contributions of the price. The male provided a payment plus half the loan; the female provided half the loan. As to intention, if there is a sole contributor, that person’s subjective view as to whether or not a gift was intended would be relevant. Where there are joint purchasers contributing unequally the search is for common intention. Each party’s intention is what was reasonably understood by the other to be manifested by that party’s words or conduct. From this perspective most actions are equivocal. For example, the fact that the female partner’s name was added as purchaser and mortgagor to facilitate the arrangement of finance

10

Conveyancing Act 1919 (NSW), s 44(1); Law of Property Act 1969 (WA), s 39; see also Stugwell v Walker (1993) DFC 75-​134.

502 [9.75]

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can be viewed as an explanation of her acquisition of a beneficial interest or as an explanation of her being a trustee for the male partner. The understanding that the male partner would pay the bulk of the mortgage could be viewed as part of the arrangements as to how expenses would be shared. The High Court, therefore, concluded that, under the presumption of resulting trust, the parties held on trust for themselves in proportion to their original contributions to the price. The husband was credited with the payment plus half the loan, the wife was credited with half the loan. The material on intention did not provide any clear common intention so that the resulting trust presumption was not rebutted. The issue of law to be clarified was the scope of the presumption of advancement. In Wirth v Wirth (1956) 98 CLR 228 (see [9.90]), Dixon J had argued for a flexible approach and applied the presumption to parties who had agreed to be married. He indicated that the presumption should be applied when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred. In Calverly v Green Gibbs CJ accepted Dixon J’s approach as governing the matter. He pointed out that the case was one where the relationship had an apparent permanence and in which the parties lived together, and represented themselves to others, as man and wife. Gibbs CJ concluded that it was natural that between such a man and a woman property would be put in the woman’s name because she was intended to have a beneficial interest, and a presumption of advancement was raised. Mason and Brennan JJ disagreed as to this factual inference. They considered that where a man and a woman are cohabiting though unmarried, an assumption that the parties intend to retain independent control of assets is more likely than a presumption of beneficence. Deane J pointed out that originally the presumption of advancement applied in cases where the person making the transfer of legal title owed obligations of support to the transferee: a man to his child or other person to whom he stood in loco parentis; a husband to his wife. He recognised that the categories had been extended to an intended wife and modern notions of equality should extend them to the wife vis-​a-​vis a husband. He considered that there were convincing reasons of logic or analogy to deny the extension to persons in a de facto relationship, but, in any event, previous decisions of the High Court precluded the extension of the presumption to such a relationship. Murphy J rejected the approach of determining the property rights by reference to the presumptions. The conclusion of the case was that the presumption of a resulting trust applied so that the property was held on trust for the parties in proportion to their contributions to the purchase price and there was no application of the presumption of advancement. [9.85] The application of the presumption and its place in relation to normal inferences

from the facts occurred in Paulet v Stewart [2009] VSC 60. The case involved a domineering and overly protective mother and a profoundly deaf daughter. The court pointed out that mother had advanced money for the purchase of land by the daughter, and spent $181,000 on mortgage payments and improvements to the land. On the other hand, the daughter had entered a genuine loan agreement for $50,000 towards repayment of the initial advance and contributed significantly ($90,000) to the reduction of the mortgage. No apparent reason for the purchase in the daughter’s name existed other than the desire to benefit her; the mother’s writings treated the house as the daughter’s and the house was not contained in the list of assets prepared on the mother’s death. These factors pointed to intended beneficial ownership by the daughter. Similarly, the presumption of advancement applied in the daughter’s favour. [9.85]  503

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Although the presumption would normally be weak where a child was over 18 and managed her own affairs, in this case the daughter suffered from disabilities and her mother took a protective role. The case reinforces the strength of Murphy’s position in Calverley v Green (1984) 155 CLR 242 that presumptions rebutted by other presumptions which may be strong or weak do not help analysis as to whether a benefit as well as nominal ownership is intended. [9.90]  The application of these presumptions can be affected by an illegal purpose for the

transfer. The property is put in the name of another to avoid a tax or other charge that applies to the transferor. The issue came before the High Court in Nelson v Nelson (1995) 184 CLR 538 at 574–​576. Property was transferred from a mother to a child so as to avoid charges which would have been imposed on the mother. The actual intent was clear –​the mother was to retain a beneficial interest but that result was to achieve an illegal purpose. The High Court pointed out that the flexibility of equitable remedies meant that an all-​ or-​nothing result could be avoided. Consequently the Court rejected a result that the loss should lie where it fell and the transferee retain the property free of a trust in favour of the transferor where that trust would give effect to the illegal purpose. Rather, the Court imposed a condition on the claim to the property by way of a resulting trust. That condition was that the transferor pay to the relevant government authorities the sums of money avoided by the nominal ownership. [9.95] The position in Australia is that the presumption of a resulting trust arises from

provision of the purchase price by someone other than the transferee or by unequal contributions between joint owners. These contributions are assessed at the time of purchase. The presumption of a resulting trust may be rebutted by evidence of intention to make a gift, but this intention must be that of the party contributing the whole of the purchase price or, in the case of unequal contributions, their common and revealed intention. Again the intention is judged at the time of the purchase. The presumption of a resulting trust may also be rebutted by the presumption of advancement, which extends beyond cases of father benefiting a child and husband benefiting a wife, but does not extend to couples in a de facto relationship. Later actions may indicate a dealing with the equitable interests, but any transfer is subject to formality requirements.

FAILURE OF AN UNDERTAKING [9.100]  Where one party accepts a transfer of property, but does so on the understanding that

the whole or part of the property will be held for someone else, the transferee would gain an unintended advantage if the transferee were to retain the property but deny the understanding. To overcome this result a constructive trust has been imposed upon the transferee.11 The trust is imposed in favour of the intended beneficiary of the understanding, whether or not that party was the transferor, even though the party defrauded will normally be the transferor. The person in whose favour the trust is constructed may, therefore, be a bystander to the dealing. The lack of writing for the understanding is regarded as rendered irrelevant by the fraud: the Statute of Frauds should not be an instrument of fraud.

11

See Davies, “Constructive Trusts, Contract and Estoppels: Proprietary and Non Proprietary Remedies for Informal Arrangements Affecting Land” (1981) 7 Adel L Rev 200 at 206.

504 [9.90]

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The longest-​established applications of this principle are cases of secret trusts attached to wills. If a named beneficiary under a will agrees with the testator that the named benefit is meant for another, the named beneficiary will be held subject to a trust in favour of the other. A similar result occurs where a person declines to make a will on the basis that the next of kin who take on intestacy will hold for an intended beneficiary. In these cases, even if the subject matter is not land, formalities are required for the making of a valid will and the trust is enforced in the absence of any writing. The principle has been applied to transfers of land. It is the assertion that a transfer was absolute when there was an understanding that the land be held for another that gives rise to the fraud. It is not essential that there was a malevolent intention at the time of transfer. [9.105] In Bannister v Bannister [1948] 2 All ER 133 the defendant agreed to sell two cottages to the plaintiff on the plaintiff’s undertaking that the defendant would be allowed to live in one of the cottages rent free for as long as she desired. The price reflected this arrangement, but the undertaking was not included in the formal conveyance. Thereafter the defendant lived in a room in one of the cottages until the plaintiff brought an action for recovery of possession. The Court of Appeal ruled that the plaintiff held the property on trust for the defendant during the defendant’s lifetime to permit her to occupy the cottage for as long as she desired. The court stated that equity would not allow the transferee to set up the apparent absolute nature of the conveyance, as to do so was of itself fraud, and it was enough that there was some sufficiently defined beneficial interest in the property to be taken by another.12 [9.110] An arrangement between two co-​ owners brought the principle into operation in

the New South Wales case of Last v Rosenfeld [1972] 2 NSWLR 923. The co-​owners had had various social and business dealings with one another and had purchased a residential property for investment purposes. Ultimately it was agreed that one co-​owner should buy out the other and a contract and transfer were duly executed. The selling owner, however, claimed that the agreement was made as a favour to the buying owner so that the buying owner could live on the property. The property was sold for its cost price. The selling owner alleged an agreement whereby the buying owner was to retransfer the half share at the sale price if the buying owner did not live on the property within one year. The selling owner’s account was accepted and the New South Wales Supreme Court held that the retention of title by the buying co-​owner would amount to a fraud. The trust arose upon the failure of the buying owner to live on the property within 12 months and it did not matter that the selling owner had to pay an agreed figure for the return of the property. The court rejected the argument that the selling owner was trying to enforce an oral collateral agreement. [9.115] In these cases the transferee holds land on trust for another and the beneficiary’s

interest is at least fashioned in the form of a recognised proprietary interest –​a conditional life estate, a right to purchase a half share. The nature of this interest flowed from the agreement of the parties. In Muschinski v Dodds (1984) 160 CLR 583 the obligation of the transferee could not be translated into such an interest. The two parties (a man and a woman) became the joint owners of a property purchased from funds provided by the woman. It was the parties’ understanding that the man would renovate a cottage on the land and purchase a

12

See also Hodgson v Marks [1971] Ch 892; Binions v Evans [1972] Ch 359; Hussey v Palmer [1972] 1 WLR 1286. [9.115]  505

PART 3 Dealings in Land

prefabricated house for it. The parties separated without these tasks being undertaken. Deane and Mason  JJ held that the woman had advanced the purchase price on the basis of the planned joint venture. That venture collapsed without attributable blame. In those circumstances it was unconscionable for the man to retain his half interest. They declared that the parties held their joint interests on trust to repay to each that person’s respective contribution and as to the residue in equal shares. Brennan and Dawson  JJ, on the other hand, rejected the imposition of a constructive trust on the basis that to do so was merely to contend that, as the circumstances unfolded, it was unfair for the man to retain his half interest without any contribution. [9.120]  The failure of a joint enterprise again came before the High Court but in the context

of domestic aspects of a de facto relationship.13 The parties in the case pooled their earnings to meet their expenses and outgoings, which included the acquisition of land and the building of a house and furniture payments. When they separated, the man attempted to rely upon his sole legal title to the land. The High Court ruled that the contributions were made for the purpose of the relationship and were not intended as a gift. The assertion of sole title by the man was unconscionable and a constructive trust would be imposed. The parties held on trust for themselves in proportion to their contributions which the Court determined as 55% and 45% by the man and woman respectively. The principle14 has been described as reclaiming a windfall equity. There must be both a joint enterprise and unconscionability in one party retaining a benefit where the circumstances are such that it was intended that another party enjoy the benefit. The facts of Paulet v Stewart [2009] VSC 60, where a mother advanced money to a daughter, are set out at [9.85]. An argument on the failure of a joint enterprise was rejected because the acts were those of the mother alone without any inducement by the daughter and because the benefits had been volunteered by the mother. [9.125]  It is fairly clear that an owner going back on an undertaking shared with another,

which has been the basis of the acquisition of ownership, is unfair and that person should be held to the undertaking. A constructive trust is imposed to enforce the undertaking. But the circumstances in which it is unconscionable to assert title beyond the failure of a joint enterprise await elucidation. Furthermore, where the basis of the trust is not an undertaking, the terms of the constructive trust are similarly indeterminate. The unconscionable conduct gives rise to an equity in favour of the wronged party and the remedy to satisfy the equity depends on what is necessary to set aside the wrong. Although a constructive trust is imposed on the property acquired by the wrongdoer, the ultimate remedy may not even involve an interest in the property, although even a monetary right is likely to be imposed as a charge on the property. It now seems to be accepted that the remedy in cases of going back on an undertaking and of failure of joint enterprises is akin to that of detrimental reliance on expectations created by another. [9.130] The place of the denial of undertaking cases within the Torrens system was

considered by the High Court in Bahr v Nicolay (1988) 164 CLR 604. That case produced

13 14

Baumgartner v Baumgartner (1987) 164 CLR 137; 62 ALJR 29. See also Cooke v Cooke [1987] VR 625; Glouftis v Glouftis (1987) 44 SASR 298.

506 [9.120]

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no clear majority one way or the other. Mason CJ and Dawson J took the view that the fraud exception to indefeasibility extended to cases of a subsequent repudiation of a pre-​registration undertaking. Wilson and Toohey JJ denied this view of the fraud exception, but concluded that the denial of the undertaking gave rise to a constructive trust which was enforceable against the registered proprietor because of the “in personam” exception to indefeasibility. Brennan J decided the case on the basis of an express trust, but inclined to the wide view of the fraud provision. The result seems clear whatever the justification. It should be pointed out that some of the statutory language refers to an obtaining of title by fraud –​an expression difficult to reconcile with the wide view.

TAKING ADVANTAGE OF ANOTHER [9.135]  Trade power or misleading conduct may induce a person to enter a transaction that

person would not otherwise have done. A person may also be persuaded to enter a transaction because of the influence of another. Where that influence is unfair, equity will allow the transaction to be set aside. Actual unfair influence may be established where a person can show that the person’s judgment was overwhelmed by another. Unfair influence is presumed if there is a fiduciary relationship between the parties. A fiduciary relationship will exist because of an existing dealing between persons. Finally, where a married woman is influenced by her husband, unfair influence is presumed. [9.140]  To establish undue influence, the party seeking to set aside a transaction must show

that the party’s will was subject to the control of another such that the party could not exercise an independent judgment.15 A relationship between an uncle and a nephew was involved in Bridgewater v Leahy (1998) 194 CLR 457. The uncle owned grazing land over which he made a contract of sale to his nephew and the nephew’s wife for $696,811. A deed of forgiveness of $546,811 was executed by the uncle. An amount of $150,000 was paid and a transfer completed. The uncle had four daughters and no sons. He was a frugal person whose interests were narrow. He excluded his wife and daughters from his business affairs. The nephew had worked on the grazing land for many years. The uncle did not want the land broken up on his death and relied on the nephew to manage it. At the time of the transactions the uncle was 84 but was assessed by a medical practitioner to be of a sound mind. He died the following year. By his will the uncle gave the nephew an option to buy land including the grazing land for $200,000. That option was exercised. The wife and daughters sought to set aside the transfer or the deed of forgiveness. The High Court held that the uncle’s strong emotional dependence upon the nephew placed him in a position of disadvantage as against the nephew. It was unconscionable for the nephew and wife to retain the benefit of the deed of forgiveness. However, the nephew would have had rights under the will but for the transfer prior to the uncle’s death. The setting aside was on condition of an investigation of the benefits of the will and the claims the wife and daughters could then have made upon the estate.

15

On a parallel with the fiduciary duty principles, undue influence is presumed in certain classes of relationships: parent and child, guardian and ward, solicitor and client, physician and patient, and cases of religious influence: Johnson v Buttress (1936) 56 CLR 113. A controversial application of the doctrine to a male dependence on a female companion occurred in Louth v Diprose (1992) 175 CLR 621; the criticisms of the case to the effect that the court made uncalled-​for inferences from the relationship seem conversely to be based on the stereotype that females cannot dominate males. [9.140]  507

PART 3 Dealings in Land

[9.145]  The doctrine of fiduciary duty provides that where there is a fiduciary relationship

between the parties, a transaction in favour of the person owing the fiduciary duty will be set aside in the absence of informed consent to the flowing of the benefit. The transaction will be set aside even if it can be shown that the party to whom the duty is owed would have entered the transaction if the true purport of the transaction had been disclosed. A  person owing a fiduciary duty will also have to account for profits received from information not passed on to those to whom the duty is owed. 16 The classes of persons who normally stand in a fiduciary relationship to one another extend from trustee and beneficiary to “partners, principal and agent, director and company, master and servant, solicitor and client, tenant-​for-​ life and remainderman”.17 [9.150]  The continued existence of a separate doctrine with respect to transactions entered

into by a married woman has been more controversial, but its place in the Australian legal system was affirmed by the High Court in Garcia v National Australia Bank Ltd (1998) 194 CLR 395. A married woman and her husband executed a mortgage in favour of a bank as security for all moneys owed by either of them to the bank. The woman signed four guarantees in favour of the bank and its successor. The guarantees related to loans for the husband. The couple subsequently divorced. The wife sought to set aside the guarantees. The guarantees were executed without any explanation by the bank. The woman was a physiotherapist who was found to be a capable and presentable professional. While her husband pressured the wife to sign the documents, his power was not such as to overbear her will. However, the wife did not understand the relationship between the guarantee and the mortgage and some other aspects of the transaction. There was nothing to alert the bank to any suspicions in relation to the transaction. The High Court held that a claim succeeds if (a)  the woman does not understand the purpose and effect of the transaction; (b) the woman does not gain any financial benefit from the transaction; (c) the lender is taken to have understood that the woman may impose trust and confidence in her husband in matters of business; and (d) the lender does not take steps to have the transaction explained to the wife. The important knowledge of the lender is of the existence of the relationship of husband and wife. The majority of the High Court Garcia v National Australia Bank Ltd (1998) 194 CLR 395 expressly recognised that the role of women in Australian society had changed in the 60  years from Yerkey v Jones (1939) 63 CLR 649. However, their Honours pointed out that there remained a significant number of women in relationships that are, for many and varied reasons, marked by disparities of economic and other power. The doctrine was, however, based on the trust and confidence between marriage partners. The lender is taken to have understood that the woman may impose trust and confidence in her husband. The majority left open the possible extension of the doctrine to long-​term and publicly declared relationships between members of the same or opposite sex. Kirby  J delivered a powerful dissent in which he rejected a doctrine providing special relief for married women. However, he agreed in the result with the majority by extending the responsibility of the lender through what he described as “constructive notice”. In his Honour’s view, the lender could readily have discovered that the wife reported trust and confidence in the husband and, on its face,

16 17

Chickabo Pty Ltd v Zphere Pty Ltd [2019] VSC 73. Maguire v Makaronis (1997) 188 CLR 449 at 464.

508 [9.145]

Defeasible Transactions  Chapter  9

the transaction provided little advantage to her and left her at high risk in relation to the roof over her head. [9.152]  The continuing existence of a doctrine of a married woman’s equity separate from

the general principle of unconscionability was applied by the Victorian Supreme Court in Wenczel v Commonwealth Bank of Australia [2006] VSC 324. In that case the wife gave a third party mortgage supporting a loan her husband’s company. The court accepted the four tests set out above. In determining that the wife was a volunteer, it disregarded any benefit which might ultimately flow to her. Part of the loan was to discharge liabilities on a vehicle owned by her husband; whilst she had use of the vehicle, that use was at the decision of her husband. Furthermore although the wife had some business experience, her understanding of the transaction was superficial, incomplete and confused not the full understanding required. The doctrine applied once the bank had knowledge of the relationship; the details of the strength of the relationship and the fact that the parties were separated were irrelevant. Some indications have been given that the equity may be applied to relationships of trust and confidence beyond that of husband and wife. The Victorian and Queensland Courts of Appeal have expressed a willingness to apply the doctrine to relationships such as that between elderly parents and their adult children.18

MISLEADING OR DECEPTIVE CONDUCT [9.155] The ACL which is set out in Sch  2 of the Competition and Consumer Act 2010

maintains in s 18 of the ACL a general prohibition on misleading or deceptive conduct. This prohibition replaces s 52 of the Trade Practices Act 1974 (Cth). The Act applies to conduct in trade or commerce which is misleading or deceptive or likely to be misleading or deceptive. The section is supported by penalties and civil remedies for affected parties. The civil remedies have been examined earlier in this chapter (see [9.27]). The ACL, applies on its face to acts of corporations but it is limited by s 131 of the Competition and Consumer Act 2010 (Cth) to acts of corporations but then by ss 5 and 6 of the Act extends to acts of individuals dealing with Commonwealth agencies, engaging in interstate trade or commerce or using post or telegraphic services. Many of the provisions of the ACL are copied but extended to acts of individuals generally by State and Territory fair trading legislation. A wide range of actions are caught by the ACL; the phrase “engaging in conduct” is defined in s 2(2) as follows: In this Act a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant. [9.160] There is no definition of “misleading” and “deceptive” contained in the ACL. The concepts are left to interpretation by the courts and, in consequence, the Act seeks to retain the flexibility inherent in the terms themselves. In interpreting these words, Franki J stated in Weitmann v Katies Ltd (1977) 29 FLR 336 at 343:

18

Krans v National Australia Bank Ltd [2003] VSCA 92 ; ANZ Banking Group Ltd v Alirezai [2004] QCA 6; the matter was left open by McCallum J in Australian Regional Credit v Mula [2009] NSWSC 325. [9.160]  509

PART 3 Dealings in Land

The most appropriate meaning for the word “deceive” in the Oxford Dictionary is: “To cause to believe what is false; to mislead; as to a matter of fact, to lead into error, to impose upon, delude, take in”. The most appropriate definition in that dictionary for the word “mislead” is: “To lead astray in action or conduct; to lead into error, to cause to err”.19

The High Court revisited the meaning of the phrase “misleading or deceptive” in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25. The case involved misrepresentations as to sales revenue of a business whose shares were being sold. The court indicated that the essence of a breach of the then s 52 of the Trade Practices Act 1974 was whether the impugned conduct had a tendency to lead into error. Where representations are made to the public or a group, the impact is that on the relevant section of the public; where negotiations are between individuals, the concern is with the state of mind of the affected individual. The concept of deceptive conduct and more particularly responsibility for others’ conduct was considered in Rash Nominees Pty Ltd v Bartholomaeus [2013] SASCFC 23.20 The case involved misleading or deceptive conduct by parties who were the director and conveyancer of the defendant; however this relationship was not enough to impute knowledge to the defendant. The court held that if it had concluded otherwise, the conduct was in trade and commerce because even though the parties were not in the business of buying and selling land, their activities on the land were enough for the buying and selling to be acts in trade and commerce. The absence of any deceit meant that the court did not have to consider the relationship between the provisions of the Trade Practices Act and the remedy of fraud under the Torrens system statute.21 [9.165]  Section 18 of the ACL, as with s 52 of the Trade Practices Act 1974 (Cth), is concerned

with the impact of conduct, not its purpose. The effect of a statement, not the intent of the maker, is the crucial element. Northrop J in Keehn v Medical Benefits Fund of Australia Ltd (1977) 14 ALR 77 at 81 held that a statement is misleading “if it would lead one ordinary member of the public, likely to read the statement or be influenced by it, into error”. This seems to suggest that the correct test of liability under s 52 is to ascertain whether the conduct complained of has a misleading or deceptive tendency; if so, the section will be infringed without the need for proof of further facts. This interpretation was confirmed as correct in Arctic Investments Pty Ltd v Ductline Pty Ltd (1992) ATPR 41-​180 at 40,459. The section will be breached even in circumstances where a corporation did not intend to deceive or it believed that its conduct was not misleading or deceptive. In other words, mens rea on the part of the corporation is irrelevant: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216. The courts have consistently held that the overall effect is what is important. They have rejected arguments of literal truth or reliance upon almost imperceptible qualifications or exclusions in fine print. Stephen J in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd at 217 stated: “nothing in [s 52(1)] suggests that a statement

19

0 2 21

See also RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164; Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88; Bill Acceptance Corporation Ltd v GWA Ltd (1983) 78 FLR 171; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; Siddons Pty Ltd v Stanley Works Pty Ltd (1991) 29 FCR 14; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564; [2000] FCA 1572; Koonara Management Pty Ltd v Rockliff (No 2) [2019] FCA 805. The case is discussed in relation to other grounds at [8.145]. In the case the relevant provision was s 69(a) of the Real Property Act 1886 (SA).

510 [9.165]

Defeasible Transactions  Chapter  9

made which is literally true … may not at the same time be misleading and deceptive”. It thus appears that s 52 extends to cases of failure to disclose relevant information where the suppression of facts will mislead a person. Impact is to be assessed from the total product of words and pictures. In Given v Pryor (1979) 39 FLR 437; 24 ALR 442 a television commercial displayed homes on attractive settings with words that this was a wonderful place to live. The advertisement was held to be misleading because a special permit was required to construct a house. The advertisement implied that housing construction was subject only to normal building and zoning controls. Similarly, in Bowler v Hilda Pty Ltd (1998) 80 FCR 191; 153 ALR 95 representations in the course of the sale of a strata unit implied that the purchaser could live in the unit. The representations were held to be misleading or deceptive because the unit’s zoning was as a hotel unit. Section 18 of the ACL has been extended by s 4 to apply to statements as to the future as well as statements of existing fact. Where a person makes a statement as to future events, he or she must have reasonable grounds for the statement to escape liability; the person also has the onus of establishing those reasonable grounds.22 [9.170]  A prohibition upon false or misleading statements in relation to dealings in land is

achieved by s 30 of the ACL and, unlike s 18, this prohibition has criminal as well as civil consequences.23 A corporation must not, in trade or commerce, in connection with the actual or possible sale or grant of an interest in land or in connection with the promotion of such sale or grant, make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put or the existence or availability of facilities associated with the land. The majority of cases arising under this subsection concern the sale of freehold land, where a number of convictions under the predecessor of s 30 have occurred. Section 29 also extends to false or misleading statements in relation to dealings in land because it applies to “services”, and services are defined in s 2 to include interests in land.

UNCONSCIONABLE OR UNFAIR CONDUCT [9.175] Since the 1980s, unconscionable conduct has been established in Australia as a

basis of equitable relief. If a contract can be shown to have been induced by unconscionable conduct, equity could set aside that contract. The recognition of unconscionability stems from the High Court decision in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447. In that case the High Court affirmed the existence of an equitable doctrine of unconscionability distinct from that of undue influence and applicable beyond contracts of mortgage and contracts of loan. The doctrine is said to apply wherever one party, by reason of some condition or circumstance, is placed at a special disadvantage vis-​a-​vis another and unfair or unconscientious advantage is taken of the opportunity thereby created.

22 23

See ACCC v Universal Sports Challenge Ltd [2002] FCA 1276. Given v Pryor (1980) 30 ALR 189; Sackville v Mansard Developments Pty Ltd (1981) ATPR 40-​222; Videon v Barry Burroughs Pty Ltd (1981) 53 FLR 425; Latella v L J Hooker Ltd (1985) 5 FCR 146. [9.175]  511

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This principle was affirmed and used as the basis of relief by the High Court in Amadio’s case. The plaintiffs in that case had executed a mortgage in favour of the bank as a guarantee for the extension of credit by the bank to the plaintiffs’ son. The plaintiffs had no appreciation of the perilous financial position of their son and their command of written English was limited. Without the guarantee the bank’s existing relationship with the son was markedly unprotected, the guarantee protected existing credit more than extended credit and the bank was engaged in a joint venture with the son through a subsidiary company. The bank realised that the son was the dominant member of the family and that the plaintiffs’ understanding of the transaction was derived from him. The court held that the mortgage and guarantee should be set aside as the plaintiffs would not have entered the agreement if they had known the state of the son’s account and its peculiar features. The common law doctrine of unconscionability was summed up by Mason J in the following terms (at 502): Relief on the grounds of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party, who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest. [9.180] Where unconscionable conduct as defined by the common law is engaged in by a corporation or an individual in interstate trade of commerce, the remedies of the ACL Law are available to a consumer injured by that conduct. Section 20 of the ACL forbids conduct “that is unconscionable within the meaning of the unwritten law, from time to time, of the States or Territories”. Because such conduct contravenes the ACL the remedies in ss 232, 236 and 243 of that law for persons injured by a breach are available. Additionally, statutory relief for consumers and small businesses in relation to expanded versions of unconscionability is provided by the ACL and the corresponding provisions of the State and Territory fair trading legislation.24 The National Credit Code also provides relief in respect of unconscionable terms or excessive interest affecting consumer credit contracts: see [7.170]. Statutory unconscionability in relation to dealings with consumers is prohibited by s 21 of the ACL. That section provides that a corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services, engage in conduct that is, in all the circumstances, unconscionable. The fair trading legislation provisions extend this prohibition to acts of supply by an individual. The actions must occur in trade or commerce so that private loans are outside the sections. Services are defined to include the rights provided under a contract for the lending of moneys. The subject matter of the prohibition is conduct; although conduct may include the making of a contract, the offence may occur in negotiations or in the exercise of rights conferred by an existing contract. Relief in cases of unconscionability includes all relief available under the ACL and the equivalent parts of the Fair Trading Acts; relief thus includes the granting of compensation or the setting aside or variation of a contract. The term “unconscionable” is not defined, but s 21(2) lists factors which a court may take into account in determining whether conduct is unconscionable. Those factors are:

24

Fair Trading Act 1987 (NSW); Australian Consumer Law and Fair Trading Act 2012 (Vic); Fair Trading Act 1989 (Qld); Fair Trading Act 1987 (SA); Fair Trading Act 1987 (WA); Australian Consumer Law (Tasmania) 2010 (Tas); Fair Trading Act (Australian Consumer Law) 1992 (ACT); Consumer Affairs and Fair Trading Act (NT).

512 [9.180]

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(a) the relative strengths of the bargaining positions of the corporation and the consumer;



(b) whether, as a result of conduct engaged in by the corporation, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the corporation;



(c) whether the consumer was able to understand any documents relating to the supply or possible supply of goods or services;



(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer or a person acting on behalf of the consumer by the corporation or a person acting on behalf of the corporation in relation to the supply or possible supply of the goods or services; and



(e) the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent goods or services from a person other than the corporation.

As a result of the list in s 21(2), key factors are the relative bargaining strengths of the parties, the understanding of the consumer, tactics used by the supplier, the terms of comparable deals and the extent to which the transaction supported the legitimate interests of the supplier. In George T Collings (Aust) Pty Ltd v HF Stevenson (Aust) Pty Ltd (1991) ATPR 41-​104 the standard sales listing form of the Victorian Real Estate and Stock Institute was held to be unconscionable because it failed to draw to the customer’s attention the liability to pay commission on sales made after the expiration of the sole agency period. Clear disclosure of an onerous term was necessary. [9.185]  Unconscionable conduct in relation to small business dealings may be attacked under

s 22 of the ACL. Small business dealings exclude those with a listed public company or for amount exceeding $3  million. The list of relevant factors includes not only those relevant to consumer transactions, but also includes relevant industry codes. Termination of an auto repair franchise without complying with the Franchising Code of Conduct was held to be unconscionable in Auto Masters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286. The relationship between parties will not be the basis of unconscionable conduct unless one party is under a special disadvantage or disability, but conduct may be so outside accepted norms as to amount to unconscionable conduct. In Rozenblit v Vainer [2019] VSC 316, the defendants so acted by expropriating or retaining the plaintiff’s shares for no consideration. [9.190]  As well as relief against unconscionable conduct the ACL renders void unfair terms.

This concept does not have a significant background in Australian law. Unfair terms in standard form contracts are rendered void by s  23 of the ACL. Section  24 defines “unfair terms” as follows:

(1) A term of a consumer contract is unfair if:



(a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and



(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and



(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.



(2) In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following: (b) the extent to which the term is transparent; (c) the contract as a whole.



[9.190]  513

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(3) A term is transparent if the term is:



(a) expressed in reasonably plain language; and



(b) legible; and



(c) presented clearly; and



(d) readily available to any party affected by the term.



(4) For the purposes of subsection (1)(b), a term of a consumer contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.

The section draws particularly on Victorian experience, where long-​term commitments and penalties for breach for telecommunications and similar services were a focus of concern.25 Section  25 of the ACL contains examples of offending conduct; they emphasise one-​sided obligations and include terms by which one party but not the other has a right to renew the contract, variations to price without a right to terminate, and limits on the right to sue. Breach of 23 of the ACL leads to the same range of penalties as for misleading or deceptive conduct.

UNCONSCIENTIOUS EXERCISE OF RIGHTS [9.195] Rights and obligations are mutual. The enforcement of obligations may place a

considerable burden on the party subject to the obligation. Performance of the obligation may be the condition to the obtaining or retention of a benefit; that benefit may be an interest in property. The position under a mortgage is an obvious illustration. If a mortgagor fails to repay the mortgage debt, the mortgagee is entitled to sell the property. What allowance is to be made for minor default or some overwhelming external cause? Already there has been the instance of a lightning strike preventing on line computer access to the Queensland Land Titles Office. What if a vendor was contracted to lodge transfer documents on that day? One of the impacts of equity has traditionally been to temper the rigidity of the common law. In relation to mortgages, equity dispensed with the terms of the agreement. If the mortgagee received the debt plus interest plus costs there was no complaint about lateness. More broadly equity developed the doctrine of relief against forfeiture. If default is made good, loss of any interest will be subject to equitable intervention. Such relief has been common for lessees who default in rent payments or other obligations.26 To counteract this leniency, contractual draftpersons inserted clauses make strict compliance essential to contract performance; principal among such clauses is a statement that time is of the essence. There are now two bases for relief against the unconscientious enforcement of rights: estoppel (see [9.205]) and relief against forfeiture: see [9.210]. [9.200] The doctrine of estoppel has been examined in detail as a source of rights where a representation induces another to believe that a benefit will be provided. The doctrine had been more generally applied where there was an existing relationship and one party was misled as to the enforcement of rights. In its simplest form the doctrine was applied where one party was led to believe that repayment of a full amount on the due date would not be

25 26

Victoria first introduced restrictions on penalty clauses in standard form contracts under its then Fair Trading Act 1999 (Vic); see now Australian Consumer Law and Unfair Trading Act 2012 (Vic). Tannos v Cipolla [2001] NSWSC 496.

514 [9.195]

Defeasible Transactions  Chapter  9

required. The principles27 established in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 apply equally in this context. [9.205] The interaction of essential time clauses and equitable jurisdiction to grant relief

against forfeiture was reviewed by the High Court in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. The case involved a sale of land. After some delays the terms of the contract were amended to provide for performance on a named day and the provision that performance by this day was essential. The vendor knew that the purchaser was relying on finance from an international source. On the due day for settlement the purchaser advised the vendor that there had been a delay in the availability of the finance, but completion would be possible on the following day. The vendors however indicated that they were terminating the contract immediately. That decision and the loss of the purchaser’s interest in the land were upheld by the High Court. The court emphasised that the vendor had not contributed to the purchaser’s difficulties and had not contributed to any belief by the purchaser that the rights would not be enforced. Any argument of estoppel was therefore unsustainable. But would failure to perform be excused? The court held that relief against forfeiture could be based on any of the special heads of fraud, accident, mistake or surprise. In the particular case accident was the focus of argument. The purchaser argued that it was an accident that funds had not been available; the supplier of funds had unexpectedly and without fault on the purchaser’s part been unable to forward the funds. However the court held that an accident had to involve the vendor. Here the vendor was totally divorced from the purchaser’s problems. The court emphasised that the purchaser had knowingly agreed to the essential time clause as part of a settlement of earlier problems. Furthermore, a failure by the third party to provide the funds on time was reasonably within the contemplation of the purchaser. The vendor was entitled to insist on the agreed contractual performance. The lack of relief against forfeiture resolved the issue of specific performance; that remedy was not available once the vendor was entitled to terminate the agreement. [9.210] If the position of contracts of sale can now be regarded as settled in favour of

entitlement to performance in accordance with contractual terms, the situation of defaulting lessees is less clear. Authority seemed to have established quite clearly the availability of relief provided default is made good. To justify forfeiture some ongoing harm to the lessor’s interest must be established. Even continued rent arrears will not justify termination, except in exceptional circumstances. This traditional approach was taken in Elsafty Enterprises Pty Ltd v Mermaids Café and Bar Pty Ltd [2007] QSC 394 but without any express consideration of Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. The position in respect of leases may reflect an early statutory statement of the availability of relief; the uneven power between lessor and lessee may support greater equitable intervention. Efforts to protect lessors through drafting may not have been fully explored. However, the law does seem to have a different approach to mortgages and leases where relief is granted unless there is good reason to the contrary, and sales where due performance is required in the absence of some act of the vendor contributing to the purchaser’s default.

27

Estoppel is here being used as a shield to prevent the exercise of rights. Its application to create rights is analysed at [8.190]. [9.210]  515

DIVIDED OWNERSHIP OF LAND

PART IV

CHAPTER 10

Future Interests [10.05] INTRODUCTION......................................................................................................... 519 [10.10] POSSESSION, REVERSION AND REMAINDER............................................................... 520 [10.15] Possession.................................................................................................... 520 [10.20] Reversion..................................................................................................... 520 [10.25] Remainder................................................................................................... 520 [10.30] VESTED AND CONTINGENT INTERESTS...................................................................... 521 [10.50] REMAINDERS AT COMMON LAW................................................................................ 524 [10.50] Legal remainder rules.................................................................................... 524 [10.55] The rule in Shelley’s Case.............................................................................. 525 [10.65] Destructibility of legal contingent remainders................................................. 526 [10.75] THE ROLE OF EQUITY.................................................................................................. 528 [10.75] The law prior to 1535................................................................................... 528 [10.80] The Statute of Uses 1535.............................................................................. 529 [10.90] The Statute of Wills 1540.............................................................................. 530 [10.95] THE CURRENT AUSTRALIAN LAW................................................................................ 531 [10.95] Overview..................................................................................................... 531 [10.100] Relevance of Torrens legislation to future interests........................................... 531 [10.110] General statutory reforms............................................................................. 532 [10.110] Alienability of future interests.............................................................. 532 [10.115] Abolition of rule in Shelley’s Case.......................................................... 533 [10.120] Destruction of contingent remainders.................................................... 533 [10.135] Avoidance of legal remainder rules........................................................ 535 [10.140] Restriction on executory limitations....................................................... 535 [10.145] The repeal of the Statute of Uses.......................................................... 536

INTRODUCTION [10.05]  The concept of estates, and the various estates developed under the feudal systems

of land tenure and recognised at common law, is discussed in Chapter 2. Each one of these estates may be created either to grant the holder of the estate an immediate right to physical possession of the land or to withhold the right of possession until some event has occurred or a possessory estate has expired. All corporeal rights in land which do not give the holder the right of immediate possession are said to be “future interests”. A future interest in land has been described as “an interest which confers a right to enjoyment of the land at some future time, in that it follows on the expiry or termination of a present but limited interest”.1 Various complex and rigid rules were developed at common law governing the validity and enforceability of future interests. As will be shown in this chapter, the stubbornness and unreasonable attitude of the common law was responsible for the intervention of equity in this area of law and the enactment of landmark legislation in the Statute of Uses 1535 (Eng) and the Statute of Wills 1540 (Eng). Although these developments all occurred in the United Kingdom long before the first European settlement in Australia, an understanding of this 1

Woodman, Law of Real Property in New South Wales (Law Book Co, Sydney, 1980), p 68. See also Johns v Johns [2004] 3 NZLR 202. [10.05]  519

PART 4 Divided Ownership of Land

historical background is necessary in order to appreciate the development of real property law in this country. Certain aspects of the common law and equitable rules concerning future interests still apply in some States. An understanding of future interests is also an essential prerequisite to the modern law of perpetuities, as discussed in Chapter 11.

POSSESSION, REVERSION AND REMAINDER [10.10]  All freehold estates may be held in possession (see [10.15]), in reversion (see [10.20])

or in remainder: see [10.25].2

Possession [10.15]  An estate in possession entitles the holder to immediate possession and is accordingly

classified as a present, rather than a future, interest. A gift “to A for life, remainder to B” will give A a life estate in possession. Possessory estates must be contrasted with reversions and remainders, both of which class as future interests.

Reversion [10.20]  A reversion arises by operation of law, rather than by express grant. It arises whenever

the holder of a freehold estate grants a lesser estate to a third party and thus does not dispose of his or her entire interest in the property.3 For example, if A, the fee simple owner, makes a gift “to B for life”, A  will automatically retain the fee simple estate in reversion. A  is commonly described as “the reversioner”. Accordingly, on B’s death the possessory right will automatically revert to A. The situation is unaltered if A should predecease B; in this event, the possessory right will revert to A’s legal personal representative. We can contrast the situation of a gift by A, the fee simple owner, “to B and his heirs”. In this case, by giving B the fee simple estate, A has disposed of his entire estate, and no reversion exists. The same rules have been said to operate in respect of equitable as well as legal freehold estates.4 A different analysis applies if the fee simple owner conveys a leasehold rather than freehold estate. If A, the fee simple owner, grants to B a term of years, A will not be said to have the fee simple estate in reversion, but rather to have the fee simple estate in possession subject to the term. The reason for this is that the grant of seisin determines whether an estate is held in possession, reversion or remainder, and leasehold estates were not recognised as affecting seisin under the feudal system of land tenure.5 In the above example, A is often said to have a leasehold reversion, but this is not classed as a future interest.

Remainder [10.25] A remainder occurs in respect of a gift designed to take effect on the natural

termination of an earlier freehold estate. Thus, in a gift by A “to B for life, then to C and her heirs”, C will receive a fee simple estate in remainder. The estate will continue in remainder

2 3 4 5

Blackstone, Commentaries on the Laws of England (Clarendon Press, Oxford, 1765–​1769), Book II, p 163. See Hunter and Brooke, Coke on Littleton (17th ed, W. Clarke & Sons, London, 1817) 142b. Woodman, Law of Real Property in New South Wales (Law Book Co, Sydney, 1980), p 69. See Wakefield and Barnsley Union Bank Ltd v Yates [1916] 1 Ch 452 (CA); De Gray v Richardson (1747) 3 Atk 469; 26 ER 1069 (Ch).

520 [10.10]

Future Interests  Chapter  10

until B’s death, whereupon it will vest in possession by operation of law. B will receive a life estate in possession, and A will have nothing. If C should predecease B, the remainder estate will automatically vest in C’s legal personal representative. There is no limit to the number of remainders that can be created. Thus A could make a gift “to B for life, then to C for life, then to D for life, then to E”. In this case, C and D would each have a life estate in remainder and E would have a fee simple in remainder. C, D and E are commonly called “remaindermen”. As with reversions, the same rules have been said to apply to equitable estates, as well as legal estates.6 There are four major restrictions on remainders: 1.

Both the prior lesser estate in possession on which the remainder is expectant (sometimes called the “prior particular estate”) and the remainder must be created in the same instrument.7

2.

Because of the notion of seisin (see [10.20]), the prior particular estate must be a freehold, rather than a leasehold, estate. Thus, a gift “to B for a term of years, then to C” will give C an estate in possession rather than in remainder.

3.

No remainder can exist which is expectant upon a fee simple estate.8 A’s gift “to B and his heirs, then to C and his heirs” will give B a fee simple estate in possession and C nothing. The reason is that if B receives a fee simple estate, which is the greatest possible estate, there is nothing left for C to receive. This rule is not restricted to fees simple absolute but also applies to determinable fees simple and fees simple subject to a condition subsequent. The rights expectant upon these estates (a possibility of reverter and a right of entry, respectively) are sui generis and are not classed as either remainders or reversions.9

4.

As mentioned above, a remainder must be designed to take effect upon the natural termination of an earlier freehold estate. Thus, a gift “to B for life, then one year after B’s death, to C”, or “to B, but if she remarries then to C” would not classify as remainders. As will be shown later, in both illustrations, C would be regarded as having an “executory interest”.

VESTED AND CONTINGENT INTERESTS [10.30] In addition to classifying estates as being in possession, reversion or remainder,

it is also necessary to determine in each case whether they are vested or contingent. The major reason why this additional classification is essential is that the rule against perpetuities (discussed in Chapter 11) is based upon this distinction and specifically employs the concept of “vesting”. A further reason is that the common law legal remainder rules required a remainder to vest within a particular period of time or else it was treated as void, although, as explained at [10.110]ff, this situation is now remedied by State legislation.

6 7 8 9

Woodman, Law of Real Property in New South Wales (Law Book Co, Sydney, 1980), p 70. See Coke on Littleton, 49a, 143a; Challis, The Law of Real Property (3rd ed, Butterworth & Co, London, 1911), pp  77–​79. Blackstone, Commentaries on the Laws of England (Clarendon Press, Oxford, 1765–​1769), Book II, p 164. For determinable fees simple and fees simple subject to a condition subsequent, see [2.220]ff. [10.30]  521

PART 4 Divided Ownership of Land

Stated simply, a vested interest is one that is bound to take effect in possession at some future date, while a contingent interest may never fall into possession.10 If the answer to the question, “Is there anything preventing the estate in question from falling into possession other than the death of the holder or holders of one or more earlier life interests?” is “No”, the estate in question is vested; if the answer is “Yes”, the estate is contingent. The test is sometimes put as follows: an interest is vested provided that the identity of the persons taking the interest is known and provided that there is no condition precedent to the interest falling into possession other than the regular determination of the prior particular estate or estates.11 So, for example, if A makes a gift “to B for life, then to C”, the gift to C is vested as it is bound to fall into possession on B’s death. Conversely, if A  makes a gift “to my first-​born child”, the gift will be contingent if at the date of execution he has no children, but it will be vested if at that time he has one or more children. A gift “to B for life, then to C if she should survive B” will give C a contingent interest (provided that at the date of execution B is still alive) as C has to fulfil the condition precedent of outliving B before she is entitled to take the fee simple estate. If she fails to outlive B, the fee simple estate will revert to A on B’s death. A gift “to B if he should graduate in law at Melbourne University” will also be a contingent rather than a vested interest as there is a condition precedent (viz graduating in law) still to be satisfied. [10.35]  A contingent interest will become vested by operation of law on the satisfaction of

the condition precedent. Thus, a gift “to my first-​born child” will automatically vest as soon as the donor produces his or her first child. A gift “to B for life, then to C if C should outlive B” will vest in C if she is still alive at B’s death, and a gift “to B if he should graduate in law at Melbourne University” will also vest as soon as B actually graduates. [10.40]  Conditions precedent must be carefully distinguished from conditions subsequent.

A gift “to B on condition that she moves to New South Wales” would give B a contingent interest which would become vested as soon as B satisfies the condition precedent of moving to New South Wales. Conversely, a gift “to B on condition that she does not move out of New South Wales” would give B a vested fee simple subject to later divestment if she should ever move out of New South Wales. Thus, the rule is simple: all gifts subject to conditions precedent are contingent, and all gifts subject to conditions subsequent are vested. Sometimes the wording of the grant is ambiguous. Here, the court will try to establish the intention of the donor and in cases of genuine doubt will lean in favour of deeming the gift to be vested.12 An interesting illustration is Permanent Trustee Co of New South Wales Ltd v D’Apice (1968) 118 CLR 105, where the court had to interpret a will “to B for life, and after the decease of the said B, to C in fee simple”, where C predeceased B. The words “after the decease of” could have been construed as requiring C to outlive B before C’s remainder could fall into possession; this interpretation would make the remainder contingent. Alternatively, the words could be construed as mere surplusage, and the gift could be construed as in effect “to B for life, then to C”; this interpretation would make the gift vested. The majority of

10 1 1

12

See Blackstone, Commentaries on the Laws of England (Clarendon Press, Oxford, 1765–​1769), Book II, p 169. See Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), p 183; Woodman, Law of Real Property in New South Wales (Law Book Co, Sydney, 1980), p 71; Pearson v IRC [1981] AC 753 at 772 (HL) per Viscount Dilhorne. Duffield v Duffield (1829) 2 Bl NS 260; 4 ER 1334 at 331 at 1358 (HL) per Best CJ.

522 [10.35]

Future Interests  Chapter  10

the Full Court of the High Court adopted the latter interpretation and held that the person entitled to the estate on B’s death was the devisee under C’s will. Merely because a gift is couched in the form of a condition precedent does not mean that it will be construed as contingent if in reality there is no condition to be fulfilled. The courts are not blinded by the terminology that the donor adopts in his gift, but will examine the true effect of the instrument.13 A gift “to B for life, but if B should die, then to C” appears at first glance to give C a contingent, rather than a vested, remainder, but in reality it would be held to be a vested remainder as C’s estate is bound to take effect in possession on B’s death. Conversely, a gift “to B (a bachelor) for life, then to the first-​born child of B, then to C” appears to give C a vested remainder, but in reality would be held to be a contingent remainder as C’s estate is subject to the implied condition precedent that C will only take the fee simple in possession if B remains childless throughout his life.14 [10.45]  Three other propositions may be deduced from the authorities:

1.

All reversionary estates are vested.15

2.

A gift which follows a contingent fee simple is itself contingent.16

3.

A gift which follows a determinable fee simple or fee simple subject to a condition subsequent is always contingent.17 These propositions are illustrations of the basic distinction between vested and contingent interests, explained at [10.30].

It is possible for estates to be vested, but subject to divestment. The classic illustration of this is a gift “to B for life, then to all of his children who shall attain the age of majority”. If at the date of execution B either has no children or has children, but only under the age of 18, the remainder is contingent. As soon as the eldest child reaches 18, the remainder vests solely in him, but the eldest child will be partially divested each time a younger child reaches 18. Thus, when the second child reaches 18, the eldest child is divested of half his share, and the estate is vested in both of them in equal shares. When the third child reaches 18, each of the older children are partially divested so that all three hold a vested interest in a one-​third share.18 Occasionally, the divestment may be total. In Re Master’s Settlement [1911] 1 Ch 321,19 a sum of money was settled: upon trust for C for life, and after her death, upon trust for M for life, or until he should become bankrupt, and subject as aforesaid the trustees are to stand possessed of the said sum and the income thereof in trust for the children or other issue of the intended marriage, as the

13 14

15 16 17 18 19

See, for example, Smith d Dormer v Packhurst (1740) 3 Atk 135; 26 ER 881 (Ch); Maddison v Chapman (1858) 4 K & J 709; 70 ER 294 (V-​C) (affirmed in (1859) 3 De G & J 536; 44 ER 1375). See Fairbairn v Varvaressos (2010) 78 NSWLR 577. Although the similar gift in this case gave C an interest contingent upon B dying childless, the gift was not construed as being subject to the additional contingency of C surviving B. This meant that although C had died and B was still alive, in the event that B died childless, which on the facts was inevitable, the contingent interest held by C’s estate would vest. Challis, The Law of Real Property (3rd ed, Butterworth & Co, London, 1911), p 67. Luddington v Kime (1697) 1 Ld Raym 203; 91 ER 1031 (KB). Gray, The Rule Against Perpetuities (4th ed, Little Brown, Boston, 1942), s 114, fn 3. See, for example, Baldwin v Rogers (1853) 3 De GM & G 649; 43 ER 255 (Ch); Brackenbury v Gibbons (1876) 2 Ch D 417; Re Lechmere and Lloyd (1881) 18 Ch D 524. See also Cunningham v Moody (1748) 1 Ves Sen 174; 27 ER 965 (Ch); Lambert v Thwaites (1866) LR 2 Eq 151. [10.45]  523

PART 4 Divided Ownership of Land

spouses should by deed jointly, or as the survivor should by deed or will, direct or appoint, and in default of appointment for all the children of the marriage who, being sons, should attain 21, or, being daughters, should attain that age or marry, in equal shares.

Eve  J held that the children’s interests in the settled fund were vested interests subject to divestment by the exercise of the power of appointment.

REMAINDERS AT COMMON LAW Legal remainder rules [10.50]  In the 16th century, the common law developed very rigid rules (usually referred to as

the “legal remainder rules”) concerning the enforceability of remainders.20 The major reason for these rules was the need to preserve the continuity of seisin. This was considered essential for two major reasons: first, to ensure that some person remained seised of the land at all times so that feudal incidents of tenure would always be payable;21 and, secondly, to ensure that an owner dispossessed of land could always bring an action for recovery, which could only lie against a freeholder. A further factor was the refusal of common law to permit a grantor to alter the duration or extent of earlier interests by successively adding future interests. Stated briefly, the legal remainder rules were: 1.

Any remainder limited after a fee simple estate (including determinable and conditional fees simple) was void.22

2.

Any remainder designed to vest in possession before the natural determination of the prior particular estate was void.23 An illustration of this is a gift by A “to B for life, but if she remarries, then to C”. Such a gift to C was void as an illegal attempt to cut short B’s life estate. B would retain the life estate in possession, and A  would have the fee simple in reversion. The remainder would have been valid if the grantor had phrased the gift so as to make the prior particular estate determinable, such as “to B for life or until remarriage, then to C”.24

3.

A remainder was void unless it followed a prior particular estate created by the same instrument.25 An illustration is a gift by A “to B and his heirs effective one year after the date of execution of this instrument”. This gift was void and A retained the fee simple in possession.

20 21 22

See Colthurst v Bejushin (1550) 1 Plow 23; 75 ER 36 (KB). Freeman d Vernon v West (1763) 2 Wils KB 165; 95 ER 745. Duke of Norfolk’s Case (1681) 3 Ch Ca 1; 22 ER 931 at 31 (CA), 949–​950 (Ch); Earl of Stafford v Buckley (1750) 2 Ves Sen 170; 28 ER 111 (Ch). Blackman v Fysh [1892] 2 Ch 209 (CA). Rochford v Hackman (1852) 9 Hare 475; 68 ER 597 (V-​C); Brandon v Robinson (1811) 18 Ves Jun 429; 34 ER 379 (Ch). Goodlittle d Dodwell v Gibbs (1826) 5 B & C 709; 108 ER 264 (KB); Boddington v Robinson (1875) LR 10 Ex 270; Barwick’s Case (1597) 5 Co Rep 93b; 77 ER 199 (KB). Way CJ held in Re Campion [1908] SALR 1 that the rule that contingent remainders must have a prior particular estate to support them does not apply to Torrens land which, by virtue of the provisions of the Real Property Act 1886 (SA), becomes vested upon the death of the registered proprietor in his executors or administrators.

23 24 25

524 [10.50]

Future Interests  Chapter  10

4.

There could never be an abeyance of seisin.26 The remainder in a gift by A  “to B for life, remainder to such of B’s children who graduate in law after B’s death” was void at common law as there was bound to be an abeyance of seisin. The life estate to B was regarded as valid, and A would be held to have a fee simple in reversion. This gift should be contrasted with one “to B for life, remainder to such of B’s children who have graduated in law by the time of B’s death”. In this gift there may or may not be an abeyance of seisin depending on whether any of B’s children graduate prior to B’s death. Where such uncertainty existed, the common law took a “wait-​and-​see” approach in determining whether the remainder was valid or void.

The rule in Shelley’s Case [10.55]  Another anomalous common law rule affecting remainders was the rule in Shelley’s

Case (1581) 1 Co Rep 93b; 76 ER 206 (KB), which applied to both deeds and wills. The rule is stated in the original text as follows (at 104a, 234): It is a rule in law, when the ancestor by any gift or conveyance27 takes an estate of freehold,28 and in the same gift or conveyance an estate is limited either mediately or immediately to his heirs in fee or in tail; that always in such cases, “the heirs” are words of limitation of the estate, and not words of purchase.29

The classic illustration of the rule is a gift by A “to B for life, then to heirs of B”.30 The effect of Shelley’s Case is that the gift is construed as bestowing a fee simple estate in possession on B and giving B’s heirs nothing, regardless of the obvious intention of the donor to benefit the heirs. Another illustration is the facts in Hordern v Permanent Trustee Co (1894) 10 WN (NSW) 190, where Owen CJ in Eq of the New South Wales Supreme Court held that a limitation “to B for life and the heirs of her body” gives B a fee tail. On many occasions, the courts emphasised that the rule is one of law, not one of construction31 and thus would override even the clearest statement of intention to the contrary.32 The rule was also held to apply where an intermediate freehold estate was interposed between a purported life estate to a person and a remainder to that person’s heirs.33 An illustration is “to B for life, then to C for life, then to the heirs of B”. In this situation, B would receive a life estate in possession and a fee simple in remainder, while her heirs would again receive nothing. C’s life estate in remainder was unaffected, but subject to this B was free to alienate her future interest.

26 7 2 28 29

30 1 3 32 33

For illustrations of the operation of this rule, see Miles v Jarvis (1883) 24 Ch D 633; Dean v Dean [1891] 3 Ch 150; White v Summers [1908] 2 Ch 256. The rule also applies to devises: see, for example, Hayes d Foorde v Foorde (1770) 2 Bl W 698; 96 ER 410 (KB). The rule did not apply when the ancestor held only a leasehold estate: Harris v Barnes (1768) 4 Burr 2157; 98 ER 125 (KB). For recent discussions of Shelley’s Case (1581) 1 Co Rep 93b; 76 ER 206 (KB), see Smith, “Was There a Rule in Shelley’s Case?” (2009) 30 J Leg Hist 53; Atherton, “Quirks and Curios: Rescued Footnotes in the History of Succession Law” (2009) 83 ALJ 609. For reported illustrations of the rule, see, for example, Sheppard v Gibbons (1742) 2 Atk 441; 26 ER 666 (Ch); Ambrose v Hodgson (1781) 3 Bro PC 416; 1 ER 1405 (HL); Van Grutten v Foxwell [1897] AC 658 (HL). See, for example, Roddy v Fitzgerald (1858) 6 HLC 823; 10 ER 1518 (HL). Van Grutten v Foxwell [1897] AC 658 (HL) at 662 per Lord Herschell. See Ambrose v Hodgson (1781) 3 Bro PC 416; 1 ER 1405 (HL). [10.55]  525

PART 4 Divided Ownership of Land

[10.60] The justifications for this anomalous rule have been variously stated and were examined by Lord  Macnaghten in Van Grutten v Foxwell [1897] AC 658 at 668ff.34 According to his Lordship, one argument is that the rule was designed to protect the property from abeyance of seisin with its subsequent loss of the incidents of feudal tenure. Other justifications are that the rule was designed to facilitate the alienation of property and the ancestor’s debts, and that its object was to exclude the possibility of creating “an amphibious species of inheritance”, designed to introduce confusion into the legal system. Although the rule applied to both deeds and wills, it did not apply equally. In the case of deeds, the rule only applied where the words “heirs” or “heirs of his body” were included,35 and would not apply where “heir” or “heir of his body” was used as the latter words did not constitute common law words of limitation.36 In the case of wills, words of limitation were not necessary at common law; accordingly, the rule applied regardless of whether “heir” or “heirs” was used.37 It was held by McLelland CJ in Eq of the Supreme Court of New South Wales in Mabey v Ramsey [1963] NSWR 59938 that although the rule is capable of applying to equitable estates as well as legal estates, it does not apply where one limitation is legal and the other equitable. His Honour accordingly refused to apply the rule where, on the facts, he interpreted the prior life estate to be equitable and the subsequent remainder to be legal. As a matter of principle, this is a curious decision as there is no logical reason for the distinction. The decision can be viewed as a pragmatic one designed to avoid the application of the rule whenever possible.39

Destructibility of legal contingent remainders [10.65]  Even if contingent remainders managed to avoid the operation of the legal remainder

rules, they were still liable to destruction. Common law classified the methods of destruction under two heads: natural destruction and artificial destruction. Natural destruction occurred when the prior particular estate determined naturally before the contingent remainder vested. Where this occurred, the contingent remainder was held to be void.40 Thus, for example, in a gift “to B for life, and then to C if C should move to New South Wales”, if B died before C moved to New South Wales, the remainder to C was void and C could not revive it by moving at a later date.41 The only exception recognised by common

4 3 35 36 37 38 39

40 41

See also Hargreaves, “Shelley’s Ghost” (1938) 54 LQR 70. Waker v Snowe (1621) Palm 359; 81 ER 1123 (KB). See [2.160]ff for a discussion of the common law rules relating to words of purchase and words of limitation. See Van Grutten v Foxwell [1897] AC 658 (HL); Re Routledge [1942] Ch 457. See also Re Fergusson (1882) 3 LR (NSW) 43. Shelley’s Case (1581) 1 Co Rep 93b; 76 ER 206 (KB) was also held not to be applicable in Re Barber (1937) 37 SR (NSW) 470 and Goodwin v Baylis (1875) 13 SCR (NSW) Eq 27; cf Andrew v Morgan (1923) 19 Tas LR 36. There are a number of Australian cases where the application of the rule appears to have been overlooked: see, for example, Bouel v Cooktown Municipality (1885) 2 QLJ 93. This is based on the rule that there cannot be an abeyance of seisin: see [10.50]. See also Preston, An Elementary Treatise on Estates (2nd ed, Vol 1, J&WT Clarke, London, 1827), pp 217, 249. For reported illustrations, see, for example, Doe d Mussell v Morgan (1790) 3 Term Rep 763; 100 ER 846 (KB); Fuller v Chamier (1866) LR 2 Eq 682.

526 [10.60]

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law to the operation of the natural destruction rule was that a gift to an unborn child would be saved if the child was en ventre sa mere at the time of the determination of the prior particular estate.42 Destruction of a contingent remainder would also occur when the prior particular estate was determined artificially prior to the vesting of the remainder. The common law methods of artificial destruction were surrender, merger, forfeiture and disclaimer. Surrender occurred when the holder of the prior particular estate surrendered his or her interest to a person with a vested remainder. This would nullify any intermediate contingent remainders.43 Thus, in a gift “to B for life, then to C for life if she should move to New South Wales, then to D”, B could at any time convey her life estate to D and by doing so automatically destroy C’s interest. The same result would ensue by merger of the prior particular estate with a vested remainder. An illustration of this is the rule in Purefoy v Rogers (1671) 2 Wms Saund 380; 85 ER 1181 (KB):44 see [10.80]. Forfeiture would occur when the holder of the prior particular estate purported to convey his or her life estate to a third party; this event was referred to as a “tortious conveyance” and had the effect of destroying any contingent remainder.45 At common law, the contingent remainderman was powerless to prevent such a forfeiture. The final method of artificial destruction, disclaimer, would arise whenever the holder of the prior particular estate disclaimed his or her interest, which could occur at any time.46 [10.70]  The rules relating to artificial destruction were later circumvented in the 17th century

by the use of a trust to preserve the contingent remainder.47 In a gift “to A for life, provided that if A’s estate should be determined by forfeiture or otherwise in his lifetime remainder to T and his heirs during the life of A in trust for A and to preserve the contingent remainder next following, remainder to A’s first son to attain 21 and his heirs”, the remainder to the trustee, T, could not be destroyed by the artificial destruction of A’s life estate as the remainder was held to be vested, rather than contingent.48 If A’s estate were destroyed, T was said to have a life estate pur autre vie held in trust for A, and on A’s death his first son would acquire the estate if his interest had meanwhile become vested. This system of circumventing the destructibility rules had no application to cases of natural destruction, however, and contingent remainders remained liable to destruction in this manner until the later intervention of legislation:  see [10.120].

42 43 44 45 6 4 47

48

Statute 10 Will 3 c 22 (1698) (deeds); Reeve v Long (1695) 1 Salk 227; 91 ER 202 (KB) (wills). Challis, The Law of Real Property (3rd ed, Butterworth & Co, London, 1911), p 136. See also Egerton v Massey (1857) 3 CB(NS) 338; 140 ER 771 (CP). See, for example, Chudleigh’s Case (1595) 1 Co Rep 113b; 76 ER 261 (KB); Archer’s Case (1597) 1 Co Rep 66b; 76 ER 146 (KB). See, for example, Re Sir Walter Scott [1911] 2 Ch 374. See also Edgeworth, Rossiter, O’Connor and Godwin, Sackville and Neave: Australian Property Law (10th ed, LexisNexis, Sydney, 2016), pp 186–​187; Holdsworth, A History of English Law (Vol VII, Methuen, Sweet and Maxwell, London, 1925), p 112. Duncomb v Duncomb (1695) 3 Lev 437; 83 ER 770 (KB); Smith d Dormer v Packhurst (1740) 3 Atk 135; 26 ER 881 (Ch).

[10.70]  527

PART 4 Divided Ownership of Land

THE ROLE OF EQUITY49 The law prior to 1535 [10.75] It should not be thought that the role of equity was limited to preserving

contingent remainders from artificial destruction. This was merely one illustration of the chancellor’s dissatisfaction with the operation of the common law rules regarding future interests. Because of the unyielding approach of the common law to its legal remainder rules, persons were deprived of interests which donors had intended them to receive. Many of these persons petitioned the chancellor for a remedy. The chancellor devised a system of uses whereby interests could be created as valid in equity which would have been regarded as invalid at common law. The device of uses was extremely simple; all that equity required was the addition at the beginning of a gift of words such as “to X to the use of …”. Whereas, for example, a gift by A “to B for life, but if she remarries, then to C” would have been regarded at common law as void as infringing the rule against remainders designed to vest in possession before the natural determination of the prior particular estate, a gift “to X to the use of B for life, but if she remarries, then to use of C” would be held to be valid in equity. By the device of uses, all the restrictive common law rules could be avoided. The major effect of the device was to secure the recognition in equity of three new types of interests which had previously not been recognised at common law. The first of these interests is a “springing use”.50 This type of use flouts the common law rule against the abeyance of seisin and allows gifts to be made in futuro. An illustration is a gift “to X to the use of B when B reaches the age of 25 years”. The second of these interests is the “shifting use”. This type of use flouts both the rule against remainders limited after a fee simple estate and the rule against remainders designed to vest in possession before the natural determination of the prior particular estate. An illustration is a gift “to B and his heirs, but if C qualifies as a medical practitioner then to C and his heirs”. Both springing and shifting uses have been designated as “executory interests”. These are distinguishable from contingent remainders in that contingent remainders are interests intended to operate from the natural determination of an earlier estate, while executory interests are intended to operate on the occurrence of one or more events, regardless of whether the event or events take place upon the natural determination of the earlier estate. The final of the three interests is the “executory devise”. This phrase encompasses any devise which, if it had been couched as a gift inter vivos, would have constituted an “executory interest”.51 By employing a use, the common law rule against wills could be circumvented. Thus, a testator was given by equity similar powers to a donor to make a devise provided that he commenced the devise with the phrase “to X to the use of …”.

49 0 5 51

For a general discussion of the role of equity in the development of modern trusts and real property law, see [2.280]ff. See, for example, Roe d Wilkinson v Tranmer (1757) 2 Wils KB 75; 95 ER 694 (KB). See, for example, Taylor v Bydall (1677) 1 Freem KB 243; 89 ER 173 (KB); Gulliver v Wickett (1745) 1 Wils KB 105; 95 ER 517 (KB).

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The Statute of Uses 1535 [10.80] This situation continued until well into the 16th century, when it was eventually

changed by the enactment of the Statute of Uses 1535 (Eng). The relevant parts of this legislation and the reasons for its introduction are cited earlier: see [2.325]ff.52 The purpose of the statute was to ensure that the traditional feudal incidents of tenure applied to estates created in equity behind a use. The effect of the statute was to execute the use. By this process, the legal estate was taken from the feoffee to uses and vested in the cestui que use, with the result that gifts and devises subject to the use, which had previously only been enforceable at equity, were automatically converted into legal interests. In relation to inter vivos gifts, it was soon held that the effect of the statute was to execute all uses, regardless of whether they were consistent with the common law legal remainder rules. The most significant result of this was that springing and shifting uses were, for the first time, recognised as valid legal future interests. All that was required to create a legal executory interest was to preface the gift with the words: “to X and his heirs to the use of …”.53 The statute was also held to execute resulting uses as well as express uses.54 Thus, for example, in a gift by A “to X to the use of B for life”, the Statute of Uses 1535 passed the legal estate from X to both B and A; A would be held to have the legal fee simple in reversion. The overall effect of the creation of legal executory interests by the Statute of Uses 1535 could have been to render the legal remainder rules entirely redundant. Unfortunately, this did not occur. Following the Statute, the common law developed a restriction known as the rule in Purefoy v Rogers (1671) 2 Wms Saund 380; 85 ER 1181 (KB).55 Simply stated, the rule is that if a limitation of a legal estate is capable of existing as a contingent remainder it must be regarded as a contingent remainder, rather than as an executory interest, with the result that it may be destroyed by the application of the legal remainder rules. The probable reason for the rule was the desire of the common law to prevent landowners from controlling the disposition of their lands for indefinite periods into the future. An additional factor was the stubborn reluctance of the common law judges to depart from the legal remainder rules. The rule in Purefoy v Rogers soon became entrenched and was stated by Lord St Leonards in Cole v Sewell (1843) 4 Dr & War 1 at 27 to be a “sacred rule of law”. [10.85]  The key to understanding the rule in Purefoy v Rogers (1671) 2 Wms Saund 380; 85

ER 1181 (KB) is to recognise that it only applies where the limitation is capable of existing as a contingent remainder.56 A  gift by A  “to X and her heirs, then to the use of B for life, then to the use of C when C is admitted as a medical practitioner” is capable of existing as a contingent remainder and is therefore subject to the rule. The effect of the rule would be that the gift to C is void as it breaches the legal remainder rules. This should be contrasted with

2 5 53

54 55 56

See generally Sanders, An Essay on Uses and Trusts (5th ed, A Maxwell and Son, London, 1844). For illustrations of the operation of the Statute of Uses 1535, see Woodman, Law of Real Property in New South Wales (Law Book Co, Sydney, 1980), pp 85–​88. See also Baker v White (1875) LR 20 Eq 166; Re Bostock’s Settlement [1921] 2 Ch 469 (CA); Silvester d Law v Wilson (1788) 2 TR 444; 100 ER 239 (KB); Doe d Lloyd v Passingham (1827) 6 B & C 305; 108 ER 465 (KB). Woodman, Law of Real Property in New South Wales (Law Book Co, Sydney, 1980), pp 97, 101. See also Chudleigh’s Case (1595) 1 Co Rep 113b; 76 ER 261 (KB); Festing v Allen (1843) 12 M & W 279; 152 ER 1204 (Ex); White v Summers [1908] 2 Ch 256. For illustrations of the operation of the rule, see Woodman, Law of Real Property in New South Wales (Law Book Co, Sydney, 1980), pp 91–​92. [10.85]  529

PART 4 Divided Ownership of Land

a gift “to X and her heirs, then to the use of B for life, then to the use of C one year after B’s death”. This was incapable of existing as a contingent remainder because of the abeyance of seisin, and the rule in Purefoy v Rogers would accordingly have no application. The rule was also applied to class gifts (discussed in Chapter 11). Thus, for example, a gift “to X and his heirs, to the use of B for life, then to the use of such of C’s children who shall have qualified as medical practitioners on B’s death” would be subject to the rule, and the effect would be to vest the property exclusively in those children who had qualified for medical practice before B’s death and to exclude any children who might so qualify at a later date. The rule in Purefoy v Rogers has been held to be a rule of law, rather than a rule of construction, and accordingly operates regardless of the intention of the donor or testator.57 There is, however, one method available to a donor or testator to avoid the operation of the rule –​namely to create alternative gifts, one as an executory interest and the other as a contingent remainder. This exception was recognised by Parker  J in White v Summers [1908] 2 Ch 256 at 267. The drafting of the gift or devise assumes great importance here. If the donor or testator wishes to make a gift or bequest to “B for life, then to C if he is admitted to practice as a medical practitioner”, the use of those words without modification would cause the gift to C to fail as the gift to C is capable of taking effect as a contingent remainder. To avoid the rule in Purefoy v Rogers, however, A could phrase the gift or devise either “to X and his heirs to the use of B for life, then to the use of C whether C is admitted to practice before or after B’s death”, or “to X and his heirs to the use of B for life, then to the use of C if he is admitted to practice as a medical practitioner, but if C is not admitted to practice as a medical practitioner by the date of B’s death then to C when he is so admitted to practice”.58

The Statute of Wills 1540 [10.90] Although devises of land were impossible under the feudal system of land tenure,

the effect of the doctrine of uses established prior to 1535 was to make it possible to make a devise which would be enforceable at equity. Thus, if A wished to devise her property to B, she could make a gift “to X and her heirs, to the use of B on A’s death”. This form of devise became comparatively common during the 15th and early 16th centuries, but the effect of the Statute of Uses 1535 (Eng) was to abolish the power to devise land. This proved to be a very unpopular reform and was one of the reasons for the Pilgrimage of Grace in 1536. Pressure to allow devises of land finally led to the enactment of the Statute of Wills 1540 (Eng). The 1540 statute created a broad power to devise land, so broad that it was held to be unnecessary to create a prior particular estate. Thus, if A wished to bequeath land to B, he could simply make a devise “to X and his heirs to the use of B” and the use would be executed by the Statute of Uses 1535. At a later stage, it was held to be unnecessary even to include an express use, as one would be implied at law if it were omitted. In this respect, the law treated devises far less rigidly than gifts inter vivos.

57 58

White v Summers [1908] 2 Ch 256 at 267. See, for example, Dean v Dean [1891] 3 Ch 150 at 155–​156; Re Caraher (1904) 21 WN (NSW) 213 at 215–​216.

530 [10.90]

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THE CURRENT AUSTRALIAN LAW Overview [10.95]  The earlier sections of this chapter have discussed the historical development of the

laws relating to future interests which Australia and the United Kingdom share in common. More recent developments have caused the present laws in Australia and the United Kingdom to diverge. The introduction of the Torrens system of land title in Australia led to a certain reappraisal of the old law of future interests. More influential has been the feeling that the old law, based as it is on the feudal system, is inappropriate to modern society. These factors have led to several changes in the law, primarily statutory; unfortunately, in many instances, uniform legislation between the jurisdictions has not been adopted.

Relevance of Torrens legislation to future interests [10.100] As a general proposition, the law discussed at [10.10]–​[10.90] applies equally to

Torrens land as to general law land. The only exception to that proposition is that the rule in Shelley’s Case (1581) 1 Co Rep 936; 76 ER 206 (KB) has never applied to Torrens land.59 The reason for this is that the rule is based on the common law distinction between words of purchase and words of limitation, neither of which have ever had any application or relevance under the Torrens legislation. The means of creating future interests in Torrens land is subject to the following provision of the Torrens legislation in the majority of jurisdictions:60 The registered proprietor of any estate or interest in land may transfer such estate or interest, or any part thereof, to the wife or husband of such registered proprietor, or to such registered proprietor, and any other person or persons as joint tenants or tenants in common, and may limit any estates by remainder or otherwise, without limiting any use, or executing any re-​ assignment; and upon the registration of any such transfer the estate or interest thereby dealt with or transferred shall vest in the transferee or transferees, according to the intent and meaning appearing in and expressed by such instrument. [10.105]  The Torrens legislation in New South Wales, South Australia and Tasmania permits the Registrar of Titles to create and issue separate certificates of title in respect of future interests.61 The legislation in New South Wales and Tasmania is similar. The s  100(2) and (3) of the Real Property Act 1900 (NSW) read as follows:

(2) Subject to subsection (3), where persons are entitled to be registered as proprietors of a life estate and an estate in remainder in, or as tenants in common of shares in, land under the provisions of this Act … the Registrar-​General may, in respect of the life estate and estate in remainder or, as the case may be, the shares:



(a) create separate folios of the Register and issue separate certificates of title,



(b) create a folio or folios of the Register and issue such certificate or certificates of title as the Registrar-​General thinks proper, or

59 60

61

Note, however, QLRC, Working Paper on a Bill to Consolidate, Amend, and Reform the Law Relating to Conveyancing, Property, and Contract, Working Paper 10 (1971), pp 19–​20. Property Law Act 1958 (Vic), s 19; Land Title Act 1994 (Qld), s 55; Real Property Act 1886 (SA), s 111; Transfer of Land Act 1893 (WA), s 84; Conveyancing and Law of Property Act 1884 (Tas), ss 62, 80; Land Titles Act 1925 (ACT), s 79; Land Title Act 2000 (NT), s 56. This is the wording of the South Australian provision. The form of the legislation differs between the jurisdictions, but is to similar effect. Real Property Act 1900 (NSW), s 100(2); Real Property Act 1886 (SA), s 75; Land Titles Act 1980 (Tas), s 33(6), (8). [10.105]  531

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(c) deliver any existing certificate of title after making thereon and in the Register such recording as may be required by this Act.



(3) The Registrar-​General shall not refuse to act in accordance with subsection  (2)(a) if the Registrar-​General is requested so to act and the Registrar-​General’s expenses for so acting are paid.

The Tasmanian legislation is similar although not identical in form. The South Australian legislation is expressed more simply, but is to similar effect. The s 75 of the Real Property Act 1886 (SA) states: The proprietor of an estate of freehold in remainder or reversion in land, for a life estate in which a certificate has already been issued, may have his estate registered on the certificate issued for the life estate, or may receive a separate certificate for his estate, which shall refer to the certificate of the particular estate.

In the remaining jurisdictions, the question whether the Registrar may create and issue separate certificates of title in respect of future interests must be considered uncertain in the absence of any reported authorities. In New Zealand, where the relevant legislation was similarly silent on the issue,62 Edwards J held in Re The Land Transfer Act 1908; Ex parte Matheson (1914) 33 NZLR 838 that holders of future interests are entitled to require that they be shown in the body of the certificate of title, rather than in a memorial endorsed upon the certificate of title issued to the holder of the possessory interest, as having a future estate in the property. This case is persuasive authority suggesting that the Registrar may be required to issue a separate certificate of title in respect of future interests in Victoria, Queensland, Western Australia, the Australian Capital Territory and the Northern Territory even without express legislation.

General statutory reforms Alienability of future interests [10.110] Historically, common law permitted vested future interests to be alienated, but not

contingent remainders.63 This rule was partially relaxed in the 18th century by decisions enabling alienation to take place by fine, or recovery as a form of estoppel, and by the suggestion that estoppel might take effect upon a purported conveyance under seal.64 Alienation of contingent remainders was held to be permissible in equity.65 Today, legislation exists in all Australian jurisdictions permitting the alienation of both vested and contingent future interests in all situations regardless of whether the interests are created by deed66 or by will.67 By way of illustration, the s 10 of the Law of Property Act 1936 (SA) states: 62

63 64 65 66

67

The s 76(2) of the Land Transfer Act 2017 (NZ) now provides for the recording on the record of title of the owner of a life estate or a freehold estate that terminates when a future event happens, the name of every person entitled to a future estate. Lampet’s Case (1612) 10 Co Rep 46b; 77 ER 994 (KB). See Caraher v Lloyd (1905) 2 CLR 480. See, for example, Crofts v Middleton (1856) 8 De GM & G 192; 44 ER 364 (Ch). Conveyancing Act 1919 (NSW), s 50(1); Property Law Act 1958 (Vic), s 19(1); Property Law Act 1974 (Qld), s 31; Law of Property Act 1936 (SA), s 10; Conveyancing and Law of Property Act 1884 (Tas), s 80(1); Civil Law (Property) Act 2006 (ACT), s 225; Law of Property Act 2000 (NT), s 31. Succession Act 2006 (NSW), s 4; Wills Act 1997 (Vic), s 4; Succession Act 1981 (Qld), s 8; Wills Act 1936 (SA), s 4; Wills Act 1970 (WA), s 6; Wills Act 1992 (Tas), s 6; Wills Act 1968 (ACT), s 7(2); Wills Act 2000 (NT), s 6. See Fairbairn v Varvaressos (2010) 78 NSWLR 577 at 598.

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All rights and interests in land may be disposed of, including -​

(a) a contingent, executory, or future interest in any land, or a possibility coupled with an interest in any land, whether or not the object of the gift or limitation of such interest or possibility be ascertained;

(b) a right of entry, into or upon land whether immediate or future, and whether vested or contingent.

Abolition of rule in Shelley’s Case [10.115]  The rule in Shelley’s Case (1581) 1 Co Rep 93b; 76 ER 206 (KB) has been expressly

repealed by legislation in New South Wales, Victoria, Queensland, Western Australia and the Northern Territory.68 For example, s 130 of the Property Law Act 1958 (Vic) states: Where by any instrument coming into operation after the commencement of this Act an interest in any property is expressed to be given to the heir or heirs or issue or any particular heir or any class of the heirs or issue of any person in words which, but for this section would, under the rule of law known as the Rule in Shelley’s case … have operated to give to that person an interest in fee-​simple or an entailed interest, such words shall operate as words of purchase and not of limitation, and shall be construed and have effect accordingly, and in the case of an interest in any property expressed to be given to an heir or heirs or any particular heir or class of heirs, the same person or persons shall take as would in the case of freehold land have answered that description under the general law formerly in force.

The legislation in these jurisdictions does not operate retrospectively, and any conveyance executed before the commencement date of the relevant sections is still subject to the operation of the rule in Shelley’s Case. The relevant dates are: New South Wales, 1 July 1920; Victoria, 12 February 1929; Queensland, 1 December 1975; Western Australia, 1 August 1969; and the Northern Territory, 1 December 2000. There is no equivalent legislation in South Australia, Tasmania and the Australian Capital Territory, and in these jurisdictions, the rule in Shelley’s Case continues to apply. Destruction of contingent remainders [10.120]  In the United Kingdom, natural and artificial destruction of contingent remainders

were abolished by statute in the 19th century. Section 8 of the Real Property Act 1845 (UK) abolished artificial destruction by surrender, merger and forfeiture in the following manner: a contingent remainder is and shall be deemed to have been capable of taking effect notwithstanding the destruction or determination by forfeiture, surrender or merger of any preceding estate of freehold in the same manner and in all respects as if the destruction or determination had not happened.

The rules of natural destruction and artificial destruction by disclaimer were unaffected by this legislation. These methods of destruction were later repealed by s  1 of the Contingent Remainders Act 1877 (UK), which stated: Every contingent remainder which would have been valid as a springing or shifting use or executory devise or other limitation had it not had a sufficient estate to support it as a contingent remainder shall in the event of the particular estate determining before the contingent remainder

68

Conveyancing Act 1919 (NSW), s 17; Property Law Act 1958 (Vic), s 130; Property Law Act 1974 (Qld), s 28; Property Law Act 1969 (WA), s 27; Law of Property Act 2000 (NT), s 28; discussed in Hammersley v Newton (2005) 30 WAR 568; [2005] WASC 221. [10.120]  533

PART 4 Divided Ownership of Land

vests be capable of taking effect in all respects as if the contingent remainder had originally been created as a springing or shifting use of executory devise or other executory limitation. [10.125]  The intended effect of this legislation was to abolish the rule in Purefoy v Rogers (1671) 2 Wms Saund 380; 85 ER 1181 (KB) and to overturn the rule which declared a contingent remainder void if it failed to vest before the natural determination of the prior particular estate. In earlier editions of their work, Megarry and Wade expressed some doubt69 as to whether this intended effect has been achieved, as the section does not deal expressly with class gifts and does not seem to cover the obvious situation of a contingent remainder created by deed without a use. For example, in a gift by deed by A “to B for life, then to his first child to reach the age of 21”, the contingent remainder to the first son would have been invalid without the existence of the prior particular estate. The effect of the legislation has never been tested in a reported case. [10.130] In Australia, the abolition of the rules of natural and artificial destruction of

contingent remainders and the rule in Purefoy v Rogers (1671) 2 Wms Saund 380; 85 ER 1181 (KB) has been achieved in all jurisdictions by three different methods.70 Victoria, Western Australia and Tasmania71 have copied the English approach and have incorporated into their conveyancing legislation the wording of the two UK statutes discussed at [10.120] without significant amendment. The consequence of this is that lingering doubt expressed by Megarry and Wade as to the effectiveness of the Contingent Remainders Act 1877 (UK) in achieving its intended goal applies also in these three States. In New South Wales and South Australia, the same result appears to have been achieved by the following legislation:72 A contingent remainder existing at any time after the commencement of this Act shall be capable of taking effect notwithstanding the want of a particular estate of freehold to support it in the same manner as it would take effect if it were a contingent remainder of an equitable estate supported by an outstanding legal estate in fee simple.

Finally, s  30(1) of the Property Law Act 1974 (Qld) and s  30(1) of the Law of Property Act 2000 (NT) adopt the more fundamental approach of declaring that future interests shall henceforth only exist as equitable interests. The subsection reads: “A future interest73 in land validly created after the commencement of this Act shall take effect as an equitable and not a legal interest”.74

69 70 71 72 73 74

For example, Megarry and Wade, The Law of Real Property (5th ed, Stevens & Sons Ltd, London, 1984), p 1184, fn 66. See Berry v Berry (1878) 7 Ch D 657. Property Law Act 1958 (Vic), ss 191, 192; Property Law Act 1969 (WA), s 26(1), (2); Conveyancing and Law of Property Act 1884 (Tas), ss 80(2), 81. Conveyancing Act 1919 (NSW), s 16(1); Law of Property Act 1936 (SA), s 25. Section 30(4) of the Property Law Act 1974 (Qld) and s 30(5) of the Law of Property Act 2000 (NT) define “future interest” as meaning a legal contingent remainder and a legal executory interest. The section does not apply to any future interest created before the commencement of the legislation (Property Law Act 1974 (Qld), 1 December 1975; Law of Property Act 2000 (NT), 1 December 2000). Legal executory interests created prior to this date in Queensland are still subject to the rule in Purefoy v Rogers and contingent remainders created prior to this date are still subject to the common law legal remainder rules.

534 [10.125]

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Avoidance of legal remainder rules [10.135]  There is a provision in the conveyancing legislation of New South Wales, Western

Australia and the Australian Capital Territory that states:  “Every limitation which may be made by way of use operating under the Statute of Uses or this Act may be made by direct conveyance without the intervention of uses”.75 The legislation is relevant to any interest that could exist as an equitable executory interest or (following the Statute of Uses 1535 (Eng)) as a legal executory interest if it had been created behind a use. The effect of the legislation is that a legal executory interest will henceforth be valid pursuant to the legislation even if no use is employed. Thus, the purpose of the legislation is to make uses unnecessary and to preserve as valid interests which would otherwise be void. In New South Wales, this analysis has been complicated by the repeal of the Statute of Uses 1535 as from 1 January 1971: see [10.145]. On one analysis, on a literal interpretation of the legislation, s  44(2) of the Conveyancing Act 1919 (NSW) could be argued to have been impliedly repealed, as from 1971 as no limitation may now be made “by way of use operating under the Statute of Uses”. Alternatively, it can be argued that s 44(2) applies to every limitation which could be made by way of use at the time when s  44(2) came into operation (1 July 1920). If this latter approach is correct, the subsequent repeal of the Statute of Uses 1535 in New South Wales will have no effect on the operation of s 44(2). The matter has not been tested in the courts. In the absence of authorities, the preference of the writers is for the latter interpretation, which preserves the operation of s 44(2). Restriction on executory limitations [10.140]  All jurisdictions except South Australia and the Australian Capital Territory possess

legislation in the following form:76 Where there is a person entitled to:

(a) land for an estate in fee-​simple or for any less interest, or



(b) any other property, with an executory limitation over on default or failure of all or any of the person’s issue, whether within or at any specified period of time or not, that executory limitation shall be or become void and incapable of taking effect, if and as soon as there is living any issue who has attained the age of eighteen years77 of the class on default or failure whereof the limitation over was to take effect.

The effect of this provision is to render void any executory limitation following a possessory interest where, according to the terms of the deed or will establishing the limitation, the possessory interest may be defeated by the death of the holder of the interest without issue once any of the holder’s children attain the age of 18. Thus, if A makes a gift “to B in fee simple, but if B should die without issue then to C and her heirs”, the limitation to C will be treated as void by the legislation once any of B’s children first reaches 18. The fact that the

75 76

77

Conveyancing Act 1919 (NSW), s 44(2); Property Law Act 1969 (WA), s 39; Civil Law (Property) Act 2006 (ACT), s 223. Conveyancing Act 1919 (NSW), s 29B(1); Property Law Act 1958 (Vic), s 132; Property Law Act 1974 (Qld), s 32; Property Law Act 1969 (WA), s 28; Conveyancing and Law of Property Act 1884 (Tas), s 79; Law of Property Act 2000 (NT), s 32. The original legislation specified 21 years. This was changed to 18 years in all States following the reduction in the age of majority: see, for example, Minors (Property and Contracts) Act 1970 (NSW), Pt II. [10.140]  535

PART 4 Divided Ownership of Land

child who reaches 18 later dies and B is left childless at the time of her death will be of no avail to C. This provision only applies where the executory limitation is contained in an instrument coming into operation after the following dates:  New South Wales, 1  July 1920; Victoria, 31 January 1905; Queensland, 1 December 1975; Western Australia, 1 August 1969; Tasmania, 1 January 1884; and the Northern Territory, 1 December 2000.78 The repeal of the Statute of Uses [10.145]  In New South Wales, Victoria, Queensland and the Northern Territory, the Statute of

Uses 1535 (Eng) has been abolished by State legislation.79 The effective dates for the operation of this repeal are:  New South Wales, 1  January 1971; Victoria, 2  July 1980; Queensland, 1 December 1975; and the Northern Territory, 1 December 2000. The effect of this reform is to return the law to its pre-​1535 condition. Thus, for example, a gift “to B and his heirs to the use of C and his heirs” will henceforth give C an equitable, rather than a legal, estate as the use is no longer executed. The practical effect of this is that trusts can now be created without employing a use upon a use. It also follows from the repeal of the Statute of Uses 1535 that legal executory interests can no longer be created in New South Wales, Victoria and Queensland. The repeal has no effect, however, on legal contingent remainders, which may still be created in New South Wales and Victoria (although not in Queensland, by virtue of s  30(1) of the Property Law Act 1974 (Qld), or in the Northern Territory, by virtue of s 30(1) of the Law of Property Act 2000 (NT): see [10.130]). In Victoria, an additional provision was added to the Property Law Act 1958 (Vic) at the time of the repeal of the Statute of Uses 1535. Section 19A reads:

(1) Interests in land which under the Statute of Uses could before the commencement of this section have been created as legal interests shall after the commencement of this section be capable of being created as equitable interests.



(2) Notwithstanding sub-​section (1) an equitable interest in land shall after the commencement of this section only be capable of being validly created in any case in which an equivalent equitable interest in property real or personal could have been validly created before such commencement.

The reasons for the inclusion of this section are puzzling. It has been suggested80 that the section was designed to ensure that interests drafted as legal executory interests created after the repeal of the Statute of Uses 1535 now take effect as equitable interests. If this is correct (and it is difficult to contemplate any other justification), the provision appears to be unnecessary as it has always been possible to create as equitable interests those interests which are capable of creation as legal interests. Thus, the legislation appears to be superfluous. The Statute of Uses 1535 still continues in effect in the remaining Australian jurisdictions.

78

79 80

Conveyancing Act 1919 (NSW), s 29B(2); Property Law Act 1958 (Vic), s 132(2); Property Law Act 1974 (Qld), s 32(2); Property Law Act 1969 (WA), s 28(2); Conveyancing and Law of Property Act 1884 (Tas), s 79(2); Law of Property Act 2000 (NT), s 32(2). Imperial Acts Application Act 1969 (NSW), s 8; Imperial Acts Application Act 1980 (Vic), s 5; Property Law Act 1974 (Qld), s 7; Law of Property Act 2000 (NT), s 6. Edgeworth, Rossiter, Stone and O’Connor, Sackville and Neave: Australian Property Law (8th ed, LexisNexis, Sydney, 2008), p 231.

536 [10.145]

CHAPTER 11

The Rule Against Perpetuities [11.05] BACKGROUND............................................................................................................ 538 [11.25] THE RULE ITSELF.......................................................................................................... 541 [11.30] The common law position............................................................................. 541 [11.35] “Vest”............................................................................................ 541 [11.40] “21 years”...................................................................................... 542 [11.45] “Life in being”................................................................................. 542 [11.50] “At the creation of the interest”........................................................... 543 [11.55] “Must vest, if at all”.......................................................................... 543 [11.90] Examples of the application of the common law rule....................................... 547 [11.95] Australian Capital Territory and New South Wales.......................................... 548 [11.95] The perpetuity period......................................................................... 548 [11.100] Certainty of vesting........................................................................... 549 [11.105] Alternative contingencies.................................................................... 550 [11.110] Northern Territory......................................................................................... 550 [11.110] The perpetuity period......................................................................... 550 [11.115] Certainty of vesting........................................................................... 550 [11.120] Queensland.................................................................................................. 551 [11.120] The perpetuity period......................................................................... 551 [11.125] Certainty of vesting........................................................................... 551 [11.130] South Australia............................................................................................. 551 [11.135] Tasmania..................................................................................................... 552 [11.135] The perpetuity period......................................................................... 552 [11.140] Certainty of vesting........................................................................... 552 [11.145] Victoria........................................................................................................ 552 [11.145] The perpetuity period......................................................................... 552 [11.150] Certainty of vesting........................................................................... 553 [11.155] Western Australia......................................................................................... 554 [11.155] The perpetuity period......................................................................... 554 [11.160] Certainty of vesting........................................................................... 554 [11.165] CLASS GIFTS............................................................................................................... 554 [11.165] The common law position............................................................................. 554 [11.170] Class-​closing rules......................................................................................... 555 [11.175] Examples of the application of the common law class-​closing rule................ 556 [11.180] New South Wales and the Australian Capital Territory..................................... 557 [11.185] Victoria........................................................................................................ 558 [11.190] Western Australia......................................................................................... 558 [11.195] Queensland.................................................................................................. 558 [11.200] Tasmania..................................................................................................... 558 [11.205] Northern Territory......................................................................................... 559 [11.210] South Australia............................................................................................. 559 [11.215] THE EFFECT OF INFRINGING THE RULE AGAINST PERPETUITIES.................................. 559 [11.215] The common law position............................................................................. 559 [11.225] The statutory position (all jurisdictions except South Australia)........................ 561 [11.230] EXCEPTIONS TO THE RULE AGAINST PERPETUITIES.................................................... 561 [11.230] The common law position............................................................................. 561 [11.235] Possibilities of reverter........................................................................ 561 [11.240] Rights of entry................................................................................. 562 [11.245] Options and contracts....................................................................... 563 [11.250] Other common law exceptions............................................................. 563  

537

PART 4 Divided Ownership of Land

[11.255] The statutory position (except South Australia)............................................... 564 [11.265] Miscellaneous statutory exceptions................................................................ 565

BACKGROUND [11.05]  One of the fundamental principles of English law which has been inherited in Australia is that land must be freely alienable. The origin of this principle is disputed.1 Some ascribe it to the statute Quia Emptores of 1290, which gave holders of fee simple estates the right to alienate their estate either partially or wholly. Others argue that the origin lies in the judicial acceptance of the idea that a restraint on alienation is contrary to the nature of an estate of inheritance.2 Despite its doubtful origins, it is generally agreed that significant restraints upon alienation should be outlawed for reasons of public policy, in that land should be freely marketable and that it is inappropriate for the law to permit persons to tie up land for generations by the terms of their settlement or will.3 The history of English real property law contains many illustrations of attempts to prevent land from being alienated: see [2.245]. The most common situation was a testator who sought to prevent land from being sold outside the family. The usual method of achieving this was the creation of a fee tail estate: see [2.105]–​[2.130]. Eventually in the late 15th century, the common law intervened to allow the conversion of a fee tail into a fee simple by the process of barring the entail.4 The rule developed at common law, which is still applicable today, is that a clause in a will or other instrument preventing the alienation of land is void as contrary to public policy. Numerous settlements and wills have been set aside over the years by virtue of this rule. In recent times, a partial relaxation of this rule has been allowed by the judiciary, and it is now accepted that partial restraints on alienation may be valid. The relevant authorities are discussed at [2.245]ff. In addition to the common law rule of voidness based on public policy, two other areas of law assist today in circumventing attempted restraints on the alienation of land. One is the State settled land legislation, which is discussed in Chapter 13. The other is the rule against perpetuities, which in Australia is a combination of common law principles and statutory rules. This is by far the most significant and effective of the current legal restraints on alienation of land in Australia. [11.10]  Historically there have been two separate rules against perpetuities. One of these was

the rule in Whitby v Mitchell (1890) 44 Ch D 85.5 Pursuant to this rule, where an interest in land was conveyed to an unborn person, any remainder to the issue of that person, and any subsequent limitation, was void. Take, for example, a gift “to X for life, remainder to X’s eldest child, remainder in fee simple to the children of the eldest child”. If X had a child at the time of the gift, the rule was not infringed. However, if X had at that time not produced any children,

1 2 3 4 5

See Jenks, “An Inalienable Fee Simple?” (1917) 33 LQR 11. See, for example, Mildmay’s Case (1605) 6 Co Rep 40a; 77 ER 311. The policy arguments are canvassed in Schnebly, “Restraints upon the Alienation of Legal Interests” (1935) 44 Yale LJ 961. See, for example, Mary Portington’s Case (1614) 10 Co Rep 35b; 77 ER 976. The rule has its origin in Perrot’s Case (1594) Moo KB 368; 72 ER 634.

538 [11.05]

The Rule Against Perpetuities  Chapter  11

the gift to the eldest child would be valid, but the remainder to the children of that eldest child would be void.6 This rule, which was sometimes misleadingly referred to as “the rule against double possibilities”, applied to both legal and equitable estates,7 but not to personal property.8 In Australia, the rule in Whitby v Mitchell has been abolished by legislation in New South Wales, Victoria, Queensland, Western Australia, Tasmania and the Northern Territory,9 but remains in effect in South Australia and the Australian Capital Territory. The present rule against perpetuities, which forms the remainder of the discussion in this chapter, is sometimes referred to as the “modern” perpetuities rule.10 It dates from a series of cases determined between 1682 and 1833.11 Its origin lies in the basic common law principle that land should be freely alienable, and it arose in response to a specific threat to this principle. Following the Statute of Uses 1535 (Eng) and the Statute of Wills 1540 (Eng) (see Chapter 10), a new category of executory interests became possible. When these interests were rendered indestructible by the decision in Pells v Brown (1620) Cro Jac 590; 79 ER 504, the possibility emerged of an infinite series of indestructible contingent interests. The rule against perpetuities was designed to prevent this occurrence. [11.15]  The Privy Council first considered the application of the rule against perpetuities in

Australia in 1889 in Cooper v Stuart (1889) LR 14 App Cas 286.12 The court emphasised the continued need to safeguard the free alienability of land and to ensure that ultimate ownership of land was not deferred for lengthy periods. It stated (at 293): The rule against perpetuities … is, in its principle, an important feature of the common law of England. To that extent it appears to be founded upon plain considerations of policy, and, in some shape or other, finds a place in most, if not in all, complete systems of jurisprudence. Their Lordships see no reason to suppose that the rule … is not required in New South Wales by the same considerations which led to its introduction here.

The rule has been held to apply to Torrens land as well as general law land.13 However, Young J in Consolidated Development Pty Ltd v Holt (1986) 6 NSWLR 607 has held that if a person achieves registration of an interest which would be void at common law for infringing the rule, the Torrens legislation will override the rule and make the interest indefeasible. The effect of this is that the Registrar of Titles will need to ensure that by the act of registration he or she does not create an interest which would otherwise be invalid (at 617).

6 7 8 9

0 1 11 12

13

For illustrations of the operation of the rule, see Re Mortimer [1905] 2 Ch 502; Brudenell v Elwes (1801) 1 East 442; 102 ER 171. Re Nash [1910] 1 Ch 1. Re Bowles [1902] 2 Ch 650. Conveyancing Act 1919 (NSW), s 23A; Perpetuities and Accumulations Act 1968 (Vic), s 12; Property Law Act 1974 (Qld), s 216; Property Law Act 1969 (WA), s 114; Perpetuities and Accumulations Act 1992 (Tas), s 21; Law of Property Act 2000 (NT), s 201. Sometimes referred to as the “rule against remoteness of vesting”. Duke of Norfolk’s Case (1681) 3 Ch Ca 1; 22 ER 931; Cadell v Palmer (1833) 1 Cl & Fin 372; 6 ER 956. The Privy Council held that the common law rule against perpetuities does not bind the Crown. This position has been reversed by the modern perpetuities legislation, except in respect of dispositions made by the Crown: Perpetuities Act 1984 (NSW), s 5(1); Perpetuities and Accumulations Act 1968 (Vic), s 1(2); Property Law Act 1974 (Qld), s 2; Property Law Act 1969 (WA), s 99(2); Perpetuities and Accumulations Act 1992 (Tas), s 5; Perpetuities and Accumulations Act 1985 (ACT), s 4; Law of Property Act 2000 (NT), s 185. Kauri Timber Co (Ltd) v District Land Registrar, Auckland (1902) 21 NZLR 84 (reversed on other grounds, (1902) 22 NZLR 260). [11.15]  539

PART 4 Divided Ownership of Land

[11.20]  While the rule against perpetuities made sense at the time of its formulation in England

several centuries ago, its continued application in modern times has been regarded by most commentators as an absurd anachronism.14 Belated recognition of this fact led all jurisdictions to introduce legislation amending the common law to remove some of the problems and difficulties associated with the common law rule.15 South Australia has taken the most radical step and has abolished the rule against perpetuities.16 Section 61(1) of the Law of Property Act 1936 (SA) (added by the Law of Property (Perpetuities and Accumulations) Amendment Act 1996 (SA)) states in part: A disposition of property is not invalid –​

(a) because of the remoteness from the date of the disposition of the time an interest will, or may, vest in pursuance of the disposition; or



(b) because, under the terms of the disposition, an interest is limited, for life, to a person who was unborn at the date of the disposition, with a remainder over to a child or other issue of that person.

The South Australian legislation is stated by s 59(1) of the Law of Property Act 1936 to apply to all dispositions of property, and rights and powers granted or conferred, before or after the commencement of the perpetuities provisions (1 May 1996). However, the legislation does not validate a disposition of property if, before 1 May 1996, property subject to the disposition had been wholly or partly distributed on the basis that the disposition is invalid:  s  59(2). The perpetuities legislation in the other jurisdictions modifying, but not abolishing, the rule against perpetuities in each case states that the legislation applies only to instruments taking effect after either the commencement of the Act or after an appointed day.17 The relevant dates are 31 October 1984 (New South Wales), 10 December 1968 (Victoria), 1 December

14

15

16 17

For example, Leach refers to “the hobgoblins, leprechauns, and gremlins that have infested the Rule in the nearly three hundred years of its existence”: see Leach, “Perpetuities Reform: London Proposes, Perth Disposes” (1964) 6 UWALR 11 at 12. In Leach, “Perpetuities: Staying the Slaughter of the Innocents” (1952) 68 LQR 35 at 35, the author states that the rule is: “so abstruse that it is misunderstood by a substantial percentage of those who advise the public, so unrealistic that its ‘conclusive presumptions’ are laughable nonsense to any sane man, so capricious that it strikes down in the name of public order gifts which offer no offence except that they are couched in the wrong words, [and] so misapplied that it sometimes directly defeats the end it was designed to further”. The rule does have some modern relevance, however: see Allan, “The Rule Against Perpetuities Restated” (1964) 6 UWALR 27 at 30–​33. The present legislation is contained in the Perpetuities Act 1984 (NSW); Perpetuities and Accumulations Act 1968 (Vic); Property Law Act 1974 (Qld), Pt 14; Property Law Act 1969 (WA), Pt XI; Law of Property Act 1936 (SA), Pt 6; Perpetuities and Accumulations Act 1992 (Tas); Perpetuities and Accumulations Act 1985 (ACT); Law of Property Act 2000 (NT), Pt 11. In Queensland, Western Australia and the Northern Territory, the perpetuities legislation was first introduced in the Perpetuities and Accumulations Act 1972 (Qld), the Law Reform (Property, Perpetuities and Succession) Act 1962 (WA) and the Perpetuities Act 1994 (NT). The NSW legislation is based in part on a 1976 report of the NSWLRC: Report No 26 (1976). Similar legislation has been enacted in New Zealand and the United Kingdom: Perpetuities Act 1964 (NZ); Perpetuities and Accumulations Act 1964 (UK) and Perpetuities and Accumulations Act 2009 (UK). Law reform was recommended earlier by the SALRC, Report Relating to the Reform of the Law of Perpetuities, 73rd Report (1984). Perpetuities Act 1984 (NSW), s 4(1); Perpetuities and Accumulations Act 1968 (Vic), s 3(1); Property Law Act 1974 (Qld), s 207(1); Property Law Act 1969 (WA), s 99(1); Perpetuities and Accumulations Act 1992 (Tas), s 4(1); Perpetuities and Accumulations Act 1985 (ACT), s 3; Law of Property Act 2000 (NT), s 184. Various exceptions are specified in certain cases in respect of the administrative powers of trustees, the remuneration of trustees and superannuation and other funds. In these cases, the legislation operates retrospectively.

540 [11.20]

The Rule Against Perpetuities  Chapter  11

1975 (Queensland),18 6 December 1962 (Western Australia), 1 December 1992 (Tasmania), 19 December 1985 (Australian Capital Territory) and 1 August 1994 (Northern Territory). Thus, the common law rule against perpetuities continues to apply to all instruments taking effect in these jurisdictions before the relevant date. As the perpetuities legislation differs significantly between the various States and from the common law, a separate discussion of the common law position and each Act is set out in respect of the various aspects of the rule against perpetuities.

THE RULE ITSELF [11.25] The essence of the rule against perpetuities19 is the imposition of a limit on the

amount of time which may elapse between the creation of a future interest and the ultimate vesting of that interest. The date of ultimate vesting is the date at which the final owner of the interest is identifiable and the only thing preventing him or her from taking possession of the property is the regular termination of any prior estate. The purpose behind the imposition of such a time limit is to strike a balance between the interests of those making wills or gifts to dispose of their assets as they wish during their lifetimes and the public interest in preventing land and other assets from being tied up for indefinite periods during which no one has the power of disposition. The rule applies to all contingent interests in real property, both legal and equitable, however created.20 However, it has no application to vested interests.21

The common law position [11.30]  The common law has been stated by the Privy Council in Air Jamaica Ltd v Charlton

[1999] 1 WLR 1399 at 1408–​1409 as follows:22 No interest is good unless it must vest, if it vest at all, within a period of life in being, the date of the gift plus 21 years. A gift is defeated if, by any possibility, however remote, it may vest outside the perpetuity period. It is not saved by the fact that, in the event, it vests inside the period.

Each section of this statement is considered in detail: see [11.35]–​[11.85]. “Vest” [11.35]  Morris and Leach list three requirements which must be fulfilled for an interest to

vest within the meaning of the rule:23 (a) the taker must be ascertained;

18 19

20 1 2 22

23

The now-​repealed Perpetuities and Accumulations Act 1972 (Qld) applied to instruments taking effect after 1 April 1973. For a discussion of the issue, see McCrimmon, “Understanding the Rule Against Perpetuities: Adopting a Five Step Approach to a Perpetuities Problem” (1997) 5 APLJ 130. Few cases arise for consideration today: for a recent example, see Saxby Soft Drinks Pty Ltd v George Saxby Beverages Pty Ltd [2009] NSWSC 1486. The rule applies to all types of proprietary interests. See, for example, Dunn v Blackdown Properties Ltd [1961] Ch 433, where the rule was applied to an easement in fee simple to use drains under the grantor’s land. See Chapter 10 for a discussion of vested and contingent interests. See also Nemesis Australia Pty Ltd v Commissioner of Taxation (2005) 150 FCR 152; [2005] FCA 1273; Hancock v Watson [1902] AC 14 at 17–​18. Note that a person attains a particular age on the day preceding the anniversary of the relevant birthdate: Re Shurey [1918] 1 Ch 263. Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 38. [11.35]  541

PART 4 Divided Ownership of Land

(b) any condition precedent attached to the interest must be satisfied, subject only to the termination of any prior estates; and (c) where the interest is part of a class gift, the exact amount or fraction to be taken by each beneficiary must be determined.

The effect of requirement (b) is that it is sufficient to satisfy the rule if the disposition is vested in interest and it is irrelevant whether or not the disposition vests in possession within the perpetuity period.24 The effect of requirement (c) is discussed at [11.165]. “21 years” [11.40]  This is an arbitrary figure based upon the age of majority at the time the rule was

created.25 This period, together with the “life in being”, was designed to allow parents to leave gifts to their children which would vest upon the child’s majority. In the absence of any “lives in being”, the perpetuity period is only 21 years.26 “Life in being” [11.45]  The life or lives in being relevant to determining the perpetuity period are those upon

which the vesting of the gift has been made to depend, provided that they are in existence at the creation of the interest. It is not fatal to a gift if the life or lives in being are not ascertained at that time, provided that such lives are definitely in existence and they do not form part of a class which may increase in number.27 The life or lives in being may be expressly mentioned in the terms of the gift (eg, “to X on the 21st anniversary of my great-​aunt’s death”), or may be included in the gift by necessary implication. For example, the mention of a child necessarily implies the existence of parents, and a gift “to my granddaughters” necessarily implies the existence of “my child” or “my children”. The perpetuity period also includes any actual periods of gestation, since a child en ventre sa mere28 is treated as a life in being for the purposes of the rule.29 It must be noted, however, that only actual periods of gestation can be used to extend the period, as nine months cannot simply be added to the perpetuity period unless the child was actually born nine months from the date the period began to run.30 The lives in being according to which the perpetuity period is measured need not be connected to the interest other than by being mentioned in the instrument which creates it.31 Efforts to postpone vesting as long as possible have produced devices such as the “royal lives clause”, which typically provides that the property concerned is not to vest until the

4 2 25 26 27 28 29

30 31

See, for example, Re Hargreaves (1890) 43 Ch D 401. In Australia, the 21-​year perpetuity period is unaffected by the reduction in the age of majority to 18 years. Re Raphael; Permanent Trustee Co of New South Wales Ltd v Lee (1903) 3 SR (NSW) 196; Re Hooper [1932] 1 Ch 38; Palmer v Holford (1828) 4 Russ 403; 38 ER 857. Hardebol v Perpetual Trustee Co Ltd [1975] 1 NSWLR 221. An unborn child in the mother’s womb: Royal College of Nursing of the United Kingdom v Department of Health & Social Security [1981] 1 All ER 545 at 554. Long v Blackall (1797) 7 TR 100; 101 ER 875; Thellusson v Woodford (1799) 4 Ves Jun 227 at 255; 31 ER 117 at 130; Blackburn v Stables (1814) 2 V & B 367; 35 ER 358; Re Wilmer’s Trusts [1903] 2 Ch 411; Re Stern [1962] Ch 732. Cadell v Palmer (1833) 1 Cl & Fin 372; 6 ER 956. Thellusson v Woodford (1805) 11 Ves Jun 112; 32 ER 1030; Cadell v Palmer (1833) 1 Cl & Fin 372; 6 ER 956.

542 [11.40]

The Rule Against Perpetuities  Chapter  11

expiration of 21 years from the death of the last survivor of all the lineal descendants of a named monarch living at the time that the instrument takes effect.32 Any number of lives may be taken provided they are not so numerous as to make it impossible to calculate the survivors upon the testator’s death. In such a case, the gift would be held to be void for uncertainty.33 The lives must be human lives, not those of animals34 or legal entities. As stated by Morris and Leach,35 it is therefore (arguably) not possible to postpone vesting “until the death of the survivor of all the tortoises in the zoo, or even (perhaps) of all oak trees in Hyde Park”.36 “At the creation of the interest” [11.50] At common law, the perpetuity period begins to run “at the creation of the

interest”. This date differs for various types of gifts. If the gift is made by will, the period will run from the testator’s death.37 In respect of an inter vivos gift, the period commences when the instrument takes effect and, in respect of interests created by deed, the period commences on delivery of the deed.38 If the gift is revocable, the period runs from the date when the right to revoke terminates. This will normally be upon the settlor’s death, but if the settlor releases his or her power of revocation at any earlier time, the period will begin to run from the earlier date.39 This rule is a manifestation “of the general principle that the perpetuity period does not begin to run as long as any one person either is sole beneficial owner of the property or can at will make himself the sole beneficial owner thereof”.40 “Must vest, if at all” [11.55] This clause indicates the requirement of the rule against perpetuities that there

is absolute certainty of vesting within the vesting period (the life or lives in being plus 21 years). It is not sufficient for the rule that the gift is extremely likely to vest within the period, or that it is virtually certain to vest therein. It is not even enough that the slender possibility that the gift will vest outside the period has been eliminated by the time the matter reaches court. The rule requires that it must be absolutely certain at the time the perpetuity period begins to run that the gift will vest within the perpetuity period. If that is

32 33

34 35 36 37

38 39 40

Re Villar [1929] 1 Ch 243; Re Leverhulme (No 2) [1943] 2 All ER 274; Pownall v Graham (1863) 33 Beav 242; 55 ER 360. See, for example, Re Moore [1901] 1 Ch 936, where a gift in a will “21 years from the death of the last survivor of all persons who shall be living at my death” was held to be void for uncertainty. See also Re Villar [1929] 1 Ch 243 at 255. Re Kelly [1932] IR 255. Compare Re Dean (1889) 41 Ch D 552. Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 63. For a recent discussion of how to determine who is a relevant life in being, see Dukeminier, Wait-​and-​ See: The Causal Principle (1986) 102 LQR 250. Compare Re Dean (1889) 41 Ch D 552. Abbiss v Burney (1881) 17 Ch D 211; Re Mervin [1891] 3 Ch 197 at 204; Vanderplank v King (1843) 3 Hare 1; 67 ER 273 at 17 (Hare), 279 (ER). See Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 20. Robinson v Hardcastle (1788) 2 TR 241; 100 ER 131; Routledge v Dorril (1794) 2 Ves Jun 357; 30 ER 671. Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 57; Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 49. Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 57. [11.55]  543

PART 4 Divided Ownership of Land

not certain, then the fact that the gift actually vested well within the perpetuity period will not save it.41 The insistence by the common law on the certainty of vesting requirements has produced some bizarre and inequitable decisions –​the best-​known examples are detailed at [11.60]–​[11.85].

The fertile octogenarian cases [11.60] In a line of cases beginning with Jee v Audley (1787) 1 Cox Eq Cas 324; 29 ER

1186,42 the courts have held that there is a conclusive presumption of fertility, according to which persons of any age are capable of bearing children, even women over the age of 70.43 Further, evidence to establish physical impossibility is inadmissible.44 Dean  J stated in Re Fawaz (decd) [1958] VR 426 at 431: The attitude of the law on this matter would scarcely commend itself to an intelligent layman. It is prepared to concede that a deceased person cannot have children, but it will concede no more. The fact that by a surgical operation a woman’s organs of generation have been removed or the fact that she is of advanced age will not, in the eyes of the law, exclude the possibility of further children being born to her.

An Australian illustration of this aspect of the law is Teague v Trustees, Executors & Agency Co Ltd (1923) 32 CLR 252. In this case, the High Court refused to assume that no further grandchildren could be born to the testator, even though his only surviving child was a woman aged 69 who the court admitted was beyond the age of childbearing.

The precocious toddler [11.65]  For the purposes of the rule against perpetuities, children of any age are conclusively

presumed to be capable of childbearing. For example, in Re Gaite’s Will Trusts (1949) 65 TLR 19445 Pennycuick V-​C stated that he could not deny the possibility that the gift might fail to vest because it was possible that the testator’s widow (aged 65 at his death) could remarry and

41

42 43

44 45

Leach, “Perpetuities Reform: London Proposes, Perth Disposes” (1964) 6 UWALR 11 at 12 states that the high degree of certainty required by the rule against perpetuities is not required by any other branch of the law, whether civil or criminal. See Re Watson’s Settlement Trusts [1959] 1 WLR 732 at 739. See also Re Gaite’s Will Trusts (1949) 65 TLR 194; Re Dawson (1888) 9 Ch D 155. Ward v Van der Loeff [1924] AC 653 is a particularly absurd application of the rule. In that case, a testator left his residuary estate to his wife for life (or until she should marry someone who was not a natural-​born British subject) and, upon her death, to the children of any of his siblings then living. The residuary gift was held to infringe the rule set down in Jee v Audley (1787) 1 Cox 324; 29 ER 1186 and it failed for remoteness. Lord Blanesburgh stated (at 677–​678): “If we consider matters as they stood at the testator’s death … it was necessary before anything obnoxious to the rule could take place in connection with this residuary gift, that the following remarkable conjunction of events should supervene. The testator’s father and mother were then each upwards of 66 years of age; to them … no child had been born for more than 30 years. It was, nevertheless, necessary that they should have another child. Alternatively, it was necessary that their marriages should be dissolved otherwise than by the death of the father, and that he should marry again, and have a child by the second marriage. That child, in turn, had to have a child born after the death of the testator’s widow –​one born in her lifetime would not have been excluded by the rule. And even a child so born would have brought about an infraction of the rule, only if it had also eventuated that no one of the already substantial and apparently increasing families of the testator’s four living brothers and sisters had survived his widow having married or attained 21”. Jee v Audley (1787) 1 Cox 324; 29 ER 1186. See also Re Atkins’ Will Trusts [1974] 1 WLR 761.

544 [11.60]

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bear a child, who in turn could marry and bear a child, all within five years of the testator’s death. In this case, the gift was saved only because the marriage of a person under the age of 16 would have been void at law. This meant that the hypothetical grandchild could not be legitimate so as to take under the will.

The unborn widow(er) [11.70] In Re Frost (1889) 43 Ch D 24646 a testator devised his estate to the use of his sons

and heirs upon trust for his daughter Emma (a spinster at the date of the will) during her life and, upon her death, to any husband Emma might marry, for life, and, upon his death, to any children of the marriage. In this case, the gift to Emma was valid, as was the gift to her widower, since he must be ascertained at the time of Emma’s death. However, the gift to their children was held to be invalid because it was possible that Emma could marry a man not born at the testator’s death, who might die more than 21 years after Emma (the only life in being), causing the gift to the children to vest outside the perpetuity period (Emma’s life plus 21 years). In a situation such as occurred in Re Frost, it would make no difference that by the time of litigation the person to whom such a bequest was made had died a widow with children of full age.47 The validity of any gift must be decided according to all the possibilities, no matter how remote, in existence at the time the perpetuity period begins to run.

The magic gravel pits [11.75]  If a testator leaves property to beneficiaries upon a contingency which is virtually

certain to occur within 21 years, but there is a theoretical possibility that it may take longer, the gift will be void. The classic example is Re Wood [1894] 2 Ch 310 (first instance); [1894] 3 Ch 381 (CA). In that case, a testator bequeathed his freehold gravel pits to his children, instructing the trustees to carry on the business until the gravel pits were worked out, and then to sell them and to hold the proceeds of sale on trust for his children in equal shares. The pits had in fact been worked out six years after the testator’s death and before the matter was litigated. However, both at first instance and in the English Court of Appeal it was held that the gift failed for remoteness because it could not be certain that the pits would be worked out within the perpetuity period.48 The fact that the court had the power to force the trustees to work the pits out before the end of the period was apparently not considered.49 In an analogous American case, a covenant to build an auditorium in good faith and with due diligence did not affect a finding that a lease in respect of the building was void because the building might not be completed within 21 years.50

46 7 4 48

49 50

Compare Re Garnham [1910] 2 Ch 413. As occurred in Harris v King (1936) 56 CLR 177. For other examples, see Re Jones (decd) (1950) 66 TLR (Pt 2) 51; Belyea v McBride [1942] 3 DLR 785 (PC); Re Bewick [1911] 1 Ch 116; Re Stratheden and Campbell [1894] 3 Ch 265; Haggerty v City of Oakland 161 Cal App 2d 407; 326 P 2d 957 (1958). See Leach, “Perpetuities Reform: London Proposes, Perth Disposes” (1964) 6 UWALR 11 at 12; Leach, “Perpetuities: Staying the Slaughter of the Innocents” (1952) 68 LQR 35 at 45. Haggerty v City of Oakland 161 Cal App 2d 407; 326 P 2d 957 (1958). [11.75]  545

PART 4 Divided Ownership of Land

Alternative contingencies [11.80]  There is one partial exception to the common law requirement of certainty of vesting.

As explained by Morris and Leach:51 Where a gift is made upon either of two expressed contingencies, one of which must occur, and the other of which may not, the gift is valid if the first contingency occurs although it is invalid if the second contingency occurs.52

In this specific case, the court will wait and see what actually happens within the perpetuity period before deciding upon the validity of a gift. However, for the rule to apply, the two contingencies must be clearly expressed in the gift, and not merely implicit in it.53 As stated by Cotton LJ in Re Harvey (1888) 39 Ch D 289 at 298: It is not enough that you can separate the gift over so as to make it an alternative gift on two contingencies –​the testatrix must herself have separated it so as to make it take effect on the happening of either of two events.

This rule appears particularly bizarre since it pays more attention to the way in which the gift is worded than to the actual intention of the testator or settlor, making the validity of the gift dependent on the words chosen by the testator rather than on any intention to violate the spirit of the rule against perpetuities.54 It also seems quite contrary to reason to invalidate the gift because a contingency which might have happened outside the perpetuity period actually comes to pass within it. Since no perpetuity resulted from the condition, it seems almost spiteful to defeat the testator’s intention by rendering him or her intestate when all the conditions for carrying out his or her wishes have taken place within the perpetuity period.

Construction [11.85] The issue whether or not a gift is vested is always a matter of construction. The

traditional common law rules concerning the construction of gifts have been described by Morris and Leach as “remorseless”.55 As stated by Parke B in Dungannon v Smith (1846) 12 Cl & Fin 546 at 599; 8 ER 1523 at 1545:56 Our first duty is to construe the will; and this we will do, exactly in the same way as if the rule against perpetuity had never been established, or were repealed when the will was made; not

51 52

53 54

5 5 56

Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 181. See also Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 67ff. See, for example, Longhead d Hopkins v Phelps (1770) 2 Wm Bl 704; 96 ER 414; Leake v Robinson (1817) 2 Mer 363; 35 ER 979; Cambridge v Rous (1858) 25 Beav 409; 53 ER 693; Miles v Harford (1879) 12 Ch D 691; Re Bowles [1905] 1 Ch 371; Re Davey [1915] 1 Ch 837; Mainwaring v Mainwaring (1923) 23 SR (NSW) 531; Caldwell v Fleming [1927] NZLR 145; Re Curryer’s Will Trusts [1938] Ch 952. Re Harvey (1888) 39 Ch D 289; Re Bence [1891] 3 Ch 242; Harris v King (1936) 56 CLR 177; Attorney-​General v Cahill [1969] 1 NSWR 85; Proctor v Bishop of Bath & Wells (1947) 2 H Bl 358; 126 ER 594. For illustrations of the capricious nature of this rule, see Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 182; Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 354–​355. Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 247. See also Pearks v Moseley (1880) 5 AC 714 at 719 per Lord Selborne LC; Tidex v Trustees Executors & Agency Co Ltd [1971] 2 NSWLR 453 at 458 per Street J; Re Turney [1899] 2 Ch 739 at 744; Re Atkinson [1916] 1 Ch 91 at 95–​96; Re Burnyeat [1923] 2 Ch 52 at 57; Re Leigh’s Settlement Trusts [1938] Ch 39 at 47–​48; Lindsay v Miller (No 2) [1949] VLR 154 at 157–​158; Re Murphy (decd) [1958] Qd R 456 at 466 and 471; Re Harding [1956] NZLR 482 at 487.

546 [11.80]

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varying the construction in order to avoid the effect of that rule, but interpreting the words of the testator wholly without reference to it.

Despite this so-​called remorselessness, the courts have endeavoured to mitigate the rigour and harshness of the rule against perpetuities where the words of the instrument under construction permit. Over the years, where possible, the courts have inclined towards holding a gift to be vested in order to save the gift.57 For example, a gift “to X when he or she attains the age of 21”58 will always be held to be contingent. On the other hand, however, a gift “to X, to be paid when he or she attains the age of 21”59 may be held to confer a vested interest with rights of enjoyment postponed. Similarly, if the testator directs that payments of trust income should go to the beneficiaries prior to the ostensible date of vesting, the court may imply that the gift vested at birth but that the principal is not available until the beneficiary reaches 25.60 However, a mere discretionary power to pay income to potential beneficiaries that might or might not be exercised by trustees will not give rise to any such implication.61 There are also cases where the courts purport to follow the remorseless rules of construction, but nevertheless conclude that the gift can be saved despite all indications to the contrary.62 Two notable Australian cases are Re Hobson’s Will [1907] VLR 72463 and Brownfield v Earle (1914) 17 CLR 615. In Re Hobson’s Will Cussen  J announced his intention not to depart from the “relentless” interpretation required by Lord Selborne’s judgment in Pearks v Moseley (1880) LR 5 App Cas 714 at 719, but drew attention to a passage in that case which he believed indicated that the remorseless approach is required only when the testator’s words are clear and unambiguous. Where the court is dealing with words which are obscure and ambiguous, however, Cussen J concluded that a judge is entitled to give some weight, in a question of remoteness, to the consideration that it is better to make effectual than to destroy the intention of the testator or settlor.64 The reasoning of Barton  J in Brownfield v Earle was very similar. Both judges concluded that there was sufficient ambiguity in the words of the instrument before them to allow a construction which came far closer to carrying out the testator’s wishes than would be possible under the remorseless approach.

Examples of the application of the common law rule [11.90]  Examples of the application of the common law rule include:

1.

An inter vivos disposition: “To such of my grandchildren who reach the age of 21”. This gift will be void as it infringes the rule. The only relevant life in being is the grantor. The

57

See, for example, Bickersteth v Shanu [1936] AC 290; Hume v Perpetual Trustees Executors & Agency Co of Tasmania Ltd (1939) 62 CLR 242. Stapleton v Cheales (1711) Prec Ch 317; 24 ER 150; Hanson v Graham (1801) 6 Ves Jun 239; 31 ER 1030. See Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 328. Re Couturier [1907] 1 Ch 470; Clobberie’s Case (1677) 2 Vent 342; 86 ER 476; Re Bartholemew (1849) 1 Mac & G 354; 41 ER 1302; Will of Bickerdike [1918] VLR 191; Re Croser (decd) (1973) 6 SASR 420. See Ford and Lee, The Law of Trusts (Thomson Reuters subscription service, Sydney) at [727]. Barrett v Barrett (1918) 18 SR (NSW) 637. See Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 251ff. Compare White v Commissioner for Stamps (1908) 8 SR (NSW) 287; Re Fawaz (decd) [1958] VR 426. Re Hobson’s Will [1907] VLR 724 at 737.

58

59 0 6 61 62 63 64

[11.90]  547

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grantor’s children (if any) cannot count as lives in being as their number is capable of increase so long as the grantor is alive. This remains true at common law regardless of the age of the grantor. The perpetuity period is thus the life of the grantor plus 21 years. The gift clearly fails as the perpetuity period may be exceeded prior to vesting. 2.

A bequest: “To such of my grandchildren who reach the age of 21”. The bequest is valid. As the bequest will not take effect until the testator’s death, the testator’s children will class as lives in being as their number is not capable of increase. The gift must vest (if at all) within the lives of the testator’s children plus 21 years.65

3.

A bequest: “To such of my grandchildren who reach the age of 25 years”. This bequest is void. As in ­example 2, the lives in being are the testator and his or her children. However, if all the testator’s children die prior to the oldest grandchild attaining the age of four years, the gift will not vest until more than 21 years after the death of the lives in being.

4.

An inter vivos gift or bequest: “To the first child of Mary who marries”.66 The gift or bequest is void, unless at the time of the disposition one of Mary’s children has already married. The only life in being is Mary. It is possible that none of Mary’s children will marry within 21 years of her death.

Australian Capital Territory and New South Wales The perpetuity period [11.95]  The New South Wales and Australian Capital Territory Acts set a mandatory 80-​year

perpetuity period,67 which replaces the complex “life in being” common law period. Unlike some other jurisdictions which have enacted perpetuities legislation,68 New South Wales and the Australian Capital Territory do not provide for the common law period to be used as an alternative to the statutory period. In the Australian Capital Territory, gestation periods may be added to the 80-​year period in order to save a settlement.69 The position in New South Wales on this point is not yet settled. The better answer would appear to be that actual periods

65

66

67

68 69

As a result of modern-​day sperm and ova banks, it is no longer necessarily true that a child must reach the age of 21 within 21 years of her or his parents’ death. For the legal difficulties in this context associated with advancing medical technology, see Sappideen, “Sperm Banks, Wills and Perpetuities” (1979) 53 ALJ 311; Leach, “Perpetuities in the Atomic Age: The Sperm Bank and the Fertile Decedent” (1962) 48 Am Bar Assoc J 942. A child includes an ex-​nuptial child: Status of Children Act 1996 (NSW), s 6(2); Status of Children Act 1974 (Vic), s 3(2); Status of Children Act 1978 (Qld), s 6(2); Family Relationships Act 1975 (SA), s 6(1), (2); Wills Act 1970 (WA), s 31; Status of Children Act 1974 (Tas), s 3(2); Status of Children Act 1979 (NT), s 4(1); Parentage Act 2004 (ACT), s 39(3). Perpetuities Act 1984 (NSW), s 7(1); Perpetuities and Accumulations Act 1985 (ACT), s 8(1). The Perpetuities and Accumulations Act 2009 (UK), which applies to instruments taking effect on and after 6 April 2010, establishes a perpetuity period of 125 years for interests created under a trust or a will. See Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property (18th ed, OUP, Oxford, 2011), pp 529–​530, 575–​576 and Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 324, 326, 329–​331, 343. Property Law Act 1969 (WA), s 101; Perpetuities and Accumulations Act 1968 (Vic), s 5; Property Law Act 1974 (Qld), s 209; Perpetuities and Accumulations Act 1992 (Tas), s 6; Law of Property Act 2000 (NT), s 187. Perpetuities and Accumulations Act 1985 (ACT), s 8(3). A certificate from a medical practitioner who has examined a woman stating that she is pregnant is required: s 8(4).

548 [11.95]

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of gestation should be added to the 80-​year period, as this is consistent with the common law position (see [11.45]) and allows gifts to the children of males and gifts to the children of females to be treated equally.70 In addition, Sappideen and Butt state that this would accord “with the general policy of the law to treat a child en ventre sa mere as living where it is for the benefit of that child”.71 The mandatory 80-​year period seems certain to render the drafting and administration of gifts a far simpler process than it was at common law.72 In addition, the fixed period is more appropriate to commercial transactions than the common law period with its inclusion of elements as variable as a “life in being”.73 Section 3(2) of the Perpetuities Act 1984 (NSW) and s 5 of the Perpetuities and Accumulations Act 1985 (ACT) enact the common law rule that a will is deemed to take effect upon the death of the testator. The Acts make no specific provision for the commencement of the perpetuity period with respect to other forms of disposition. It is therefore assumed that, as at common law, in respect of an inter vivos gift the period commences when the instrument takes effect and, in respect of interests created by deed, the period commences on delivery of the deed: see [11.50]. Certainty of vesting [11.100]  The common law requirement of certainty of vesting as at the date the disposition

takes effect has been completely reformed by the perpetuities legislation, which replaces it with a “wait-​and-​see” system.74 Instead of determining the validity of the gift by assessing all the possibilities, no matter how extravagant or remote, as they stand at the date the perpetuity period begins to run, the court now examines what actually happens. Under the New South Wales and Australian Capital Territory legislation, if a gift must vest within the 80-​year period fixed by the Act, it is valid. If it is incapable of vesting inside the 80-​year period, it is necessarily invalid. In either of these cases, the gift is unaffected by the wait-​and-​ see provisions.75 However, if the gift is capable of vesting within the period, but is not certain to do so, instead of being required to invalidate the gift, the court must wait and see if the gift actually vests within the 80-​year period. If it does, it is valid. If it does not, it is invalid. If at any time it becomes certain that the gift cannot vest within the period, the wait-​and-​see rule ceases to operate and the gift fails. The absurdities of the common law presumption of fertility have not been dealt with in the New South Wales and Australian Capital Territory Acts, despite the New South Wales Law Reform Commission’s recommendation that statutory presumptions should be enacted76 as in

0 7 71 72 73 74

5 7 76

See Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), pp 64–​65. Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 48. Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 47. See Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 47; Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), pp 68–​69. Perpetuities Act 1984 (NSW), s 8; Perpetuities and Accumulations Act 1985 (ACT), s 9. For an illustration of the operation of the NSW provision relating to certainty of vesting, see Public Trustee v Bennett [2004] NSWSC 955. See also Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 60ff and Shead Real Estate Pty Ltd (In the matter of EA & F Shead (Chatswood) Trust) [2018] NSWSC 614 at [31]. See Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 62. NSWLRC, Report on Perpetuities and Accumulations, Report No 26 (1976), Pt 10. [11.100]  549

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the other jurisdictions.77 Sappideen and Butt suggest that this is because the implementation of an 80-​year perpetuity period coupled with a system of wait-​and-​see was thought to make such presumptions unnecessary.78 However, the failure to provide statutory presumptions as to the ages outside which the court may assume someone to be incapable of bearing children may result in administrative inconvenience, forcing trustees and executors to wait-​and-​see longer than is really necessary. In the absence of presumptions, it is possible that the old cases concerning fertile octogenarians, unborn widow(er)s and similar oddities will be imported into the reformed rule as a hurdle serving to unnecessarily prolong the wait-​and-​see period. Alternative contingencies [11.105]  The common law rules concerning gifts conditional on either of two contingencies

are also unnecessary under the new law.79 Under the wait-​and-​see system, the issue of the validity of a gift or will is deferred until it becomes clear whether either of the contingencies occurs within the perpetuity period. If one of the contingencies happens, the gift is valid. If neither happens, it fails.

Northern Territory The perpetuity period [11.110] The Law of Property Act 2000 (NT) gives the disponor a choice between the

common law formula or a statutory period of 80 years. Section 187 of the Act states, in part:

(1) For the purposes of the rule against perpetuities … the perpetuity period applicable to an interest created by a settlement is:



(a) a life in being plus 21 years; or



(b) 80 years from the date on which the settlement takes effect, whichever is specified in the settlement.

(2) … if no perpetuity period is specified in the settlement, the perpetuity period is taken to be 80 years from the date on which settlement takes effect.

Like the Australian Capital Territory and New South Wales legislation (see [11.95]), the Northern Territory legislation does not contain a specific provision stating when the perpetuity period begins to run. In the absence of such a provision, it may be presumed that the common law rules continue to apply on this point: see [11.50]. Certainty of vesting [11.115]  Section 190 of the Law of Property Act 2000 (NT) institutes a wait-​and-​see system

similar to that provided for by s 6 of the Perpetuities and Accumulations Act 1968 (Vic): see [11.150]. Sections 188 and 189 of the Law of Property Act 2000 provide for presumptions as to the future parenthood and to cover the unborn widow(er) situation in the same manner as ss 8 and 10 of the Perpetuities and Accumulations Act 1968, respectively: see [11.150].

77 8 7 79

Perpetuities and Accumulations Act 1968 (Vic), s 8; Property Law Act 1974 (Qld), s 212; Property Law Act 1969 (WA), s 102; Perpetuities and Accumulations Act 1992 (Tas), s 10; Law of Property Act 2000 (NT), s 189. Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), pp 65–​66. Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 68.

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Queensland The perpetuity period [11.120]  Sections 210(4) and 209(1) of the Property Law Act 1974 (Qld) increase the number

of persons who may be reckoned lives in being at common law and provide for an alternative power to specify the perpetuity period in terms identical to those of ss 6(4) and 5(1) of the Perpetuities and Accumulations Act 1968 (Vic) respectively: see [11.145].80 Certainty of vesting [11.125]  Section 210 of the Property Law Act 1974 (Qld) institutes a wait-​and-​see system

identical to that provided for by s 6 of the Perpetuities and Accumulations Act 1968 (Vic): see [11.150].81 Sections 212 and 214 provide for presumptions as to future parenthood and to cover the unborn widow(er) situation in the same manner as ss 8 and 10 of the Victorian Act, respectively: see [11.150].

South Australia [11.130] As discussed at [11.20], s  61 of the Law of Property Act 1936 (SA) (added in

1996) has abolished the rule against perpetuities. Despite this, however, the legislature did not wish to allow donors and testators to be able to tie up land indefinitely. To achieve this, s 62(1) states that if, 80 or more years after the date of disposition of property, there remain interests in the property that have not vested, the court may, on application, vary the terms of the disposition so that the interests vest immediately. It is not necessary, however, to wait 80 years after the disposition before bringing action. Pursuant to s 62(2), the court may, on application, vary the terms of the disposition of property so that interests that cannot vest, or are unlikely to vest, within 80 years after the date of the disposition, will vest within that period. Applications under either s  62(1) or s  62(2) may be made by the Attorney-​General, a trustee of property to which the disposition relates, the next-​of-​kin of a deceased person to whose estate the disposition relates, a person with an actual or potential interest in property subject to the disposition, or “a person who would, assuming the existence and continuance of lineal issue, be the ancestor of a person (as yet unborn) who would have an actual or potential interest in property subject to the disposition”: s 62(5). When varying the terms of a disposition, the court is required to give effect to the spirit of the original disposition insofar as that is possible given that interests are to vest earlier than contemplated by the person who made the disposition: s 62(4). The effect of the South Australian legislation is the reverse of the common law rule against perpetuities. Instead of remorselessly striking down gifts or bequests which might vest outside the perpetuity period, such gifts or bequests are now valid, and their vesting may be advanced in the discretion of the court, on application to the court made under s 62.

80 81

For an illustration of the operation of the Queensland legislation, see Nemesis Australia Pty Ltd v Commissioner of Taxation (2005) 150 FCR 152; [2005] FCA 1273. See Denham Bros Ltd v W Freestone Leasing Pty Ltd [2004] 1 Qd R 500; [2003] QCA 376. [11.130]  551

PART 4 Divided Ownership of Land

Tasmania The perpetuity period [11.135] As under the Victorian legislation, the Perpetuities and Accumulations Act 1992

(Tas) gives the disponor a choice between the statutory period or the common law formula. Under s 6(1), the statutory period is the number of years not exceeding 80 as is specified in the instrument as the perpetuity period applicable to the disposition. Section 6(1) must be read together with s 6(3), which states: If no period of years is specified in an instrument by which a disposition is made as the perpetuity period applicable to the disposition but a date certain is specified in the instrument as the date on which the disposition is to vest, the instrument is taken, for the purposes of this section, to specify as the perpetuity period applicable to the disposition a number of years equal to the number of years from the date of the taking effect of the instrument to the specified vesting date.

The common law formula is altered slightly by s 9(6), which increases the number of persons who may be held to be lives in being. The subsection gives an exhaustive definition of the persons who are to be treated as measuring lives. Like the New South Wales and Australian Capital Territory provisions (see [11.95]ff), the Tasmanian Act does not contain a specific provision stating when the perpetuity period begins to run. In the absence of such a provision, it may be presumed that the common law rules continue to apply on this point: see [11.50]. Certainty of vesting [11.140]  Section 9 of the Perpetuities and Accumulations Act 1992 (Tas) institutes a wait-​

and-​see system similar to that provided for by s 6 of the Perpetuities and Accumulations Act 1968 (Vic): see [11.150]. Sections 10 and 7 provide for presumptions as to future parenthood and to cover the unborn widow(er) situation in the same manner as ss 8 and 10 of the Victorian Act, respectively: see [11.150].

Victoria The perpetuity period [11.145]  In contrast to the New South Wales and Australian Capital Territory legislation,

the Perpetuities and Accumulations Act 1968 (Vic)82 gives the disponor a choice between a statutory period or the common law formula. Under s 5(1), the statutory period is the number of years not exceeding 80 as is specified in the instrument as the perpetuity period applicable to the disposition. Section 5(1) must be read together with s 5(3), which states: If no period of years is specified in an instrument by which a disposition is made as the perpetuity period applicable to the disposition but a date certain is specified in the instrument as the date on which the disposition shall vest the instrument shall, for the purposes of this section, be deemed to specify as the perpetuity period applicable to the disposition a number of

82

For a detailed discussion of the Victorian perpetuities legislation, see Hogg and Ford, “Victorian Perpetuities Law in a Nutshell” (1969) 7 MULR 155; Doane and McCredie, “Perpetuities Reform in Victoria” (1969) 43 ALJ 366.

552 [11.135]

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years equal to the number of years from the date of the taking effect of the instrument to the specified vesting date.

The common law formula is slightly altered by s 6(4), which increases the number of persons who may be held to be lives in being. The subsection states that in the disposition to a class of persons or to one or more members of a class, any person living at the date of the disposition whose life is so expressed or implied as relevant for any member of the class may be reckoned a life in being when ascertaining the perpetuity period. Like the New South Wales and Australian Capital Territory legislation (see [11.95]ff), the Victorian Act does not contain a specific provision stating when the perpetuity period begins to run. In the absence of such a provision, it may be presumed that the common law rules continue to apply on this point: see [11.50]. Certainty of vesting [11.150]  Section 6(1) of the Perpetuities and Accumulations Act 1968 (Vic) creates a wait-​

and-​see system analogous to that provided by the New South Wales and Australian Capital Territory perpetuities legislation: see [11.95]ff. The subsection states: Where apart from the provisions of this section and of section 9 a disposition would be void on the ground that the interest disposed of might not become vested until too remote a time the disposition shall be treated until such time (if any) as it becomes established that the vesting must occur, if at all, after the end of the perpetuity period as if the disposition were not subject to the rule against perpetuities; and its becoming so established shall not affect the validity of anything previously done in relation to the interest disposed of by way of advancement, application of intermediate income or otherwise.

The reference to s  9 is to the provision similar to s  9 of the Perpetuities Act 1984 (NSW) and s 10 of the Perpetuities and Accumulations Act 1985 (ACT) authorising the reduction of age and the exclusion of class members in order to avoid the application of the rule against perpetuities: see [11.180]. Unlike the New South Wales and Australian Capital Territory legislation (see [11.100]), the Victorian Act contains presumptions designed to abrogate the common law conclusive presumption of fertility and to avoid the harsh effects of the “unborn widow(er)” cases. Section 8(1) provides that, subject to evidence that a living person was or was not capable of having a child at the time in question, a male is incapable of having a child if he is under the age of 12 and a female is presumed capable of bearing children between the ages of 12 and 55, but not otherwise. By s 8(4), these provisions apply not only to begetting and giving birth but also to having a child by “adoption, legitimation or other means”. If someone has a child outside the ages indicated by the statute after a perpetuities case has been decided according to the presumption, s  8(2) allows the court to make whatever order it thinks fit in order to place that person in the position which he or she would have held if the case had not been determined according to the presumption. Section 10 attempts to overcome the unborn widow(er) cases by deeming the widow or widower of a person who is a life in being under the terms of a gift to be a life in being in two circumstances: in the case of a disposition in favour of that widow or widower, or in the case of a gift to a third party, the vesting of which is expressed to be dependent upon the death of the widow(er) or some contingency occurring during his or her lifetime.

[11.150]  553

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Western Australia83 The perpetuity period [11.155]  Under s 101 of the Property Law Act 1969 (WA), any period of years not exceeding

80 may be specified in the disposition and, if none is specified, the common law period will apply. Unlike s 6(4) of the Perpetuities and Accumulations Act 1968 (Vic) (see [11.145]), the Western Australian Act does not alter the common law rules which determine which lives may be classified as lives in being for the purposes of the rule against perpetuities. Certainty of vesting [11.160] Section  103 of the Property Law Act 1969 (WA) creates a wait-​and-​see system.

Section 103(1) reads in part: A limitation shall not be declared or treated as invalid, as infringing the rule against perpetuities, unless and until it is certain that the interest that it creates cannot vest within the perpetuity period.

The Act also contains in s  102(1) and (2) presumptions governing the legal capacity to procreate, bear or adopt a child. These presumptions may be rebutted by evidence tendered at the time the matter comes before the court, but not subsequently. Medical evidence of capacity or incapacity of procreating or bearing a child is admissible under s 102(3). It is presumed that a female over the age of 55 is incapable of bearing a child and that she will not adopt a child after the age of 55. Both females and males are presumed incapable of having children until they attain the age of 12 years. Section 102(4) provides for the situation in which any of the presumptions are applied or where evidence as to capacity or incapacity to reproduce is accepted, but one of the persons concerned has a child nonetheless. In such a case, the decision of the court is to remain effective notwithstanding the subsequent birth or adoption of a child. However, provided that the limitation concerned is not itself invalid, a right to any property conferred upon that child or his or her spouse (including any right to follow or trace the property) is to be unaffected by the court’s decision. Section 108 contains a deeming provision similar to that contained in s 10 of the Perpetuities and Accumulations Act 1968 (Vic) (see [11.150]), which is designed to prevent gifts being invalidated in a hypothetical unborn widow(er) situation.

CLASS GIFTS The common law position [11.165]  Sir Denys Buckley of the English Court of Appeal in Re Drummond’s Settlement

[1988] 1 All ER 449; [1988] 1 WLR 234 at 453 described a class gift as:84 a limitation in favour of a number of persons which is uncertain in number when the limitation is created and is to be ascertained in the future, such persons all coming within a common

83 84

See Simes, “Reform of the Rule against Perpetuities in Western Australia” (1963) 6 UWALR 21; Allan, “The Rule Against Perpetuities Restated” (1963) 6 UWALR 27. His Honour added (at 455) that although he was not prepared to decide that a requirement that all takers should satisfy the same qualifications is an essential feature of every class gift, it is, where it exists, a strong indication that the gift may be a class gift, and its absence is a contrary indication.

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classification or description, taking one divisible subject matter in specified proportions dependent on the number of takers, all of whose interests must, it seems, vest at the same time.

As this dictum indicates, the common law rules concerning gifts to classes of persons apply to situations where the amount to be received by each member of a group depends upon the total number of persons within that group. An illustration is: “My estate is to be divided equally among my nieces”. This type of gift must be contrasted with separate gifts made to each of a group of persons. An illustration of this is: “I bequeath the sum of $500 per week for life to each of my children”. This latter type of gift is not affected by the law relating to class gifts, as the number of children cannot vary after the testator’s death.85 The rule applicable to class gifts is known as the “all or nothing” rule. It states that the precise proportion of the gift which is to vest in each member of the class of beneficiaries must be sure to be known within the perpetuity period. If the class is capable of increase outside the period, the gift will fail, not merely in its application to any additional members who may be born after the perpetuity period ends, but for all members of the class.86 Thus, in effect, the size of the grantee’s share is itself a contingency unless it is incapable of variation.87

Class-​closing  rules [11.170] In 1791, the “rule of convenience” commonly known as the rule in Andrews v

Partington (1791) 3 Bro CC 401; 29 ER 61088 emerged. This rule allows the closure of a class of people at the date when the first member of the class becomes entitled to take, irrespective of whether the class is capable of further growth. Take as an illustration the devise: “To my grandchildren upon attaining the age of 21 years”. In this situation, the class closes upon the first grandchild’s 21st birthday, even if the children of the testator are still of childbearing age (in fact or at law). All grandchildren born at the death of the testator are included in the class and may collect their shares upon their 21st birthdays. If any of the younger grandchildren should fail to reach 21, those remaining will obtain an augmented share. There are two important effects of the rule in Andrews v Partington. First, once the class closes, no-​one born subsequently can enter the class. Thus, in a bequest “To my grandchildren upon attaining the age of 21  years”, once one grandchild has attained 21 and the class

85

86

87 88

See, for example, Wilkinson v Duncan (1861) 30 Beav 111; 54 ER 831. Other illustrations of gifts falling inside and outside the class gifts rules are given in Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 344; Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 106. See, for example, Re Hooper’s Settlement Trusts [1948] 1 Ch 586 at 589; Pearks v Moseley; Re Lord’s Settlement [1947] 2 All ER 685; In the Will of Deane, Earle v Deane [1913] VLR 272; Ker v Hamilton (1880) 6 VLR (Eq) 172; In the Will of Breheney [1915] VLR 242; Re Whiteford [1915] 1 Ch 347; Tidex v Trustees Executors & Agency Co [1971] 2 NSWLR 453. Although the size of the grantee’s share is critical for the rule against perpetuities, the amount or value of the share is irrelevant: Re Cassel [1926] Ch 358; Beachway Management Ltd v Wisewell [1971] Ch 610. As stated by Sir Denys Buckley in Re Drummond’s Settlement [1988] 1 All ER 449 at 454, the rule in Andrews v Partington (1791) 3 Bro CC 401; 29 ER 610 is in reality a rule of construction, rather than a rule of convenience. The rule is discussed in Ford and Lee, The Law of Trusts (Thomson Reuters subscription service, Sydney) at [732]; Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 110ff; Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 345–​348; Morris, “The Rule Against Perpetuities and the Rule in Andrews v Partington” (1954) 70 LQR 61; Bailey, “Class-​Closing, Accumulations and Acceleration” (1958) 16 CLJ 39. For a modern illustration, see Re Wernher [1961] 1 All ER 184. [11.170]  555

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closes, any grandchildren born later will be excluded from acquiring a share. Secondly, in certain circumstances, the rule can save a gift from being declared void under the rule against perpetuities. Megarry and Wade cite as an illustration a devise “to all of A’s grandchildren”, where A is living at the testator’s death and has a living grandchild.89 This gift, which would otherwise be void, will be saved as the class will close immediately upon the testator’s death since the first member of the class is entitled to his or her share. As the class-​closing rule is premised on the assumption that the testator or settlor would prefer an early distribution of the gift to an indefinite waiting period for those who have qualified for the gift (even at the cost of excluding some possible beneficiaries),90 the rule can be excluded by the expression of a contrary intention.91 If the gift depends upon a contingency (eg, marriage, or the attainment of 21 years), the class closes when the first member of the class qualifies (ie, marries, or turns 21). Where the gift is preceded by a life estate, the class closes at the death of the life tenant. An illustration is: “To my husband for life, and upon his death, to the children of X in equal shares”. In this case, the class closes at the death of the husband. If the vesting of the gift is also preceded by a contingency, the class closes at the death of the life tenant, or upon the first-​class member satisfying the contingency thereafter. An illustration is a gift: “To my husband for life, and upon his death, to the children of X who shall attain the age of 21 years”. Here, if X has one or more children aged 21 or over at the death of the husband, the class will close upon his decease. If X has only infant children at the death of the husband, the class will close when the first of them reaches 21 years. The rule in Andrews v Partington does not apply to a situation where the class members are to take at birth, and there are no members of the class at the date of the distribution of the property. In such a case, the class remains open indefinitely, encountering all the difficulties the rule in Andrews v Partington was designed to avoid.92 Examples of the application of the common law class-​closing rule [11.175]  Examples of the application of the common law class-​closing rule include:

1.

A gift or bequest: “To my trustees on trust for A for life, and then to the children of B”. Assume that at the date of the disposition B is alive and has two children (B1 and B2). Assume also that A  is alive. The class (B’s children) will remain open until A’s death. During this time, none of B’s children can call for a distribution of assets. On the closure of the class at A’s death, any children of B alive at that time will qualify as a beneficiary. This will include B1 and B2 and if a third child, B3, has been born after the disposition but before A’s death, that child will also be beneficiary. However, if a fourth child, B4, is born after A’s death, that child will be excluded.

89

Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 346. Re Charters [1927] 1 Ch 466 at 474; Re Drummond’s Settlement [1988] 1 All ER 449 at 454. Bateman v Foster (1844) 1 Coll 118; 63 ER 346; Re Courtenay (1905) 74 LJ Ch 654; Re Bukowski (dec’d) [1954] St R Qd 286; Re Chapman’s Settlement Trusts [1977] 1 WLR 1163; Re Clifford’s Settlement Trusts [1981] Ch 63; Re Cockle’s Will Trusts [1967] Ch 690; Re Ketby-​Fletcher’s Will Trusts [1969] 1 Ch 339; Re Estate of Chow Cho-​Poon (2013) 10 ASTLR 251 at 267, 284 [89]–​[93], [203]. Shepherd v Ingram (1764) Amb 448; 27 ER 296; Re Ransome [1957] Ch 348; Weld v Bradbury (1715) 2 Vern 705; 23 ER 1058.

90 91

92

556 [11.175]

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2.

A gift or bequest: “To the children of Mary who marry”. If at the date of disposition Mary is dead, the gift is valid under the rule against perpetuities, as Mary’s children are lives in being and they must clearly marry within their own lifetimes. Each child who marries will qualify as a beneficiary. This situation does not give rise to the class-​closing rule. The class-​closing rule will apply, however, if at the date of the disposition, Mary is still alive. Without the class-​closing rule, the gift would be void as infringing the rule against perpetuities. However, under the class-​closing rule the gift will be saved if, at the date of the disposition, one or more of Mary’s children have already qualified as beneficiaries by being married. Assume that at the date of disposition, Mary has two children, C1 and C2. C1 is married and C2 is single. Assume further that, after the date of disposition, Mary produces a third child, C3. The class will close immediately upon the disposition, and the gift will be valid as C1 has a vested interest. C2 may also become a beneficiary by marrying at a later date. However, C3 cannot become a beneficiary as he or she was not in existence at the time the class was closed.

New South Wales and the Australian Capital Territory [11.180]  The “all or nothing” common law rule has been abolished by s 8 of the Perpetuities

Act 1984 (NSW) and s 9 of the Perpetuities and Accumulations Act 1985 (ACT). In addition to the “wait-​and-​see” provisions in s 8(1) of the NSW Act and s 9(1) of the ACT Act (see [11.100]), a number of provisions dealing with class gifts replace the all or nothing rule. These provisions are commonly referred to as “remedial” provisions in that they endeavour to prevent a gift from being declared void by the perpetuity rule. Section 9(4) of the NSW Act and s 10(2) of the ACT Act provide for the exclusion of actual or potential class members where that is necessary to prevent a gift from infringing the rule unless such exclusion would exhaust the class completely.93 Section  9(1) of the NSW Act and s  10(1) of the ACT Act further provide for the ages of potential beneficiaries to be reduced to allow them to take if they are prevented from doing so only by reason of an age contingency. The order of application of the remedial provisions is specified in s 10 of the NSW Act as s 8, then s 9(1), and finally s 9(4). Section  10 does not appear to have resolved all disputes regarding the application of the remedial provisions. As discussed in detail by Sappideen and Butt,94 the exact mode in which these provisions will be applied is debatable. In the case of a class gift which must fail without the benefit of a reduction of the ages of beneficiaries, it is unclear whether the age contingency should be reduced once and for all, to ensure that all potential beneficiaries

93

94

Section 3(3) of the Perpetuities Act 1984 (NSW) and s 6 of the Perpetuities and Accumulations Act 1985 (ACT) define the meaning of “member of a class”: “A person shall be treated as a member of a class if in that person’s case each and every condition identifying a member of the class is satisfied”. Section 3(3) of the Perpetuities Act 1984 (NSW) defines the meaning of “potential member of a class”: “A person shall be treated as a potential member of a class if in that person’s case only one or some of the conditions identifying a member of the class is or are satisfied but there is a possibility that the remainder of those conditions will in time be satisfied”. (Compare Perpetuities and Accumulations Act 1985 (ACT), s 11.) Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 93. See also Sappideen, “Perpetuities –​Age Reduction and the Application of the 80 Year Period: Some Unexpected Problems” (1986) 60 ALJ 471 and Prichard, “Two Petty Perpetuities Puzzles” (1969) 27 CLJ 284 concerning the equivalent UK legislation. [11.180]  557

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may take, or whether it should be reduced by stages, each one allowing us to wait-​and-​see a little longer.95 It is also debatable whether the age reduction provisions should be applied to the whole class of beneficiaries to reduce the age of qualification for all members of the class, or whether it should be reduced only for those members of the class who would otherwise be unable to take.96 This dilemma cannot be solved by reference to the disponor’s intentions.

Victoria [11.185]  Section 9 of the Perpetuities and Accumulations Act 1968 (Vic) enacts reduction of

age and exclusion of class members provisions in terms similar to those contained in the New South Wales legislation. Similar uncertainties exist in relation to the age reduction provisions as in New South Wales: see [11.180]. Section  9 specifies that wait-​and-​see is to be the first remedy applied, followed by age reduction and finally the exclusion of class members, if necessary.

Western Australia [11.190]  Reduction of age provisions in order to save a class gift are contained in s 105(1)

of the Property Law Act 1969 (WA). Section 105(3) specifically provides that s 105(1) applies without prejudice to any provision whereby the absolute vesting either of capital or income of property, or the ascertainment of a beneficiary or class of beneficiaries, is also made to depend upon the marriage of any person or any other event which may occur before the age stated in the instrument has been reached. Section 106 allows for the exclusion of class members who do not attain a vested interest within the perpetuity period, for the purpose of ensuring that the whole class gift is not declared void by the rule against perpetuities. Section 107 specifies the order of application of the remedial provisions, in terms substantially similar to s 10 of the Perpetuities Act 1984 (NSW). Pursuant to s 107, the exclusion of class members is a last resort only after wait-​and-​ see and the reduction of age provisions have failed to save the gift.

Queensland [11.195]  Reduction of age and exclusion of class members provisions are contained in s 213

of the Property Law Act 1974 (Qld) and are to be applied in the same order required by the other jurisdictions: see [11.180].

Tasmania [11.200]  Reduction of age and exclusion of class members provisions are contained in s 11

of the Perpetuities and Accumulations Act 1992 (Tas) and are to be applied in the same order required by the other jurisdictions: see [11.180].

95 96

Effectively, this allows each child to come as close to the age contingency as possible. Each may then take at a different age. Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 98; Prichard, “Two Petty Perpetuities Puzzles” (1969) 27 CLJ 284 at 291.

558 [11.185]

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Northern Territory [11.205]  Reduction of age and exclusion of class members provisions are contained in s 191

of the Law of Property Act 2000 (NT) and, under s 192, are to be applied in the same order required by the other jurisdictions: see [11.180].

South Australia [11.210]  Division 2 of Pt 6 of the Law of Property Act 1936 (SA) (added in 1996) contains

rules for ascertaining class membership. Section 60 states: For the purpose of ascertaining whether the membership of a class is presently ascertainable and, if so, the membership of the class –​

(a) the possibility that a person might, while under the age of 12 years, become the natural or adoptive parent of a child is to be ignored; and



(b) the possibility that a male or female over the age of 55 years might become the adoptive parent of a child is to be ignored; and



(c) the possibility that a female over the age of 55 years might bear a child is to be ignored; and

(d) the possibility that a child might be born to a living person is to be ignored if it is established to the satisfaction of the court that there is no real prospect that the possibility will be realised; and

(e) the possibility of a biological parentage arising from an artificial reproductive procedure involving the use of reproductive material from a person who is dead at the time of the procedure is to be ignored.

Further, the court is given a discretionary power, on application, to expand the membership of a class by including in the class a living person who would, but for the terms of the South Australian legislation, have been a member of the class: s 60A(1). Where this occurs, the new class member becomes entitled, subject to any conditions stated in the court order, to share in a distribution of property to members of the class made after (but not before) the date of the order: s 60A(2)(3).

THE EFFECT OF INFRINGING THE RULE AGAINST PERPETUITIES The common law position [11.215] The effect of a violation of the rule against perpetuities at common law varies

depending on the sequence of interests concerned. If a particular contingency in an instrument is rendered void because it infringes the rule, any prior interest takes effect just as it would have if the void contingency had not been inserted in the gift.97 An illustration is a bequest: “To such of my grandchildren as attain the age of 21 years, but upon the birth of my first great-​grandchild, to that great-​grandchild”. The bequest to the great-​grandchild is void for remoteness since the child may be born more than 21 years after the death of all the testator’s children. The bequest to the grandchildren takes effect absolutely. In the case of a void disposition following upon a valid interest for a limited time, when the prior interest comes to an end, the property goes to the heir (in the case of realty) or the 97

Garland v Brown (1864) 10 LT 292 at 294. [11.215]  559

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residuary legatee (in the case of personalty) just as it would if the gift were held to be void for any other reason. An illustration is a bequest: “To Richard for life, and then to such of Richard’s children as attain the age of 30 years”. Upon the death of Richard, the property passes to the heir or residuary legatee of the testator. In the absence of any prior interest created by the will or settlement, the property concerned passes as it would on intestacy (if a will) or, in the case of a gift inter vivos, on a resulting trust for the settlor. [11.220] The situation with respect to subsequent interests following void dispositions

must also be considered. The rule is that any limitation dependent or expectant upon a prior limitation which is void for remoteness is invalid.98 Note, however, that limitations valid in themselves, which follow but are not dependent upon limitations which offend the rule against perpetuities, are not affected by the invalidity of the prior limitations.99 A dependent limitation is one that is designed to take effect only if the prior limitation takes effect, whereas an independent limitation is one that is intended to take effect in all eventualities.100 If the prior disposition is a fee simple estate, any subsequent limitation must automatically constitute a dependent limitation as it is contingent upon the failure of the prior dispositions. In other situations, the issue of dependence is a question of construction, where the courts will endeavour to ascertain the intentions of the grantor from the terms of the disposition. Megarry and Wade give as an illustration of an independent limitation the gift: to “A for life, remainder for life to A’s first son to marry, remainder in fee simple to B (an infant) at 21”. Here, the first remainder will be void at common law unless at the time of the disposition one of A’s sons has already married, but regardless of whether this is so, B’s contingent interest is valid. The issue involving the validity of the limitation to A’s son has no relevance to the gift to B. The authors contrast this with the gift: “To A for life, remainder in fee simple to A’s first son to marry, but if there is no such son then remainder to B for life”. Unless one of A’s sons has already married, both remainders will be void. B’s gift is void as it is dependent on the failure of the limitation to A’s son.101 If the prior disposition is held void for remoteness and the subsequent disposition is held to be dependent upon it, it makes no difference that the subsequent disposition would have been valid if it had stood separately. Even where the subsequent disposition is one to a living person which must vest within the perpetuity period, it will be invalid.102 In contrast, if the dispositions are held to vest independently, the subsequent disposition will be valid.103 The apparent reasoning behind the rule is that if the testator or settlor expresses the dispositions as dependent upon each other, the second cannot take effect until the first is

98

99 100

101 102 103

Re Abbott [1893] 1 Ch 54 at 57 per Stirling J. See also Robinson v Hardcastle (1788) 2 TR 241; 100 ER 131; Routledge v Dorril (1794) 2 Ves Jun 357; 30 ER 671; Beard v Westcott (1822) 5 B & Al 801; 106 ER 1383; Monypenny v Dering (1852) 2 De GM & G 145; 42 ER 826; Re Buckton’s Settlement Trusts [1964] Ch 497; Re Hubbard’s Will Trusts [1963] Ch 275. Re Canning’s Will Trusts [1936] Ch 309; Re Coleman [1936] Ch 528. See the discussion in Morris, “Ulterior Limitations and the Rule Against Perpetuities” (1950) 10 CLJ 392. For cases on the meaning of “dependent” and “independent” gifts, see and cf Re Backhouse [1921] 2 Ch 51; Re Canning’s Will Trusts [1936] Ch 309; Re Coleman [1936] Ch 528; Macpherson v Maund (1937) 58 CLR 341. Bridge, Cooke and Dixon Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 353. Beard v Westcott (1822) 5 B & Al 801; 106 ER 1383; Re Thatcher’s Trusts (1859) 26 Beav 365; 53 ER 939. Re Canning’s Will Trusts [1936] Ch 309; MacPherson v Maund (1937) 58 CLR 341.

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exhausted.104 If the first is void, it cannot take effect at all and therefore cannot be exhausted. However, if this was the disponor’s intention, it seems strange logic to assume that had the disponor been able to see the possibility that the rule against perpetuities would thwart his or her plans, he or she would have preferred to die intestate rather than allow the second gift to take effect without the first.105 Whether a subsequent contingency is dependent or independent of a prior void contingency is always a matter of construction. The attitude of the courts in construing such provisions varies from time to time, sometimes appearing quite relentless and at other times upholding the provisions as valid by finding that a subsequent limitation is independent of a prior void limitation.106

The statutory position (all jurisdictions except South Australia) [11.225]  Section 17 of the Perpetuities Act 1984 (NSW) deals with dependent interests. It states:

(1) Where a provision of a settlement creates an interest, the provision is not rendered invalid by the rule against perpetuities or the rule against perpetual trusts by reason only that the interest is ulterior to and dependent upon an interest which is so invalid.



(2) Where a provision of a settlement creates an interest which is ulterior to another interest and the other interest is rendered invalid by the rule against perpetuities or the rule against perpetual trusts, the acceleration of the vesting of the ulterior interest shall not be affected by reason only that the other interest is so invalid.

Similar provisions exist in the other Australian jurisdictions (except South Australia).107 This provision is designed to save dependent subsequent limitations otherwise void at common law, provided that they would have been valid if they had stood alone. It is submitted that this represents a rationalisation of the common law rule which is more likely to make effectual the grantor’s intentions.

EXCEPTIONS TO THE RULE AGAINST PERPETUITIES The common law position [11.230]  There are a number of common law proprietary interests to which the application

of the rule against perpetuities is either definitely inapplicable or remains questionable. The most significant of these possible common law exceptions are detailed at [11.235]–​[11.250]. Possibilities of reverter [11.235]  As discussed at [2.225], a possibility of reverter is the interest remaining in a grantor

after he or she has conveyed property on terms whereby the grantee’s interest is to end upon the occurrence of a determining event. In such a case the estate will automatically revert to the grantor if the determining event occurs.

104 105 106 107

Re Abbott [1893] 1 Ch 54 at 57 per Stirling J. Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 179. See Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 176ff. Perpetuities and Accumulations Act 1968 (Vic), s 11; Property Law Act 1974 (Qld), s 215; Property Law Act 1969 (WA), s 109; Perpetuities and Accumulations Act 1992 (Tas), s 12; Perpetuities and Accumulations Act 1985 (ACT), s 18; Law of Property Act 2000 (NT), s 199. [11.235]  561

PART 4 Divided Ownership of Land

There is some disagreement as to whether the rule against perpetuities applies to possibilities of reverter. One argument is that it should apply to possibilities of reverter (where there is an effective gift over to the grantor) just as it would apply if the gift over was to any other person.108 The policy of the rule, to protect the free alienability of land, is surely violated by a gift over to the grantor which tends to a perpetuity just as much as a gift over to another person conditioned upon an event which may not happen for hundreds of years. Another line of reasoning is that the interest is vested, not being subject to any contingency other than the regular termination of the prior estate, and that the rule against perpetuities therefore has no application.109 The weight of authority suggests that the rule does not operate to invalidate possibilities of reverter which may take effect outside the perpetuity period.110 The leading case is Re Chardon [1928] Ch 464, in which Romer J stated at 468: “The rule against perpetuities is not dealing with the duration of interests but with their commencement, and so long as the interest vests within lives in being and 21 years it does not matter how long that interest lasts”. Despite the policy reasons in favour of applying the rule to possibilities of reverter, Hopper v Corporation of Liverpool (1943) 88 Sol J 213 is the only reported case where this result has occurred. Although the case has attracted much comment,111 it is clear that it does not state the current law for England or (presumably) for Australia.112 Rights of entry [11.240] The right of entry for condition broken attached to a fee simple estate, which is

the interest remaining in a grantor who conveys a fee simple estate subject to a condition subsequent (see [2.230]), is treated by the courts differently to a possibility of reverter. The traditional distinction between a right of entry and a possibility of reverter is that, in the former case, if the condition giving rise to the destruction of the estate of the grantee occurs, the grantee’s interest does not determine automatically (as in the case of a possibility of reverter), but only upon an entry or claim by the grantee or his or her heirs or assigns. Although this appears to be a technical and trivial distinction, it was held to be sufficient for the common law to apply the rule against perpetuities differently and to ensure its application to rights of entry. The application of the rule to rights of entry for condition broken attached to a fee simple estate was established in Re Trustees of Hollis’ Hospital and Hague’s Contract [1899] 2 Ch 540 and in Re Da Costa [1912] 1 Ch 337.113

08 See Ford and Lee, The Law of Trusts (Thomson Reuters subscription service, Sydney) at [738]. 1 109 See Ford and Lee, The Law of Trusts (Thomson Reuters subscription service, Sydney) at [738]; cf Leach, “Perpetuities: Staying the Slaughter of the Innocents” (1952) 68 LQR 35 at 57. 110 Ford and Lee, The Law of Trusts (Thomson Reuters subscription service, Sydney) at [738]; Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 356. 111 Hopper v Corporation of Liverpool (1943) 88 Sol J 213 is criticised in (1946) 62 LQR 222 and (1957) 21 Conv (NS) 213 but cited with approval by Leach, “Perpetuities: Staying the Slaughter of the Innocents” (1952) 68 LQR 35 at 56 and Morris and Leach, The Rule Against Perpetuities (Stevens, London, 1962), p 212. 112 Australian commentators have assumed that Re Chardon [1928] Ch 464 states the Australian law on this issue: see, for example, Sappideen and Butt, The Perpetuities Act 1984 (Law Book Co, Sydney, 1986), p 125. 113 See also Re Macleay (1875) LR 20 Eq 186; Imperial Tobacco Co (of Great Britain & Ireland) Ltd v Wilmott [1964] 1 WLR 902. 562 [11.240]

The Rule Against Perpetuities  Chapter  11

These English decisions have been cited with approval in several Australian cases114 and were applied in Re Smith (dec’d) [1967] VR 341 and by Street J (at first instance) in Perpetual Trustee Co v Williams (1913) 13 SR (NSW) 209 at 213–​214. Note that a right of entry reserved in a lease to the landlord in a forfeiture clause, exercisable where the tenant commits a breach of covenant, is treated differently and is not subject to the rule against perpetuities.115 Options and contracts [11.245]  Options and contracts also constitute an exception to the rule against perpetuities

at common law in certain circumstances.116 Because the rule is a proprietary concept, it has no application to purely contractual obligations. Contracts creating proprietary interests are enforceable between the contracting parties under normal contract law regardless of whether or not a time limit exists for the performance of the contract. Thus, if A grants B an option without a time limit to purchase land, B can enforce the contract at any time against A by way of damages or specific performance.117 The rule against perpetuities will not apply as the option is based on contract. B can assign the benefit of the option to C and C may enforce the option at any time.118 However, if A sells the land to D, then B or C cannot enforce the option against D as the remedy would be proprietary. In this latter situation, the option will be subject to the rule.119 Where the rule applies, the courts will endeavour to safeguard the option where possible. Thus, the courts may imply a term that the option must be exercised within a reasonable time, which is less than the perpetuity period.120 If the option is contained in a lease, it will be valid provided that the fixed term is for no longer than 21 years.121 Other common law exceptions [11.250]  Other common law exceptions include the following:

1.

No limitation following an estate in tail (still valid in South Australia and Tasmania: see [2.125]) is void as the holder of such an estate can bar any subsequent interests.122

2.

Any grant of a future easement is void unless the easement must take effect within a 21-​year period.123

3.

Although a gift to a charity is subject to the normal operation of the perpetuity rule,124 an exception exists in respect of a limitation transferring a proprietary interest from one

114 See, for example, Williams v Perpetual Trustee Co Ltd (1913) 17 CLR 469 at 485 per Barton ACJ. See also In the Will of Brett [1947] VLR 483 at 485 per Herring CJ. 115 Re Tyrrell’s Estate [1907] 1 IR 292. 116 See Rossiter, “Options to Acquire Interests in Land-​Freehold and Leasehold (Part II)” (1982) 56 ALJ 624. 117 Trustees Executors & Agency Co Ltd v Peters (1960) 102 CLR 537 at 546; cf Headland Developments Pty Ltd v Bullen [1975] 2 NSWLR 309. 118 Hutton v Watling [1948] Ch 26. 119 Woodall v Clifton [1905] 2 Ch 257. B or C may, however, have a remedy against A for breach of contract: see Worthing Corporation v Heather [1906] 2 Ch 532. 120 Headland Developments Pty Ltd v Bullen [1975] 2 NSWLR 309. 121 See McMahon v Swan [1924] VLR 397; Longmuir v Kew [1960] 1 WLR 862. 122 Nicolls v Sheffield (1787) 2 Bro CC 215; 29 ER 121; Heasman v Pearse (1871) LR 7 Ch App 275. 123 Dunn v Blackdown Properties Ltd [1961] Ch 433; Newham v Lawson (1971) 22 P & CR 852. 124 Re Stratheden and Campbell [1894] 3 Ch 265; Re Mander [1950] Ch 547; Re Kagan [1966] VR 538. [11.250]  563

PART 4 Divided Ownership of Land

charity to another upon a contingency. Such a limitation has been held to be valid even if it may not occur until some indefinite date in the future.125 It is established law that a gift to a charity is valid, despite the fact that the interest created may remain subject to the charitable trust indefinitely.126

The statutory position (except South Australia) [11.255] Notwithstanding the common law position discussed at [11.230]ff, legal

commentators generally agree that considerations of policy favour the application of the rule against perpetuities to both rights of entry and possibilities of reverter.127 The event upon which a possibility of reverter or right of re-​entry is conditional may not come to pass for hundreds of years in some cases, so that the task of finding the grantor’s heirs to return the land to them, or obtaining information as to whether the grantor’s heirs will re-​enter if the condition is broken, may be so arduous as to inhibit or prevent appropriate use of the land. In the case of a possibility of reverter, the grantor’s heirs may be so numerous and widespread that the task of distributing the proceeds of any sale may not be viable financially.128 All jurisdictions with perpetuities legislation have recognised the logic of these arguments and the incongruity of the common law position by subjecting possibilities of reverter to the rule against perpetuities in the same manner as rights of entry. For example, the Perpetuities Act 1984 (NSW), s 14(2) states: The rule against perpetuities applies to render invalid the provision for determination of a determinable interest created by a settlement in the same manner as the rule would apply to render invalid a condition subsequent in the settlement for defeasance of the determinable interest on the same contingency, and where that rule does so apply:

(a) the determinable interest shall not be so determinable, and



(b) a subsequent interest not itself rendered invalid by that rule shall be postponed or defeated to the extent necessary to allow the determinable interest to have effect free from the provision for determination.

The effect of this is that a possibility of reverter will remain effective until the end of the 80-​year perpetuity period. After this period is completed, if the contingency upon which the possibility of reverter depends has still not occurred, the fee simple will become absolute and any subsequent interests will be defeated to the extent necessary to achieve this result. Similar, although not identical, provisions exist in the other jurisdictions.129

125

Re Tyler [1891] 3 Ch 252; Christ’s Hospital v Grainger (1849) 1 Mac & G 460; 41 ER 1343; Royal College of Surgeons of England v National Provincial Bank Ltd [1952] AC 631. 126 Goodman v Saltash Corporation (1882) 7 A C 633; Re Bowen [1893] 2 Ch 491. 127 See, for example, Leach, “Perpetuities: Staying the Slaughter of the Innocents” (1952) 68 LQR 35 at 55; Allan, “The Rule Against Perpetuities Restated” (1963) 6 UWALR 27 at 61–​63. This was the recommendation of the NSWLRC: Report No 26 (1976). 28 Leach, “Perpetuities: Staying the Slaughter of the Innocents” (1952) 68 LQR 35 at 56ff gives some 1 examples: see, for example, Brown v Independent Baptist Church of Woburn 325 Mass 645; 91 NE 2d 922 (1950). 129 Perpetuities and Accumulations Act 1968 (Vic), s 16; Property Law Act 1974 (Qld), s 219; Property Law Act 1969 (WA), s 111; Perpetuities and Accumulations Act 1992 (Tas), s 16; Perpetuities and Accumulations Act 1985 (ACT), s 15; Law of Property Act 2000 (NT), s 196. 564 [11.255]

The Rule Against Perpetuities  Chapter  11

[11.260] The legislation of all jurisdictions exempts certain options from the rule against

perpetuities. Section 15 of the Perpetuities Act 1984 (NSW) reads: The rule against perpetuities does not apply to –​

(a) any option to renew a lease of property,



(b) any option to acquire a reversionary interest in property comprised in a lease,



(c) any right of pre-​emption given for valuable consideration or by will in respect of property, or



(d) any other option given for valuable consideration or by will to acquire an interest in property.

Similar, although not identical, legislation exists elsewhere.130 The legislation of all jurisdictions also reaffirms the common law rule that the rule against perpetuities does not apply to a gift over from one charity to another.131

Miscellaneous statutory exceptions [11.265] Certain minor statutory exceptions to the rule against perpetuities exist in the

Property Law Act 1974 (Qld). Section 217(1) states: For removing doubts, it is declared that the rule of law relating to perpetuities does not apply and shall be deemed never to have applied –​

(a) to any power to distrain on or to take possession of land or the income of the land given by way of indemnity against a rent, whether charged upon or payable in respect of any part of that land or not; or

(b) to any rent charge created only as an indemnity against another rent charge, although the indemnity rent charge may arise or become payable only on breach of a condition or stipulation; or

(c) to any power, whether exercisable on breach of a condition or stipulation or not, to retain or withhold payment of any instalment of a rent charge as an indemnity against another rent charge; or



(d) to any grant, exception or reservation of any right of entry on, or user of, the surface of land or of any easements, rights, or privileges over or under land for the purpose of –​



(i) winning, working, inspecting, measuring, converting, manufacturing, carrying away and disposing of mines and minerals; and



(ii) inspecting, grubbing up, felling and carrying away timber and other trees, and the tops and lops of them; and



(iii) executing repairs, alterations or additions to any adjoining land, or the buildings and erections on the land; and



(iv) constructing, laying down, altering, repairing, renewing, cleansing and maintaining sewers, watercourses, cesspools, gutters, drains, water pipes, gas pipes, electric wires or cables or other like works.

Similar legislation exists in Victoria and Tasmania.132 130

131

132

Perpetuities and Accumulations Act 1968 (Vic), s 15; Property Law Act 1974 (Qld), s 218; Property Law Act 1969 (WA), s 110; Perpetuities and Accumulations Act 1992 (Tas), s 15; Perpetuities and Accumulations Act 1985 (ACT), s 16; Law of Property Act 2000 (NT), s 197. See Denham Bros Ltd v W Freestone Leasing Pty Ltd [2003] QCA 376. Perpetuities Act 1984 (NSW), s 14(4); Perpetuities and Accumulations Act 1968 (Vic), s 16(2); Property Law Act 1974 (Qld), s 219(2); Property Law Act 1969 (WA), s 111(2); Perpetuities and Accumulations Act 1992 (Tas), s 16(5); Perpetuities and Accumulations Act 1985 (ACT), s 15(3); Law of Property Act 2000 (NT), s 196(5). Perpetuities and Accumulations Act 1968 (Vic), 13; Perpetuities and Accumulations Act 1992 (Tas), s 20. [11.265]  565

CHAPTER 12

Co-​ownership [12.05] [12.40] [12.95] [12.100]

[12.235]

[12.320] [12.330]

[12.440]

NATURE AND TYPES OF CO-​OWNERSHIP.................................................................... 567 JOINT TENANCY......................................................................................................... 571 TENANCY IN COMMON............................................................................................. 577 CREATION OF CO-​OWNERSHIP................................................................................... 577 [12.100] General........................................................................................................ 577 [12.105] Common law............................................................................................... 578 [12.140] In equity...................................................................................................... 581 [12.175] Under statute............................................................................................... 585 [12.195] Statutory provisions and equitable interests.................................................... 588 [12.205] Under the Torrens system.............................................................................. 590 RIGHTS OF ENJOYMENT BETWEEN CO-​OWNERS........................................................ 593 [12.235] General........................................................................................................ 593 [12.245] Processes..................................................................................................... 593 [12.265] Common law principles................................................................................. 595 [12.290] Calculation of the occupation rent................................................................. 597 [12.300] Victorian provisions....................................................................................... 598 [12.310] Issues other than occupation rent.................................................................. 601 REIMBURSEMENT OF EXPENDITURE............................................................................ 602 CONVERSION OF A JOINT TENANCY TO A TENANCY IN COMMON.......................... 604 [12.330] Meaning of severance................................................................................... 604 [12.340] Severance by agreement............................................................................... 605 [12.360] Severance by conduct of the parties............................................................... 607 [12.370] Alienation by a joint tenant........................................................................... 608 [12.390] Alienation by gift by a joint tenant................................................................. 611 [12.405] Dealings less than total alienation by a joint tenant........................................ 614 [12.425] Severance by acquisition of a greater interest................................................. 617 [12.430] Severance by killing of one joint tenant by another joint tenant....................... 618 TERMINATION OF CO-​OWNERSHIP............................................................................ 620 [12.440] General........................................................................................................ 620 [12.445] Partition or sale............................................................................................ 621 [12.450] General discretion......................................................................................... 621 [12.455] Statutory trusts............................................................................................ 621 [12.460] Dealings by a co-​owner................................................................................. 622

NATURE AND TYPES OF CO-​OWNERSHIP [12.05] Where two or more persons are entitled as owners to the simultaneous enjoyment

of land, they hold their interests in co-​ownership. Apart from the term “co-​ownership”, the terms “concurrent interests” and “estates and interests in community” can be used to denote this form of ownership. The forms of co-​ownership recognised in Australian law all involve unity of possession which entitles each co-​owner to enjoy each and every part of the land. Co-​ownership where possession is divided or partitioned among the co-​owners is described as “co-​ownership by severalty”.1 Division or partition of co-​owned land can be achieved only by 1

Aoun Investments Pty Ltd v Chief Commissioner of State Revenue (2006) 65 ATR 301; [2006] NSWSC 1394. [12.05]  567

PART 4 Divided Ownership of Land

agreement or lease. The deficiency of this result is one of the reasons leading to the creation of strata or community titles. Consequently, co-​owners are entitled to an undifferentiated use of each and every part of the land, but cannot exclude one another from such use. Co-​ownership is therefore most suited to holdings by family members or business partners. [12.10]  Co-​ownership can exist under Australian law at law or in equity, in possession or

in remainder, and for both freehold and leasehold estates. Traditionally, four types of co-​ ownership were recognised: joint tenancy, tenancy in common, coparcenary and tenancy by entireties. Although there is an unlikely possibility that a coparcenary may still arise, for all practical purposes it is extinct and a tenancy by entireties can no longer be created. The word “tenancy” in the terms “joint tenancy” and “tenancy in common” is not used to connote a leasehold interest; in today’s language the terms joint owner and owner in common may be preferable. The two main forms of co-​ownership which arise today are therefore the joint tenancy and the tenancy in common. These forms of co-​ownership are recognised in relation to all forms of property: rights in land, goods and intangibles. Conceptually a joint tenancy describes a shared ownership of the whole, whereas a tenancy in common describes an undivided share. While the conceptual differences seem elusive, they underlie the significant differences between the two forms of co-​ownership. Since all joint tenants share the whole, they all hold equal interests and on death the interest of a joint tenant ceases and the survivors continue to hold the whole of the property. Perhaps paradoxically, a joint tenancy can always be undone and a joint tenant’s interest converted to that of a tenant in common. Tenants in common may hold unequal shares and the interest of a tenant in common on death forms part of the holder’s estate. While a joint tenancy may be chosen in some situations, such as between trustees, for administrative simplicity, for most everyday use selection of a joint tenancy is based on a preference for the right of survivorship. A tenant in common is free to provide by will for the interest to pass to the other co-​owner, but large numbers of Australians die without a will. Thus joint tenancy remains an explicable preference, particularly for domestic partners. The transfer of land on death probably remains simpler for a surviving joint tenant than a tenant in common taking a share under a will. [12.15]  Coparcenary was a type of co-​ownership between persons who took on intestacy.

Under the common law rules relating to descent upon intestacy, land descended to the “heir”, who was usually the deceased person’s eldest son. If, however, the deceased person had no male heir but had more than one female heir in the same degree (eg, daughters), the female descendants held as coparceners. Coparcenary could also arise pursuant to the custom of gavelkind (applicable only to land in Kent, England) if a person died intestate leaving more than one son: the sons took as coparceners. Descent to the heir upon intestacy was abolished in the mid-​19th century and thus coparcenary became irrelevant.2 It may still be possible for coparcenary to arise where the holder of an unbarred fee tail dies intestate leaving no male heir and more than one female heir in the same degree. This is most unlikely, however, as in most Australian States it has not been possible to create an entail since the end of the 19th century: see [2.125]. Coparcenary resembled the tenancy in common in that there was no right of survivorship and the interests of the coparceners could be different 2

See s 33(2) of the Property Law Act 1974 (Qld) and s 33(2) of the Law of Property Act (NT), which specifically abolish coparcenary.

568 [12.10]

Co-ownership  Chapter  12

in size. On the other hand, it was similar to the joint tenancy as the four unities were often present and one coparcener could release her share to the others thus suggesting they were jointly seised. [12.20]  A tenancy by entireties existed only between husband and wife. At common law, a

husband and a wife were regarded as one person. If land were conveyed to a husband and wife in such a manner that, had they been strangers, they would have taken as joint tenants, they took the land as tenants by entireties. The tenancy by entireties was a species of joint tenancy which could exist only between a husband and wife, but which neither spouse could sever. Further, if property was conveyed to a husband, a wife and a stranger as joint tenants or tenants in common, the husband and wife took only a half-​share and held that half-​share between themselves as tenants by entireties. Legislation permitting married women to own property separately and independently from their husbands resulted in the disappearance of the tenancy by entireties.3 In New Zealand, a modern form of tenancy by entireties has been provided by the Joint Family Homes Act 1964 (NZ). Spouses may register their home as a “joint family home”. The spouses become legal and equitable joint tenants and neither can sever the joint tenancy. Subject to provisos, the home is unaffected by bankruptcy or assignments for the benefit of creditors. Gray and Gray suggest that the New Zealand legislation “enacted with the express object of promoting the stability and permanence of family life as a higher social end than that represented by the commercial security for the creditor … is an imaginative attempt to strike a humane social balance between competing interests”.4 However, the New Zealand Law Commission has recommended the repeal of the Act. The Commission has argued that a number of legislative and practical changes such as the Matrimonial Property Act 1976 (NZ) which confers a joint sharing entitlement to the matrimonial home had reduced significantly the advantages of the Act. It argued that the protection against creditors had become of limited practical value, and any benefits which excluded sole owners were, in any case, discriminatory.5 Nonetheless the Family Homes Act 1964 (NZ) remains in force. [12.25] “Co-​ ownership” describes the entitlement to simultaneous possession. That

entitlement may be present or future so that persons holding an interest in remainder may do so as co-​owners. Under the doctrine of estates, the future entitlement to possession is a current property right. Both the current and future entitlements to possession may exist now. Those entitlements are to be enjoyed in succession and are successive interests, not concurrent interests. While co-​ownership describes shared property or entitlements, obligations may also be shared by more than one person. Commonly contracts are entered into by business or domestic partners and sometimes by strangers; tortious liability can also be shared where

3

4 5

Married Women’s Property Act 1893 (NSW) and Married Persons (Property and Torts) Act 1901 (NSW) (both repealed) –​see now Married Persons (Equality of Status) Act 1996 (NSW); Marriage Act 1958 (Vic), s 156; Married Women’s Property Act 1890 (Qld), ss 8, 9 (now repealed) –​see now Property Law Act 1974 (Qld) s 33; Law of Property Act 1936 (SA), s 92; Married Women’s Property Act 1892 (WA), s 1(1) (now repealed) –​see now Law Reform (Miscellaneous Provisions) Act 1941 (WA); Married Women’s Property Act 1935 (Tas), s 3(1); Married Persons Property Act 1986 (ACT), s 3(1); Married Persons (Equality of Status) Act (NT), s 3(1)(2). The concept of tenancy by entireties was criticised in Registrar-​General of NSW v Wood (1926) 39 CLR 46 at 53 per Isaacs J. Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 1017. The Future of the Joint Family Homes Act, Report 77 (December 2001). [12.25]  569

PART 4 Divided Ownership of Land

two or more persons inflict injury on another. Shared obligations may be joint (the persons together are liable) or several (each person is individually liable) or joint and several. Property may involve shared ownership and shared obligations; co-​owners of a freehold estate may enter a mortgage, co-​holders of a leasehold interest are entitled to the enjoyment of land and have obligations to the landlord. [12.30]  From the second half of the 20th century changes in social and economic conditions

resulted in a stronger emphasis on shared ownership.6 Economic affluence following World War II led to higher levels of home ownership and family relationships based more on the equality of the family members ensured that this ownership was often shared. “Concurrent ownership of an absolute interest in land … became the expression of [a]‌more liberated social order”.7 If co-​ownership of the family home became more common, the breakdown of the domestic partnership had consequences for co-​ownership. Legal principles as to the rights of enjoyment of co-​owners and the disposal of co-​owned land were apparently to be used where co-​owners were fighting one another (sometimes literally). [12.35] Today’s community living often brings a number of people together to share a

building or parcel of land. These persons may seek to divide off parts of the building or land for individual use while retaining areas, such as that for access or open space, in common. If people occupy as tenants, individual rights are granted by leasehold agreement and common areas are retained by the landlord. But Australian society provides many benefits for land ownership and multiple occupants of a single building or parcel of land may seek to hold their interests as fee simple owners. A single building can be shared by a number of persons as co-​owners. Agreements can be made for individual shares within that building and claims to an individual share enforceable against current and subsequent parties can be achieved most readily by leasehold agreements. All the co-​owners would, as a group, constitute the landlord. The common law provides no special mechanism for decision making by this group. Consequently, those seeking to provide shared ownership of a building or parcel of land with individual claims to separate parts of the building or land in the 1960s turned to a corporate structure of shared ownership. The co-​owners became shareholders in a company which owned the building or land, and rights to a separate part were conferred by the shareholding. This structure provided a means for decision making both with respect to the management of common areas and enforcement of the obligations of occupants of separate parts. The deficiency of this model was that individual rights were conferred by shares in a company and the company, not the shareholders, owned the land. Although such arrangements are still possible, they have been supplanted. The system of strata title and later community title was developed from the 1960s to combine the corporate model for holding common areas and providing processes for decision making with individual ownership of part of the building or land. Individual ownership could involve subdivision of building space both vertically and horizontally –​individual ownership rights are defined by reference to structures within a building. Indeed, originally strata schemes were confined to situations where there was a division within an existing building and some common ownership. Subsequently the system has been expanded to provide for individual areas that are discrete areas of land so long as individual spaces are combined with some 6 7

Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 913. Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 913.

570 [12.30]

Co-ownership  Chapter  12

common areas. The emphasis has changed to complex common activity so that the common space is developed for a boat marina or tennis courts; sharing the management of this space rather than regulation of the relationships between the individual holdings is the primary focus of the scheme. The advanced system is described as “community title”. That title also extends beyond residential use to a variety of commercial, industrial and primary production uses. Strata or community titles have some features of co-​ownership in that there is an area held in common but there is also separate ownership of discrete areas. Whereas, however, neighbouring owners of separate allotments must rely primarily on the law of nuisance to regulate their interactions, relationships between strata or community title owners are governed by the terms of the strata or community title scheme. Strata and community titles are analysed in detail at [13.260]ff.

JOINT TENANCY [12.40] A joint tenant has been described as one who “totum tenet et nihil tenet”, that is he or she holds the whole and yet nothing. Each joint tenant is seised of the whole of the estate or interest.8 Each is entitled to the use, possession and enjoyment of the whole, subject only to the rights of the other joint tenants. Thus, at common law, one joint tenant could not transfer his or her interest to another joint tenant by a conveyance of the interest: the joint tenant had nothing to convey for the other co-​owner was already seised of the whole. Such a transaction had to be by way of release of the estate.9 In one sense, however, it is incorrect to speak of a joint tenant owning the entirety of the land, for one joint tenant cannot alone deal with the land so as to bind the other joint tenants.10 [12.45] The nature of the title held by joint tenants was considered by the High Court in

Cassegrain v Gerald Cassegrain & Co Pty Ltd [2015] HCA 2. Land was transferred to the appellant and her husband who were registered as joint proprietors. The husband but not the wife had acted fraudulently in purchasing the property. It was argued that the wife’s title was affected by fraud because of the joint holding with her husband. Fraud was argued to attach to her title because joint tenants were considered by law as one person for most purposes. This proposition was supported by reference to the view of Dixon J in Wright v Gibbons (1949) 78 CLR 313 that at common law no form existed by which one joint tenant could transfer to another joint tenant (see [12.380]). Whilst accepting this specific rule the High Court in Cassegrain rejected the contention that joint tenants are considered by the law as one person as a universal principle –​it was much qualified. To attach fraud to an innocent party would be contrary to the fundamental concept of the Torrens system that fraud must be brought home to the person whose title is attacked personally. The wife’s title as a joint tenant was in the result indefeasible.

8 9

10

For a recent restatement, see Burton v Camden London Borough Council [2000] 2 AC 399 at 408D per Lord Millett. In Burton v Camden London Borough Council [2000] 2 AC 399, the House of Lords took a more modern pragmatic view and held that a release by a joint tenant was an attempted assignment for the purposes of a particular statutory provision; in dissent Lord Millett upheld the established view that a joint tenant cannot “assign” his or her interest. See Note [2000] Conv 474. For a detailed discussion and historical analysis, see Hedley v Roberts [1977] VR 282. See also Westpac Banking Corporation v Sansom [1995] NSW ConvR 55-​733; Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 149. [12.45]  571

PART 4 Divided Ownership of Land

The two principal features or characteristics of the joint tenancy are the “four unities”11 and the right of survivorship. If one of the unities of interest, title or time is missing, or if there can be no right of survivorship, the co-​owners are tenants in common. If unity of possession is absent, there is no co-​ownership at all, for unity of possession is common to all forms of co-​ ownership. The fact that all of the four unities are present does not automatically mean that the co-​ownership is capable of being a joint tenancy. Whether or not it is depends upon several factors, the most relevant being the terms in which the land was conveyed to the co-​owners.12 [12.50]  Every co-​owner is entitled concurrently to possession of the whole of the land. In

order for co-​ownership to exist, whether it be a joint tenancy or a tenancy in common, there must be unity of possession. A  co-​owner is not entitled exclusively to any one part of the land for if he or she were, separate ownership, not co-​ownership, would exist. One practical consequence of the unity of possession is that a co-​owner who occupies the whole of the land is not subject to an action for trespass by the other co-​owner. Each co-​owner is entitled to possession of the whole, and an exercise of that right by one co-​owner will not give rise to any right of action by a co-​owner not exercising the right. However, if one co-​owner destroys part of the subject matter of the tenancy or wrongfully excludes another co-​owner from possession, remedies are available: see [12.275]. A further consequence of the unity of possession at common law was that a co-​owner who received the whole of the rents and profits from the land was not liable to account to the other co-​owners. In some States legislation now ensures that a co-​owner who receives more than his or her share of rents and profits must account to the other co-​owners: see [12.260]. [12.55]  In order for unity of interest to exist, the interest of each joint tenant must be the same

in nature, extent and duration.13 Thus, there can be no unity of interest when the interests are of a different type or nature, as, for example, between a freeholder and a leaseholder or a tenant in possession and a tenant in remainder. A grant “To A for life and to B for 50 years” cannot create a joint tenancy between A and B for their interests are different in nature and also in duration. Similarly, a grant “To A in fee simple as to a three-​quarter share and to B in fee simple as to a one-​quarter share” does not satisfy the unity of interest requirement for the interests of A and B are different in extent. It should be noted that in both of these examples A and B are co-​owners because they are simultaneously entitled to possession of the whole of

11

12 13

The VLRC in its discussion paper, Disputes Between Co-​owners Discussion Paper (2001), raised the possibility of the requirement of the four unities being modified: see [2.41]–​[2.48]. One of the Commission’s suggestions was that, in relation to Torrens land, it should be mandatory for the nature of the co-​ownership to be specified on documents presented for registration. If such a change were undertaken, the Commission questioned the need to meet other requirements for the creation of the joint tenancy; in particular, the Commission questioned the need for the unities of time and title. In its final report the Commission did recommend that a provision be inserted in the Transfer of Land Act 1958 (Vic) requiring any instrument submitted for registration to specify whether co-​owners are to be joint tenants or tenants in common: see Victorian Law Reform Commission, Disputes Between Co-​owners Report (2002), Recommendation 1, p 17. The Commission did not, however, recommend any change to the requirement for the four unities. Paroz v Paroz [2010] QSC 203. The Law Reform Commission of British Columbia had earlier suggested that the requirement of unity of interest could be removed: see Law Reform Commission of British Columbia, Report on Co-​ownership of Land, LRC 100 (1988), pp 40–​44. The Victorian Law Reform Commission considered such a change but took the view that the removal of the need for unity of interest would increase the complexity of the law unnecessarily: VLRC, Disputes Between Co-​owners Discussion Paper (2001) at [2.48].

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the land. They take, however, as tenants in common. One consequence of the unity of interest is that if joint tenants acquire land in circumstances where one joint tenant has notice of a prior equitable interest in the land held by another person, but the other joint tenant does not have such notice, the equitable interest prevails over the interests of both joint tenants.14 Where a grant is made to A and B as joint tenants, the fact that the grant also provided for A or B to take as a remainderman does not destroy the joint tenancy. The subject matter of the joint tenancy is an estate and in this instance A and B are jointly seised of the life estate. [12.60]  Unity of title exists if all the joint tenants derive their interests from the same document

or the same act. Thus, if all the tenants acquired their title by virtue of the same conveyance or if they simultaneously took possession and subsequently acquired title through adverse possession, the requirement of unity of title is satisfied. For example, if X, the holder of a fee simple estate conveys the land to A and B, unity of title exists between A and B. However, if A subsequently conveys her interest to C, C and B hold the land in co-​ownership, but not as joint tenants for there is no unity of title, B having acquired her interest in a conveyance from X and C having acquired her interest in a conveyance from A.15 [12.65]  The requirement of unity of time is satisfied if the interest of each tenant vested in

interest or possession at the same time and by virtue of the same common event. The fact that unity of title is present does not necessarily mean that unity of time also exists. The following situation provides an example of where unity of title may be present and yet there is no unity of time. A grant is made “To A for life, remainder to B and C when they attain 21 years”. At the time of the grant, B and C are 20 years and 19 years respectively. B and C subsequently attain 21 years and A then dies. Their remainders vested at different times and they take as tenants in common not as joint tenants, for although there is unity of possession, interest and title, there is no unity of time. There are two exceptions to the requirement that there must be unity of time for a joint tenancy to exist. From early times it was accepted that in a conveyance to uses and in a disposition in a will a joint tenancy could arise despite the fact that the requirement of unity of time was not satisfied.16 In modern terminology, any conveyance executed to a trustee for beneficiaries or any disposition in a will may give rise to a joint tenancy in the grantees, even where unity of time does not exist.17 [12.70]  Upon the death of a joint tenant, the interest of that joint tenant passes by the right

of survivorship to the remaining joint tenants. Indeed to state that the interest of the deceased joint tenant “passes” to the others is not strictly correct, for each joint tenant is already entitled to the whole estate. The surviving joint tenants simply remain entitled to the whole estate on

14 15

16 17

Diemasters Pty Ltd v Meadowcorp Pty Ltd (2001) 52 NSWLR 572 at 579. Where a trustee is appointed after the other trustees, he or she takes as a joint tenant with the other trustees despite the lack of unity of title: Trustee Act 1925 (NSW), s 9(1); Trustee Act 1958 (Vic), s 45(1); Trusts Act 1973 (Qld), s 15(1); Trustee Act 1936 (SA), s 16(1); Trustees Act 1962 (WA), s 10(1); Trustee Act 1898 (Tas), s 15(1); Trustee Act 1925 (ACT), s 9(1); Trustee Act (NT), s 13(1). Kenworthy v Ward (1853) 11 Hare 196; 68 ER 1245; McGregor v McGregor (1859) 1 De GF & J 63; 45 ER 282 at 73 (De GF & J), 286 (ER). In New South Wales, Western Australia and the Australian Capital Territory, it is arguable that because of Conveyancing Act 1919 (NSW), s 44(2), (2A), Property Law Act 1969 (WA), s 39 and Civil Law (Property) Act 2006 (ACT), s 224, unity of time may no longer be a criterion for joint tenancy: see Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 241. [12.70]  573

PART 4 Divided Ownership of Land

the death of one joint tenant. The process continues until there is one joint tenant left and he or she is entitled to the whole of the land for his or her own use and benefit. “Ultimately … the last surviving joint tenant becomes the sole owner –​the winner takes all”.18 The right of survivorship cannot be affected by any purported disposition in the will of a joint tenant or by intestacy –​the interest of a joint tenant cannot pass in his or her will or under an intestacy.19 For example, if A  and B are joint tenants of Blackacre and A  leaves a will in which she purports to devise her interest in Blackacre to C, C takes nothing under A’s will because upon A’s death, A’s interest in Blackacre automatically accrues to B.20 If the jointly owned property is Torrens land, on the death of a joint proprietor, the Registrar may register the survivor as the proprietor.21 Despite the possibility of the loss of the whole, or the “gamble on longevity”,22 there are a number of advantages which make the joint tenancy, with its right of survivorship, a convenient and effective form of co-​ownership. Simplicity of dealing with land titles is promoted as the purchaser need ever only be concerned with one title.23 In the case of spouses and other domestic partners who want the survivor to become entitled to the whole of the jointly owned property, the right of survivorship is an economic and uncomplicated method for the automatic vesting of the interest of the partner who dies first in the survivor. No will is required for the result to be achieved. A further, more problematic, advantage is that unsecured creditors of the deceased joint tenant cannot gain access to the property to satisfy debts. When the debtor dies, the whole property vests in the surviving joint tenant or tenants free of the claims of the deceased debtor. The estate of the deceased joint tenant has no property from which these claims can be met.24 [12.75]  If there is no right of survivorship, there can be no joint tenancy.25 The common law

rule was that a corporation could not die and, therefore, could never be a joint tenant. In the 19th century, banks and other corporations began acting as trustees. It is important for trustees to be joint tenants because the trust property automatically passes to the other trustees when

8 1 19 20 21

2 2 23

24

25

Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), pp 915–​916. For a recent example, see Carr-​Glynn v Frearsons [1999] Ch 326. Note that the right of survivorship could not be defeated by a widow’s claim to dower before dower was abolished. See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 242 fn 34. Real Property Act 1900 (NSW), s 101(1); Transfer of Land Act 1958 (Vic), s 50 (“shall”); Real Property Act 1886 (SA), s 188 (“shall”); Transfer of Land Act 1893 (WA), s 227; Land Titles Act 1980 (Tas), s 100; Land Titles Act 1925 (ACT), s 55. Application is made by the survivor in appropriate form, together with proof of the death. In Queensland and the Northern Territory ( Land Title Act 1994 (Qld), s 56(2) and Land Title Act (NT), s 57(1)), if the instrument does not show the form of co-​ownership, the Registrar must register the co-​owners as tenants in common. However, where there is a joint tenancy, s 114 of the Land Title Act 1994 (Qld) may be used by a surviving joint tenant to apply to the Supreme Court for a vesting order. Query the position in Northern Territory. Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 917. In most cases of tenancy in common there is only one title, although it is possible for tenants in common to request separate certificates of title. The most recently updated Torrens legislation, Queensland and the Northern Territory, provide that the Registrar may create separate indefeasible titles for tenants in common: Land Title Act 1994 (Qld), s 57; Land Title Act (NT), s 58. Compare the situation where a mortgage over the property has been executed: see [12.245]. Note also that if the creditor can demonstrate that the deceased’s intention in putting the property in joint tenancy was to defraud the creditors, a different result may ensue: see Bankruptcy Act 1966 (Cth), s 121. Re Robertson (1943) 44 SR (NSW) 103 at 105 per Roper J.

574 [12.75]

Co-ownership  Chapter  12

one trustee dies: there is no need for a conveyance from the personal representatives of the deceased trustee to the surviving trustees as there would be if the trustees held as tenants in common. Legislation was introduced to enable corporations to hold property as joint tenants in the same manner as if they were individuals.26 [12.80]  In some jurisdictions, where joint tenants die in circumstances rendering it uncertain

which of them survived the other or others, their deaths, for purposes affecting the title to property, are presumed to have occurred in order of seniority.27 In other words, the older is presumed to have predeceased the younger. The presumption can be rebutted by evidence that the deaths did not occur in order of seniority. The position in Western Australia and the Northern Territory arguably provides a fairer outcome. If there is a doubt as to which joint tenant survived the other(s), the property devolves as though the joint tenants had held the property as tenants in common in equal shares.28 There is no provision covering the matter in South Australia.29 [12.85]  For certain purposes statutory provisions may deem or have the effect of deeming

joint tenants to be tenants in common. For example, for the purposes of the taxation of capital gains, joint tenants are treated as tenants in common. Section 108.7 of the Income Tax Assessment Act 1997 (Cth) provides that where an asset is owned by persons as joint tenants, the joint tenants are treated as if they each owned a separate CGT asset constituted by an equal interest in the asset and as if each held that interest as a tenant in common.30 [12.90] Although the right of survivorship renders invalid any purported dispositions in a

will of a joint tenant’s interest, the joint tenant may alienate or deal with that tenant’s interest during that tenant’s lifetime. The aliquot part with which a joint tenant can deal is dependent upon the number of joint tenants. For example, if there are three joint tenants, any one joint tenant can deal with a one-​third share of the property. There is, however, an exception to the general proposition that joint tenants are able to deal freely with their interests inter vivos. In Victoria, South Australia and Western Australia, the Torrens statutes provide that the words “no survivorship” may be entered on the Register if there are two or more joint proprietors

26

27

28

29

30

Conveyancing Act 1919 (NSW), s 25; Property Law Act 1958 (Vic), s 28; Property Law Act 1974 (Qld), s 34; Law of Property Act 1936 (SA), s 24C; Property Law Act 1969 (WA), s 29; Conveyancing and Law of Property Act 1884 (Tas), s 62(4); Civil Law (Property) Act 2006 (ACT), s 209; Law of Property Act (NT), s 34. See Bodies Corporate (Joint Tenancy) Act 1899 (UK). Conveyancing Act 1919 (NSW), s 35; Property Law Act 1958 (Vic), s 184; Succession Act 1981 (Qld), s 65 (younger presumed to have survived older for a period of one day); Presumption of Survivorship Act 1921 (Tas), s 2; Civil Law (Property) Act 2006 (ACT), s 213(1), (2), (3). See Hickman v Peacey [1945] AC 304; Re Brush [1962] VR 596; Re Plaister (1934) 34 SR (NSW) 547; Re Zappullo [1967] VR 390. Property Law Act 1969 (WA), s 120(d); Law of Property Act (NT), s 216(2)(d). A similar situation is provided for in the United States by the (adopted in some States such as California), where Uniform Simultaneous Death Act the simultaneous death of two or more joint tenants constitutes a severance of the joint tenancy. If the deaths are simultaneous, the estate probably remains in joint tenancy in their respective heirs: see Bradshaw v Toulmin (1784) Dickens 633; 21 ER 417 discussed in Chambers, An Introduction to Property Law in Australia (Law book Co, Sydney, 2001), p 136. See Eastgate v Equity Trustees Executors & Agency Co Ltd (1964) 110 CLR 275, where the High Court considered the nature of the jus accrescendi. The High Court held that, for the purposes of a duty payable on the notional estate of a deceased person held before death by a person to whom the estate had “passed”, the interest of a joint tenant formed part of the notional estate and “passed” to the surviving joint owner. See similarly O’Donoghue v Gilpin [1976] VR 410. [12.90]  575

PART 4 Divided Ownership of Land

who hold the land as trustees.31 Such a notation was able to be made in the past in New South Wales, Queensland and the Australian Capital Territory.32 Despite the notation of such words on the Register, the joint proprietors continue to hold as joint tenants and, as the right of survivorship is an integral part of the joint tenancy, it remains applicable between the joint tenants33 What then is the effect of the words “no survivorship” appearing on the Register? Once such an entry has been made, it is not lawful for less than the full number of the registered proprietors to transfer or otherwise deal with the land without obtaining an order of the Supreme Court.34 It seems that these provisions are intended to provide some protection for beneficiaries. Even the registration of a transmission in favour of the surviving joint proprietors would need the sanction of the court.35 In deciding whether to sanction a dealing, the court must make orders as the court considers just for the protection of persons beneficially entitled.36 Thus in a case where there are two trustees registered as joint proprietors and one trustee dies the court may take the view that the interests of the beneficiaries require the maintenance of two trustees and, thus, may only sanction the transmission to the surviving trustee on the basis that there is then a transfer to the surviving trustee and a new trustee. The “no survivorship” entry does not provide beneficiaries with complete protection for their interests. All the joint proprietors/​trustees can join together and transfer the estate to a third party. If such a third party registers without fraud, the interests of the beneficiaries in the land will be defeated under the principles of indefeasibility. However, the likelihood of all trustees acting fraudulently to deprive the beneficiaries of their interests is far less than the likelihood of one trustee doing so.37 The “no survivorship” entries ensure that the latter possibility is excluded. [12.96] Despite the general entitlement of joint tenants to a division of the property according to their respective shares, in PCM Nominees (No 2) Pty Ltd v Brighton Bay Developments Pty Ltd [2007] V ConvR 54-​727; [2006] VSC 351 prospective purchasers were denied a transfer to themselves in the appropriate individual portions. Four companies had agreed to purchase a property as tenants in common in particular shares but one company was deregistered before the settlement date. The court held that the remaining prospective purchasers could not

31

32

33

34 35 36 37

Transfer of Land Act 1958 (Vic), s 38(1), (2) (not confined to trustees); Real Property Act 1886 (SA), s 163; Transfer of Land Act 1893 (WA), s 61 (not confined to trustees). Persons already registered as proprietors may apply for the notation to be made: Transfer of Land Act 1958 (Vic), s 38(3); Real Property Act 1886 (SA), s 164; Transfer of Land Act 1893 (WA), s 61. Until 1970 in New South Wales, 1994 in Queensland and 1996 in the Australian Capital Territory, the notation “no survivorship” could be made. Whalan suggests that “no survivorship” notations created before 1970 in New South Wales are treated in the same way as the other States: see Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 123. In the Australian Capital Territory, s 180 of the Land Titles Act 1925 (ACT), specifically provides that titles with the “no survivorship” notation continue to be governed by the repealed ss 126(2) and 127. The Land Title Act 1994 (Qld) and the Land Title Act (NT) create a different procedure for dealing with the trustee issue. A person may be registered as a trustee only: Land Title Act 1994 (Qld), s 109; Land Title Act (NT), s 125. In Queensland a document detailing the trust is lodged with the Registrar, but does not form part of the Register: Land Title Act 1994 (Qld), s 110(3), (4). Re Robertson (1943) 44 SR (NSW) 103. See, for example, Transfer of Land Act 1958 (Vic), s 38(6). See Adams, “No Survivorship Titles” (1941) 17 NZLJ 137, referred to in Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 126. Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 643–​644 per Brennan J.

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Co-ownership  Chapter  12

force the vendor to transfer their proportions to them. The court’s primary reason was that the contract of sale envisaged and required transfer of the whole from the vendor to the purchasers. Whelan J also referred to the nature of the tenancy in common and its inappropriateness on the facts if the purchasers were successful. If such transfers were permitted, the result would have been to make the vendor a tenant in common (holding the deregistered company’s share) with the purchasers. An agreement between the purchasers as to management of the property and to which the vendor was not a party would be inconsistent with the existence of a co-​ owner who was not a party to the agreement. The vendor would also be entitled to the use and possession of any part of the land.

TENANCY IN COMMON [12.95]  If two or more persons are entitled simultaneously to possession of the whole of the

land and yet are not joint tenants, they will hold the land as tenants in common. Although all four unities may exist, only the unity of possession is essential for a tenancy in common to arise. A tenant in common is said to hold a distinct yet undivided share in the land.38 Each tenant in common is deemed to own an individual share, a part of all the rights involved in ownership. It is this reference to “shares” which distinguishes the tenancy in common from the joint tenancy. Although a tenant in common holds a distinct share, the land itself is not divided physically and no one tenant in common can claim any particular portion of the land as his or her own. Each tenant in common is entitled to physical possession of the whole of the land. If this were not the case separate ownership, not co-​ownership, would exist. There is no right of survivorship between tenants in common. Each tenant’s share is fixed and cannot be enlarged by the death of another tenant in common.

CREATION OF CO-​OWNERSHIP General [12.100]  Significant differences exist between common law and equity as to the type of co-​

ownership created in a wide range of everyday transactions. The consequence is that, although the same persons are co-​owners at law and in equity, their co-​ownership is different at law and in equity. It is therefore necessary to determine the nature of the co-​ownership both at law and in equity even among the same persons. The most common difference between legal and equitable interests is that two or more persons may hold as joint tenants at law 38

Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 643–​644 per Brennan J. Nevertheless, where four companies agreed to purchase a property as tenants in common in particular shares, and one company was deregistered before settlement date, the remaining prospective purchasers could not force the vendor to transfer their proportions to them. The primary reason was that the contract of sale envisaged and required transfer of the whole from the vendor to the purchasers. Whelan J also referred to the nature of the tenancy in common and its inappropriateness on the facts if the purchasers were successful. If such transfers were permitted, the result would have been to make the vendor a tenant in common with the purchasers. An agreement between the purchasers as to management of the property and to which the vendor was not a party would be inconsistent with the existence of a co-​ owner who was not a party to it and who would be entitled to the use and possession of any part of the land: see PCM Nominees (No 2) Pty Ltd v Brighton Bay Developments Pty Ltd [2007] V ConvR 54-​727; [2006] VSC 351. [12.100]  577

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on trust for themselves as tenants in common in equity. This form of holding reflects the equitable preference for tenancies in common. If persons hold the same type of co-​ownership at law and in equity, the equitable interest is absorbed into the legal interest and the parties simply hold the relevant type of co-​ownership at law. Gray and Gray have stated: “Integral to any understanding of concurrent interests in modern land law is the maintenance of a rigid distinction between ownership at law and ownership in equity”.39 Unity of possession attaches to both joint tenancies and tenancies in common, but if one or more of the other unities was missing, the parties took their interests as tenants in common not as joint tenants. If unity of possession was absent, the parties did not take as co-​owners but as separate owners. Although the legal title is vital in that it binds the whole world, the persons with bare legal title have only nominal ownership. The holders of the legal title are trustees who must exercise fiduciary duties, but they have no right to the beneficial enjoyment of the land. The persons who hold the equitable ownership derive the use and enjoyment from the land. It is they who are entitled to the occupation of the land or the rents and profits flowing from the land and it is they who are entitled to the proceeds upon a sale of the property. For example, it is not unusual for A and B to hold the land as joint tenants at law, but as tenants in common in equity.40 In such a case if A dies, the right of survivorship operates at law so that B becomes the sole legal owner. However, B holds the legal estate on trust for B and the estate of A. The estate of A  is entitled to the use and enjoyment of the land with B and to the proceeds of sale equivalent to the value of A’s beneficial interest if the property is sold. Thus, it is most important to distinguish between co-​ownership at law and co-​ownership in equity.

Common law [12.105] The common law leaned in favour of the joint tenancy for a number of reasons.

The enforcement of feudal services by feudal lords was likely to be simpler and more effective because the right of survivorship made it more likely that the land would vest in one tenant from whom feudal dues could be exacted. The investigation of title by purchasers was easier because joint tenants held a single title whereas each tenant in common had a separate title. Further, if a joint tenant died, there remained only one title, whereas if a tenant in common died, that co-​owner’s share might be left to a number of persons thereby proliferating the number of titles to be searched before the land could be sold as a whole. The presumption at law, therefore, was in favour of a joint tenancy.41 Although many of the historical reasons for the common law presumption in favour of the joint tenancy have disappeared, where parties intend that the land should pass to the survivor, the creation of a joint tenancy avoids the need for any further procedural steps and particularly overcomes difficulties caused by the widespread failure to leave a will. [12.110]  The common law presumption was that where land was conveyed to two or more

persons as co-​owners, they took their interests as joint tenants at law unless one of the four

39 40

41

Gray and Gray, Elements of Land Law (4th ed, OUP, London, 2004), p 1082. See Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 973. See Sitnovski v Trpkoski [1999] NSWSC 1247 for an example of a case where it was claimed that the legal tenants in common in equal shares held in different proportions in equity. On the facts, the claim was unsuccessful. Morley v Bird (1798) 3 Ves 628; 30 ER 1192.

578 [12.105]

Co-ownership  Chapter  12

unities was absent or words of severance were used in the deed of conveyance. Nevertheless, the Queensland Law Reform Commission has commented: (b)ecause of the somewhat arbitrary and often unintended consequences of creating a joint tenancy, particularly the incident of survivorship, the courts in construing dispositions to two or more persons … have tended to seize upon the slightest indication that a tenancy in common was intended.42

In Williams v Hensman (1861) 1 J & H 546; 70 ER 862 at 557 (J & H); at 866 (ER) Sir William Page Wood V-​C commented: In these questions of joint-​tenancy the court has frequently been driven to rely on minute grounds for holding a severance to have taken place, by the unfortunate circumstances that the Legislature has not thought fit to interpose by introducing the rule that express words shall be required to create a joint-​tenancy in place of the contrary rule which is established. [12.115]  Consequently the courts required only slight evidence of severance or an absence

of one of the unities in order to determine that the co-​ownership was a tenancy in common. In Mischel Holdings Pty Ltd v Mischel [2013] VSCA 375, an elderly woman and her son became the registered owners as joint tenants of a property in St Kilda. However at the time of purchase, it was agreed that on any sale, the proceeds would be split between the parties; this agreement was inconsistent with a joint tenancy. [12.120]  Any words in a grant which indicate that the grantees were to take distinct shares

were words of severance and their presence prevented the creation at law of a joint tenancy between the grantees. The grantees took as tenants in common provided there was unity of possession. Words which have been held to be words of severance include “equally”, “between”, “amongst”, “to be divided between”, “in equal shares”, “share and share alike”, “to be distributed amongst them in joint and equal propositions” and “respectively”.43 In Robertson v Fraser (1871) 6 Ch A 696 the testator by his will appointed Johnson and Fraser to be his executors. He provided for the payment of debts and certain legacies and left the residue of his estate to Johnson and Fraser for their own absolute use and benefit. In a codicil to his will the testator appointed Warren to be an additional executor and provided that Warren was to be a further beneficiary of the residuary estate “so that the said J Warren shall and may participate in such bequest” with Johnson and Fraser. Johnson died in the lifetime of the testator. A question arose as to whether the residuary estate was given to Johnson, Fraser and Warren as joint tenants or tenants in common. If the effect of the devise was to give a tenancy in common, an intestacy as to one-​third share would result and the next of kin of the testator would be entitled to the share.

42

43

QLRC, A Report of the Law Reform Commission on a Bill to Consolidate, Amend and Reform the Law Relating to Conveyancing, Property and Contract and to Terminate the Application of Certain Imperial Statutes, No 16 (1973), p 25. See, for example, Williams v Hensman (1861) 1 J & H 546; 70 ER 862 and Re Rose (decd) [1962] QWN 4. Denn d Gaskin v Gaskin (1777) 2 Cowp 657; 98 ER 1292 (“equally”); Lashbrook v Cock (1816) 2 Mer 70; 35 ER 867 (“between”); Richardson v Richardson (1845) 14 Sim 526; 60 ER 462 (“amongst”); Peat v Chapman (1750) 1 Ves Sen 542; 27 ER 1193 (“divided between”); Payne v Webb (1874) LR 19 Eq 26 (“equal shares”); Heathe v Heathe (1749) 2 Atk 121; 26 ER 476 (“share and share alike”); Ettricke v Ettricke (1767) Amb 656; 27 ER 426 (“distributed in joint and equal proportions”); Stephens v Hide (1734) Talb 27; 25 ER 641; Re Fox [1997] 1 Qd R 43 (“divided between”). [12.120]  579

PART 4 Divided Ownership of Land

The Court of Appeal held that the effect of the will and codicil was to create a tenancy in common between Johnson, Fraser and Warren. Lord Hatherley LC stated at 699: [A]‌nything which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy, and to create a tenancy in common … I have no doubt that the word “participate” is sufficient to indicate an intention to divide … [T] he testator [was] not contented with inserting the name of the new legatee (in his codicil but expressed his reason for doing so) that the new legatee may participate with the two other legatees –​in other words, that there may be a sharing of the bequest.44 [12.125]  The instrument of disposition itself may have indicated that a sharing was envisaged

even where there were no clear words of severance in the deed or will. If this was the case, a tenancy in common, rather than a joint tenancy, resulted.45 For example, if a settlement to children contained provisions permitting the use of income or capital for the maintenance and advancement of each particular child, the children must be concluded to hold as tenants in common for any advance to a child would have to be debited against that child’s “share” and this result could only be achieved if the child had a distinct share.46 [12.130]  In general, therefore, it seems that any indication of an intention to divide gleaned

from either the words used or from the grant as a whole gave rise to a tenancy in common. The preference of the courts in favour of the tenancy in common where there was any doubt as to the nature of the co-​ownership appears to have been based on the fact that in most instances the weight of convenience favours the creation of a tenancy in common.47 Where, however, expediency favours the creation of a joint tenancy in a given fact situation, the courts have sometimes been prepared to hold that the intention was to create a joint tenancy and a joint tenancy has resulted despite the use of words of severance. Most notably this interpretation occurred when contradictory expressions such as “to A and B to share and share alike as joint tenants” were used in the grant or the will and the intention of the grantor or testator, determined from contextual factors, indicated a joint tenancy was intended.48 In Re Barbour [1967] Qd R 10 the testator left property to a sister and two brothers “to share and share alike as joint tenants”. One of the brothers predeceased the testator. If the grant had been construed as a tenancy in common, the small share of the deceased beneficiary would have been divisible amongst 16 beneficiaries on an intestacy. Wanstall  J reviewed the facts of the case and determined that the property’s real value lay in its availability for use in conjunction with other land worked by the beneficiaries surviving the testator. His Honour took the view that the testator’s natural intention was to keep his land in the family aggregation. This intention was reflected in his choice as beneficiaries of the land those who were managing and working the aggregation.49 Consequently a joint tenancy was held to have existed despite the words “share and share alike”.

44 5 4 46 47 48 49

See similarly, Re Leaver [1997] 1 Qd R 55 –​use of the words “equally as a joint tenant” resulted in the creation of a tenancy in common. See, for example, Surtees v Surtees (1871) LR 12 Eq 400. See, for example, L’Estrange v L’Estrange [1902] 1 IR 64. See Re Rose (decd) [1962] QWN 4. See, for example, Joyce v Barker Bros (Builders) Ltd (1980) 40 P & CR 512 –​the words “fee simple as beneficial joint tenants in common equal shares” held to be a joint tenancy. Note also that those who would take on intestacy were not concerned about the result.

580 [12.125]

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[12.135]  If the court could not reconcile the use of contradictory expressions in a deed or

a will (one suggesting a tenancy in common and the other suggesting a joint tenancy), the conflict was resolved by the rule that the first word prevailed in a deed but the last word prevailed in a will.50 For example, the expression “to A and B equally as joint tenants” would have created a tenancy in common if appearing in a deed, but a joint tenancy if appearing in a will.51

In equity [12.140]  The need to consider both the common law and equitable type of co-​ownership even

among the same co-​owners owes its significance to a fundamentally different starting point in equity. Equity preferred the certainty and equality of the tenancy in common.52 Co-​owners who were tenants in common at law were often presumed to hold as tenants in common in equity. In three particular situations, equity deemed certain co-​owners to be tenants in common even where they held as joint tenants at law. Recently, a more flexible approach has been adopted by the Privy Council and an equitable tenancy in common might be favoured even in circumstances where none of the three traditional categories was present.53 When equity intervened and held parties to be tenants in common despite their legal status as joint tenants, it did so on the basis that the parties must, in the particular circumstances, be presumed to have an intention to hold individual and separate shares. If there was evidence that the parties actually intended to take as beneficial joint tenants, any presumption of a beneficial tenancy in common was rebutted. This evidence may be forthcoming in the situation, for example, of property held jointly by married persons. [12.145]  Purchasers who took the legal estate as joint tenants were deemed to be tenants

in common in equity if they contributed in unequal proportions to the purchase price. Each co-​owner held that person’s share in equity proportionate to the contribution to the purchase price.54 Thus, if A and B took a conveyance of land as joint tenants, but A contributed two-​ thirds and B contributed one-​third of the purchase price, equity deemed A and B to be tenants in common of the land in the proportions of two-​thirds to A and one-​third to B. Further, if A alone had taken the conveyance in the example above and was, therefore, the sole owner at law, equity would still deem A  and B to be tenants in common proportionate to their contributions.55 If purchasers take a conveyance of land as joint tenants and provide the purchase money in equal shares, they are presumed in equity to hold as joint tenants.56 In Robinson v Preston (1858) 4 K & J 505; 70 ER 211 at 511 (K & J) Wood V-​C commented

50

51 52 53 54 55 56

Perkins v Baynton (1781) 1 Bro CC 118; 28 ER 1022; Forbes v Git [1922] 1 AC 256. The principle is discussed in Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), p 230. See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 249 fn 93. See, for example, Re Woolley [1903] 2 Ch 206 at 211. See Malayan Credit Ltd v Jack Chia MPH Ltd [1986] 1 All ER 711. Lake v Gibson (1792) 1 Eq Ca Abr 290; 21 ER 1052 at 291 (Eq Ca Abr); Robinson v Preston (1858) 4 K & J 505; 70 ER 211. Bull v Bull [1955] 1 QB 234. See Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), p 226. [12.145]  581

PART 4 Divided Ownership of Land

that in these circumstances “no equity is supposed to intervene by which it can be reduced to a tenancy in common”. The presumptions could be rebutted. For example, if there was evidence showing that the purchasers who provided the purchase money in unequal contributions intended to take beneficially as joint tenants, they would take as joint tenants in equity.57 [12.150]  Where two or more persons advanced money on the security of a mortgage, whether

in equal or unequal shares, equity presumed the mortgagees to hold their interests as tenants in common even though they might be joint tenants at law.58 The reason for this rule was expressed succinctly in the case of Morley v Bird (1798) 3 Ves 628; 30 ER 1192 at 631 (Ves), 1193 (ER) per Arden MR: “[I]‌f two people join in lending money upon a mortgage, Equity says, it could not be the intention that the interest in that should survive. Though they take a joint security, each means to lend his own and take back his own”. The presumption that mortgagees held as tenants in common in equity could be rebutted by evidence demonstrating that the parties intended to hold in law and equity as joint tenants. The fact that mortgagees were deemed to be tenants in common in equity caused a practical problem for the mortgagor. In order to redeem the property, the mortgagor had to obtain a receipt from all the tenants in common. Further, if one of the tenants in common had died, the mortgagor had to obtain a receipt from all the remaining tenants in common and from the personal representative of the deceased tenant. In order to overcome this difficulty, it became common practice to insert a “joint account clause” in mortgages where there were two or more mortgagees. The joint account clause stated that in law and equity the money belongs jointly to the mortgagees. In many instances this statement was incorrect but it resulted in the mortgagor being able to repay the money to one of the mortgagees and to obtain from the mortgagee a valid receipt for repayment of the whole of the mortgage moneys. The joint account clause, therefore, had the effect of making the mortgagees joint tenants vis-​à-​vis third parties. It did not alter the position of the mortgagees inter se and a mortgagee who received repayment of the whole of the mortgage moneys held all but that mortgagee’s own share on trust for the other mortgagees in proportion to their contributions to the original loan moneys. A joint account clause is now implied by statute.59 [12.155]  Where partners acquired land for the purpose of a business enterprise and as part of

their partnership assets, they were presumed in equity to hold the land as tenants in common, although at law they might be joint tenants.60 As was the case with mortgagees, equity considered that it would be unfair for the right of survivorship to operate in this business context as a partner who died first would lose his or her investment. Even if there was no formal partnership but parties entered into a joint enterprise and purchased land with a view to profit, equity deemed the parties to hold the land so purchased

7 5 58 59

60

See, for example, Pink v Lawrence (1977) 36 P & CR 98; Goodman v Gallent [1986] 1 All ER 311 (CA). Re Jackson (1887) 34 Ch D 732. Conveyancing Act 1919 (NSW), ss 96A, 99; Property Law Act 1958 (Vic), ss 112–​113; Property Law Act 1974 (Qld), s 93; Law of Property Act 1936 (SA), ss 54–​55; Property Law Act 1969 (WA), ss 67–​68; Conveyancing and Law of Property Act 1884 (Tas), s 30; Law of Property Act (NT), s 103. Lake v Gibson (1792) 1 Eq Ca Abr 290; 21 ER 1052; Lake v Craddock (1732) 3 P Wms 158; 24 ER 1011; Spence v Federal Commissioner of Taxation (1967) 121 CLR 273.

582 [12.150]

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as tenants in common.61 Where the parties were married and held land as joint tenants, equity was less likely to find a business partnership existed and thus less likely to intervene to impose a trust relationship and hold the parties to be tenants in common in equity.62 Despite the fact that the co-​owners share a close personal relationship, where it is clear that they engaged in a pattern of business conduct involving the purchase and sale of real property for profit a tenancy in common has been found to exist.63 [12.158]  The intention of the parties will prevail whatever the form of relationship between

them. Where two or more persons share an ongoing relationship involving the buying and selling of land and personal property, those dealings are likely to lead to a classification of their property holdings as being in common. This classification is likely whether or not the relationship is strictly one of partners and whether all co-​owners have contributed equally to the purchase price of the items involved. In Miller v Martin [2018] VSC 444, three work colleagues shared property dealings over a substantial period of time until a falling-​out led to a dispute as to ownership of property. The original purchase was of a beach house as a leisure asset and money for the purchase came from one of the three. The three were registered as tenants in common in equal shares. The court pointed out that a resulting trust arises in favour of a co-​owner who has contributed more than the share of the purchase price and a constructive trust arises where the conduct of the parties makes it unconscionable for one or more co-​ owners to deny another co-​owner a greater share than the nominal division. Although not business partners, the three persons had acted as partners. The original provider of the money had blacked out descriptions of a partnership and on several occasions the beneficial interest in acquired property was stated as belonging to all three. The presumption of a resulting trust was rebutted by the evidence of intention to hold property for the partnership. Nothing done by the two co-​owners induced the third to allow registration of all three as co-​owners. On many occasions the claimant recognised the existence of a partnership and ownership by it of various items of property. The property was held by all three persons as tenants in common. [12.160]  Apart from the three presumptions outlined above, further grounds may exist for

the presumption in equity of a tenancy in common. Where parties agree to hold property for business purposes, such a holding indicated a tenancy in common on the proportions of the business commitments. In Malayan Credit Ltd v Jack Chia MPH Ltd [1986] 1 All ER 711 the plaintiff and the defendant were tenants of a floor of an office block. Although the lease itself contained no words of severance, the parties had agreed between themselves that they would occupy separate portions of the floorspace (38% and 62% respectively) and that they would pay the outgoings on that proportionate basis. Although the parties were joint tenants at law, the Privy Council found that they were tenants in common in equity in unequal shares. Similarly where co-​owners agree that the proceeds of a sale of the property are to be divided between all co-​owners they are taken to have agreed on ownership in common. [12.165]  The equitable presumptions were on their face applicable to disputes which arose

in the context of the family. However, the courts often viewed differently the situation where

61 62 63

Lake v Gibson (1792) 1 Eq Ca Abr 290; 21 ER 1052; Xenou v Katsaras (2002) 7 VR 335. Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278; 224 ALR 280; Neilson v Letch (No 2) [2006] NSWCA 254. Xenou v Katsaras (2002) 7 VR 335. [12.165]  583

PART 4 Divided Ownership of Land

husband and wife held property. The presumption of an equitable tenancy in common in the case of unequal contributions by husband and wife was often rebutted. The courts were readily prepared to find an intention to take as joint tenants despite an inequality of contribution.64 This view was recently reiterated by the High Court in Trustees of the Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278. The High Court commented that it was often a matter of chance whether the husband and wife used their respective finances to pay a purchase price directly to a vendor. The arrangement of their finances may see one spouse expending that spouse’s money in general family expenses, with the other spouse paying for property. In these circumstances, and particularly in relation to the matrimonial home, there was rather a presumption: for an equality of ownership and that if the principle of equality applied, it only applied in the sense that their interest was that of a severable joint tenancy so that if they had wanted to divide up the fund in their joint lifetimes they could have done so but if they did not desire to do so, then the fund would be held for the benefit of the survivor.65

Acceptance of equality for gender preference for property holdings is now accepted by statute. Consequently, the displacement of the presumptions relating to co-​ownership may be extended beyond formal family relationships to domestic relationships between same-​and opposite-​sex domestic relationships. In addition, acquisitions of property by family members continue to be affected by the presumption of advancement so that a disproportionate contribution by a family member at least to a dependent will be presumed to be by way of gift so that the family members hold according to the nominated shares. The artificiality of presumptions is again reflected in this complicated balancing of presumptions. The property holdings based on co-​ownership and advancement may also be affected by the development of principles of the constructive trust under which the beneficial interest may be distributed in a manner which takes account of factors other than direct contributions to the purchase price.66 More importantly, in relation to property disputes between parties to a marriage and parties in a domestic relationship, whether opposite or same sex, most disputes are governed by discretionary statutory powers. These property disputes are resolved for married persons pursuant to s 79 of the Family Law Act 1975 (Cth) (see [8.410]) and for domestic partners pursuant to s 90SM of the Family Law Act 1975 (Cth) or in s 205ZB of the Family Court Act 1997 (WA) (see [8.415]). Under these provisions, the Commonwealth and Western Australian Family Courts have the power, in proceedings with respect to the property of the parties, to alter the existing proprietary interests of the parties in order to achieve a just and equitable result. The range of property Interests affected has been widely defined.67 [12.170]  In Victoria, South Australia, Western Australia and Tasmania the common law and

equitable presumptions continue to apply to land held under the general law. At common law, if the four unities are present and there are no words of severance, a joint tenancy is presumed. In equity a tenancy in common is presumed if the parties contribute unequally to the purchase

64 65 66 67

Jones v Maynard [1951] Ch 572; Rimmer v Rimmer [1953] 1 QB 63; Re Cohen; National Provincial Bank Ltd v Katz (No 1) [1953] Ch 88; Vedejs v Public Trustee [1985] VR 569. Vedejs v Public Trustee [1985] VR 569 at 575 per Nicholson J, where his Honour was commenting on the import of the decision in Re Cohen; National Provincial Bank Ltd v Katz (No 1) [1953] Ch 88. See Baumgartner v Baumgartner (1987) 164 CLR 137, discussed at [5.270]. See Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56.

584 [12.170]

Co-ownership  Chapter  12

price or take as mortgagees or partners or probably in similar business relationships. Property holdings between married persons and those in a domestic relationship are subject to statutory powers in which regard is had to the whole of the relationship, not just the manner of the original acquisition.

Under statute [12.175]  In New South Wales, Queensland, the Australian Capital Territory and the Northern

Territory presumption of a tenancy in common both at law and in equity is the likely position in relation to land under the general law. Provisions in the general property statutes appear to have reversed the common law presumption in favour of the joint tenancy and substituted a presumption of tenancy in common.68 For example, ss 26 and 27 of the Conveyancing Act 1919 (NSW) provide:





26 (1)  In the construction of any instrument coming into operation after the commencement of this Act a disposition of the beneficial interest in any property whether with or without the legal estate to or for two or more persons together beneficially shall be deemed to be made to or for them as tenants in common, and not as joint tenants. (2) This section does not apply to persons who by the terms or by the tenor of the instrument are executors, administrators, trustees, or mortgagees, nor in any case where the instrument expressly provides that persons are to take as joint tenants or tenant by entireties. 27 Where two or more persons entitled beneficially as tenants in common to an equitable estate in any property are or become entitled in their own right whether as joint tenants or tenants in common to the legal estate in such property equal to and co-​extensive with such equitable estate both the legal and equitable estates shall be held by them as tenants in common unless such persons otherwise agree.

At first reading, the wording of s 26(1) suggests the creation of a presumption of a tenancy in common with respect to the beneficial interest rather than the legal interest. Nevertheless, it seems that the intention of the legislature was to effect a reversal of the common law presumption in favour of the joint tenancy.69 This result was explained in comment:  “The words ‘whether with or without the legal estate’, placed as they are in close connection with the words ‘the beneficial interest’, indicate that the rule is intended to be the same for both legal and equitable interests”.70

68

69

Civil Law (Property) Act 2006 (ACT), ss 210–​211; Conveyancing Act 1919 (NSW), ss 26, 27; Law of Property Act (NT), ss 35, 36; Property Law Act 1974 (Qld), ss 35, 36. The Queensland and Northern Territory provisions are not confined to “instruments”. Note, however, that as there is no general law land in the Australian Capital Territory and the Northern Territory, the provisions in these jurisdictions have relevance only insofar as they apply to Torrens land. The provisions were introduced in 1919 as a result of a Royal Commission inquiry into conveyancing and the law of property set up by the New South Wales Government. In referring to cl 26, Mr Justice Harvey, the Commissioner, stated in his explanatory memorandum accompanying the draft of the Bill: Clause 26 is a clause which, so far as I am aware, is entirely novel. At present the presumption of law is that if property is conveyed or devised to persons they take as joint tenants. Probably in the majority of cases in which the instrument is silent as to whether the donees are to take in joint tenancy or as tenants in common this defeats the intention. The courts of equity have recognised that is so, and have always laid hold of slight indications to negative the legal presumption. The clause as drawn raises a presumption the other way and presumes a tenancy in common unless otherwise indicated.

70

Note (1939) 13 ALJ 230 at 231. [12.175]  585

PART 4 Divided Ownership of Land

In Delehunt v Carmody (1986) 161 CLR 464 at 472 Gibbs CJ stated: (S)ince s 26 of the Conveyancing Act, in New South Wales the effect at law of a disposition in favour of A and B is that they will take as tenants in common. In New South Wales a conveyance to two purchasers who have contributed equally to the purchase price of the property will now give the purchasers a beneficial interest as tenants in common.

These statements support the view that where there is a simple disposition by way of conveyance to A and B as purchasers, pursuant to s 26(1) they hold the estate as tenants in common at law and in equity whether they contributed equally or unequally to the purchase price.71 In this type of example, it is not strictly correct to state that they hold the legal and equitable interests as tenants in common for, until an equitable interest is carved out of the legal interest, the estate is held as one whole interest. Where the legal and equitable estates are disposed of to different persons and thereby separated, it can be argued that s 26(1) does not have the effect of rendering the co-​owners tenants in common of the legal estate. If this view is correct, a question arises as to why it was then necessary for the legislature to include the first part of s 26(2): “This section does not apply to persons who by the term or tenor of the instrument are executors, administrators, trustees, or mortgagees”. In normal circumstances, persons taking in their capacity as executors, administrators, trustees or mortgagees take only the legal estate and would not, on the view expounded above, take the legal interest as tenants in common pursuant to s 26(1). Arguably this part of s 26(2) was added as a matter of caution on the part of the draftsman and to cover any situation where it might be argued that a person falling within one of these categories holds part or all of the beneficial interest for a time. The maintenance of the common law presumption of joint tenancy in the case of administrators, trustees and mortgagees is logical. It is convenient for survivorship to apply in these situations so that if, for example, one trustee dies, the remaining trustees can continue to administer the trust. In the case of mortgagees, the position of the mortgagor is protected by maintaining the presumption of joint tenancy. A tenancy in common could create difficulties for the mortgagor, who may be unclear to whom payments should be directed. [12.180]  The presumption in favour of a tenancy in common may be rebutted by evidence of

an intention to create a joint tenancy.72 Section 26(2) of the Conveyancing Act 1919 (NSW), states that where an instrument expressly provides that persons are to take as joint tenants, s 26(1) shall not apply. Where applicable, s 26(2) therefore removes automatic deeming and restores the position prior to statutory intervention.73 The subsection does refer to an express statement of a joint tenancy and may exclude cases where circumstances point to such an intention. Furthermore, where an instrument expressly provides for a joint tenancy, but the

71

72

73

In Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 Hutley JA took the view that if he had found there was a tenancy in common in relation to the lease, the surviving tenant in common could have exercised the option to renew in respect of the whole. In Churcher v Danis Hotels Pty Ltd (1980) 8 BPR 15,863 Holland J doubted the correctness of Hutley JA’s assertion. Mole v Ross (1950) 1 BPR 9101, discussed in (1951) 24 ALJ 356. See also Rule v Mallon (2000) 10 BPR 18,005 (NSWSC). The actual words “joint tenancy” do not have to be used; it is sufficient if the instrument clearly or plainly indicates the desire for a joint tenancy: see Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 249. Minter v Minter (2000) 10 BPR 18,133.

586 [12.180]

Co-ownership  Chapter  12

property is purchased for the purposes of a joint undertaking, there is a joint tenancy at law and a tenancy in common in equity.74 [12.185]  The presumption of a tenancy in common is maintained where the parties have an

equitable co-​ownership and later acquire a legal interest. Section 27(1) of the Conveyancing Act 1919 (NSW) was included to overcome the principle enunciated in Re Selous [1901] 1 Ch 921.75 In this case it was held that if two persons were beneficially entitled to a property as tenants in common and they subsequently acquired the legal estate as joint tenants, the equitable estate merged in the legal and they became joint tenants both at law and in equity. Section 27(1) overcomes this decision by providing that where two or more persons hold the beneficial interest as tenants in common and are or become entitled to the legal estate equal to or co-​extensive with such beneficial interest, the legal and beneficial interests shall be held as tenants in common unless the persons otherwise agree. Section 27(1) accords with the concept behind s 26(1).76 [12.190]  The position in the Australian Capital Territory seems to be totally in accord with

that in New South Wales, but some minor differences occur in Queensland and the Northern Territory. Although ss 35 and 36 of the Property Law Act 1974 (Qld) and ss 35 and 36 of the Law of Property Act (NT) correspond closely to ss 26 and 27 of the Conveyancing Act 1919 (NSW),77 they differ from the New South Wales sections in two important respects. First, the Queensland and Northern Territory provisions are not confined to interests created by instruments. A second difference concerns disposition of property for partnership purposes. In order to avoid difficulties which may arise upon the death of a member of a partnership where the legal title is held by the partners as tenants in common, s 35(1) of the Queensland and Northern Territory property statutes are made inapplicable to “a disposition for partnership purposes in favour of persons carrying on business in partnership”.78 The position would have been clearer had s 36 been made subject to s 35(3). The general property statutes in the other jurisdictions do not contain provisions such as those discussed above, although the reversal of the common law presumption of joint tenancy has been discussed and advocated in some jurisdictions.79

74 75 76 77

8 7 79

Minter v Minter (2000) 10 BPR 18,133. See also Selby v Aston (1797) 3 Ves 339; 30 ER 1042. Note that the Australian Capital Territory provisions follow the New South Wales provisions: see Civil Law (Property) Act 2006 (ACT), ss 210–​211. It should be noted that the words “legal interest” are used in the Queensland and Northern Territory provisions in place of the words “legal estate” used in the New South Wales legislation. The QLRC took the view that the provision was intended to apply to real and personal property and that, as the use of the words “legal estate” may not be appropriate to all forms of personalty, the words “legal interest” should be used. Further, the Commission took the view that, as the provision applies to personalty, the section should not be confined to “instruments”. In dispositions of personalty, an instrument may not be used and thus the section should apply to “a disposition” and not simply an instrument: see QLRC, Report No 16 (1973), p 25. Query whether s 35(3) would in all instances be consistent with s 36. In Western Australia the WALRC suggested a provision similar to that in New South Wales and Queensland should be enacted in Western Australia: see WALRC, Report on Joint Tenancy and Joint Tenancy in Common, Project No 78 (1994) at [2.36]–​[2.37]. The WALRC recommended, however, that the presumption of tenancy in common should not apply to married couples as they were more likely to intend “for survivorship” to operate between them. In Victoria the VLRC in its discussion paper on co-​ownership made a number of alternative suggestions concerning the creation of co-​ownership. One of its suggestions was to reverse the current situation and institute a presumption of tenancy in common between or amongst co-​owners: VLRC, [12.190]  587

PART 4 Divided Ownership of Land

Statutory provisions and equitable interests [12.195]  In New South Wales, Queensland, the Australian Capital Territory and the Northern

Territory these statutory provisions may cause some complications in relation to the beneficial interest. Pursuant to the statutory provisions, any disposition of the beneficial interest in property with or without the legal estate and to two or more persons is deemed to be made to them as tenants in common. If, however, the instrument or disposition expressly provides that the parties are to take as joint tenants, the presumption of tenancy in common is rebutted: see, for example, s 26(2) of the Conveyancing Act 1919 (NSW). Although it is not necessary that the words “as joint tenants” be used expressly, it must appear clearly from the language of the instrument that the parties are intended to take as joint tenants.80 In Mitchell v Arblaster [1964–​65] NSWR 119 the Supreme Court of New South Wales considered s 26 of the Conveyancing Act 1919. In his will the testator named Harry Mitchell and Nellie Mitchell as his executors and left his residuary estate to Harry Mitchell and Nellie Mitchell. Harry Mitchell predeceased the testator and, upon the testator’s death, the question arose as to whether Nellie Mitchell took the whole of the beneficial residuary estate. If the devise of the residuary estate was considered to have created a joint tenancy, Nellie Mitchell would be entitled to the whole of the estate; if the devise was considered a tenancy in common, there would be an intestacy as to one half share which the testator’s next of kin would take. Hardie  J held that s  26(1) had the effect of creating a tenancy in common between Harry Mitchell and Nellie Mitchell with respect to the residuary estate. The fact that the beneficiaries were also executors and took their interests in their capacity of executors as joint tenants under s  26(2) did not affect the position with respect to the beneficial estate.81 Mitchell v Arblaster provides a clear example of a situation where the beneficiaries would have taken as joint tenants but for the provision contained in s 26(1): the devise contained no words of severance and there was no other indication in the will of an intention to divide. In Hircock v Windsor Homes (Development No  3) Pty Ltd [1979] 1 NSWLR 501, the trustees were held to be joint tenants pursuant to s 26(2), although it was not expressly stated in the instrument that they were to take as such. The deed pursuant to which the lease was expressly executed provided that the lease should contain conditions whereby the lessees could continue in occupation for the life of the tenants and, if one died, the life of the survivors. This factor, together with the terms of the lease itself, convinced the New South Wales Court of Appeal that the parties intended the lessees to take as joint tenants. In contrast, in Mole v Ross (1950) 1 BPR 910182 the use of the words “as joint legatees” was held to be insufficient to create a joint tenancy.

80 81

82

Disputes Between Co-​owners Discussion Paper (2001), pp 30–​32. In its final report, however, the VLRC did not support the adoption of a presumption of tenancy in common. It took the view that the suggestion that a presumption of tenancy in common is more consistent with the intention of persons creating co-​ ownerships, is speculative and that change would lead to unnecessary confusion: VLRC, Disputes Between Co-​owners Report (2002), pp 27–​28. Mole v Ross (1950) 1 BPR 9101. If the gift to Harry Mitchell and Nellie Mitchell had been considered a class gift, Nellie Mitchell would have been entitled to the whole of the residue as the sole member of the class surviving at the date of death of the testator: Knight v Gould (1833) 2 My & K 265; 39 ER 956 at 298 (My & K), 957–​958 (ER). Hardie J rejected the contention that this was a class gift to the Mitchells in their official capacity as executors. The language of the will gave the residuary estate to the beneficiaries as named persons. Discussed in Note (1951) 24 ALJ 356.

588 [12.195]

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An issue arises as to the relationship between the statutory presumptions and the equitable presumptions discussed above:  see [12.145]–​ [12.155]. For example, if persons purchase property as a business venture and take the transfer as joint tenants so that the primary statutory presumption of tenancy in common is inapplicable, can the equitable presumption expressed in Lake v Craddock (1732) 3 P Wms 158; 24 ER 1011 (see [12.155]) apply so that as between themselves the partners take as tenants in common? In Queensland and the Northern Territory the issue is resolved by s 35(2)(b) of the Property Law Act 1974 (Qld) and s 35(2)(c) of the Law of Property Act (NT) which provide that s 35(1) is inapplicable to such a situation. In New South Wales the matter is unresolved. On one view, a statement in the title documents that the partners are to take as joint tenants precludes the operation of equitable presumptions. Alternatively, it may be that such a statement will not preclude the creation of a tenancy in common if it appears that a tenancy in common was the intention of the parties or that a tenancy in common would prevent an unconscionable distribution between the partners. The same issue as to the relationship between the statutory presumptions and the equitable presumptions arises if purchasers provide the purchase money in unequal shares but they are named as joint tenants in the title documents. This difficulty does not arise in the case of the mortgage. [12.200] The High Court decision in Delehunt v Carmody (1986) 161 CLR 46483

demonstrates that, indirectly, s 26 of the Conveyancing Act 1919 (NSW) may have the effect of creating a tenancy in common in equity even where the beneficial interest is created without an instrument. In this case Mr Carmody was the sole registered proprietor of the property in dispute. The property had been purchased, however, by equal contributions to the purchase price from Mr Carmody and his de facto wife, Miss Delehunt. It was accepted by the judge at first instance, Wootten J, that the parties contributed equally on the basis of an express oral agreement that they would own the property in equal shares and that, in due course, it would be placed in the names of both of them. Subsequently, Mr Carmody died and the respondent in the action, Mr  Carmody’s legal wife, obtained letters of administration and she became the registered proprietor of the property. Miss Delehunt claimed that she was entitled to the whole of the beneficial interest by survivorship as she and Mr Carmody had held the equitable interest as joint tenants. The fact that Mr Carmody and Miss Delehunt were co-​owners in equity was not in issue in the High Court. The Court of Appeal in the Supreme Court of New South Wales took the view that the property was held on a resulting trust for Mr Carmody and Miss Delehunt as tenants in common in equal shares. The Court of Appeal held that there was neither an express trust nor a concluded contract. This was because an essential term, that dealing with the question of survivorship or no survivorship, had not been settled between the parties. While this matter was not in issue before the High Court, Gibbs CJ (at 470) disagreed with the analysis of the Court of Appeal on this point.84 The High Court took the view that the failure of the parties to consider and to agree upon the issue of survivorship should not lead to the conclusion that there was no valid contract and no binding trust. A simple contract to convey to A and B, which makes no reference to the form of co-​ownership, will vest equitable title in A and B and

3 8 84

See Note (1987) 61 ALJ 307. Wilson, Brennan, Deane and Dawson JJ agreed with Gibbs CJ on this point. [12.200]  589

PART 4 Divided Ownership of Land

it is then a matter for the law, according to relevant statute and precedent, to determine what type of co-​ownership is to follow. On the facts of the case, Mr Carmody and Miss Delehunt were co-​owners in equity anyway by virtue of a resulting trust (at 470 per Gibbs CJ). The High Court, in taking a similar view to the Court of Appeal, found that Mr Carmody and Miss Delehunt held the property as tenants in common in equity. Gibbs CJ referred to the fact that although equity had demonstrated a dislike for the joint tenancy and had in many instances held joint tenants at law to be tenants in common in equity, equity had “followed” the law and held there to be a joint tenancy in equity where contributions to the purchase price were equal. His Honour commented, however, that since the introduction of s 26, the effect at law of a disposition to A and B is that they will take as tenants in common, unless there is a clear intention to create a joint tenancy. He stated at 473: It would be indeed surprising if the rules of equity required the courts to follow a rule of the common law that no longer existed and in doing so to reach a result which equity generally tried to avoid. However, the doctrines of equity are not so inflexible. If equity follows the law, it will follow the rules of law in their current state. Where, as a result of following the law a beneficial joint tenancy would formerly have been created, now a beneficial tenancy in common will (in NSW) come into existence. In other words, although s 26 of the Conveyancing Act has no direct application to the present case, its indirect effect is to require it to be held that there was a resulting trust for the purchasers in an interest of the same kind as that which would have resulted if the land had been conveyed to them at law, that is, as tenants in common.85

Under the Torrens system [12.205] Under the Torrens system three different approaches have been taken and in many

cases the position has been only further confused. However, in Queensland, the Australian Capital Territory and the Northern Territory ambiguity has been removed. Furthermore, titles office practice has removed most problems. [12.210] The clearest position is that in Queensland, the Australian Capital Territory and

the Northern Territory. In these jurisdictions co-​owners must be registered as joint tenants or tenants in common. In the Australian Capital Territory s 54(1) of the Land Titles Act 1925 (ACT) provides that a transfer to two or more persons cannot be registered unless they are expressed to be joint tenants or tenants in common. In Queensland and the Northern Territory, s 56(1) of the Land Title Act 1994 (Qld) and s 57(1) of the Land Title Act (NT) provide that in registering an interest to co-​owners, the Registrar must register the co-​owners as tenants in common or joint tenants.86 If the instrument does not show the nature of co-​ownership, the Registrar must register the co-​owners as tenants in common.87

85 86

87

Thus the rule that equity follows the law means that “equity follow(s) the statute law for the time being”: see West v Weston (1998) 44 NSWLR 657. See also the similar position in New South Wales: Real Property Regulation 2003 (NSW), reg 6. The VLRC has suggested that specification of the nature of the co-​owned interest be required on registration: VLRC, Disputes Between Co-​owners Report (200), pp 15–​17. The WALRC has suggested a similar provision for Western Australia: WALRC, Report on Joint Tenancy and Tenancy in Common, Project No 78 (1994) at [2.25]–​[2.26]. Land Title Act 1994 (Qld), s 56(2); Land Title Act (NT), s 57(2). Query the situation where it is clear from the underlying disposition that the parties intended to hold as joint tenants. It has been suggested that in these circumstances the equitable interest may be held as joint tenants: see Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), pp 233–​234.

590 [12.205]

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[12.215]  Victoria and Tasmania have substantially retained the common law presumption in

favour of a joint tenancy. In these States s 33(4) of the Transfer of Land Act 1958 (Vic) and s 44 of the Land Titles Act 1980 (Tas) provide for a presumption of joint tenancy in particular circumstances. By s 33(4) of the Victorian Act, where two or more persons are named in an instrument, they shall be entitled jointly unless the contrary intention is expressed. Section 44 of the Land Titles Act 1980 provides that two or more persons who are named as transferees or proprietors of an estate or interest shall, in the absence of words of severance, be entitled as joint tenants. [12.220]  In New South Wales, Victoria, South Australia and Western Australia the position is

complicated by the introduction of the term “joint proprietors”. In these States it is provided that where two or more persons are registered as joint proprietors of an estate or interest in Torrens land, they are deemed to be entitled to the estate or interest as joint tenants.88 It has been argued by Baalman that the drafting of these provisions creates uncertainty for it is unclear whether the words “persons who may be registered” (words used only in the New South Wales and Western Australian provisions) are meant to describe: (a) persons who have become registered and who have been described in the Register as “joint proprietors”; or (b) persons who have the qualifications necessary for a joint tenancy, but no indication as to the form of co-​ownership can be formed by inspecting the dealing whereby they acquired registered status.89

A further explanation of these provisions90 is that the drafters of the Torrens statutes intended to follow the common law position and favour the creation of a joint tenancy with respect to the registered title. On this analysis, the relevant provisions, such as s 100(1) of the Real Property Act 1900 (NSW) contained the medium for applying the common law presumption in favour of the joint tenancy to Torrens land. In Aoun Investments Pty Ltd v Chief Commissioner of State Revenue (2006) 65 ATR 301; [2006] NSWSC 1394 a different approach was taken by Gzell J. He considered that the words “joint proprietor” simply described a relationship of co-​owners without any presumption of a joint tenancy. On the facts he concluded that because of the history of the title involving a strata interest there was neither a joint tenancy or tenancy in common, but a tenancy by severalty, where the co-​owners held rights to separate parts of the land. In Hircock v Windsor Homes (Development No  3) Pty Ltd [1979] 1 NSWLR 501 the Supreme Court of New South Wales in considering s  100(1) of the New South Wales Act took the view that the draftsman of the Torrens statute intended such provisions to have the effect of simply applying the body of common law already in existence in relation to the term “joint tenancy” to the new statutory expression “joint proprietorship”. Hutley JA stated at 506: “The subsection means: ‘If two or more persons are registered as joint proprietors of an estate or interest in land under the provisions for this Act, they shall have the same rights as if they were joint tenants of a similar estate or interest at common law’ ”. Hutley JA referred to the fact that the authors of the Torrens statutes had been reluctant to use the old “terminology in describing the new statutory titles”. Thus, the term “joint

88 89 90

Real Property Act 1900 (NSW), s 100(1); Transfer of Land Act 1958 (Vic), s 30(2); Real Property Act 1886 (SA), s 74; Transfer of Land Act 1893 (WA), s 60; Land Titles Act 1925 (ACT), s 54(2). Baalman, The Torrens System in New South Wales (2nd ed, Law Book Co, Sydney, 1974), p 349. See Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 102. [12.220]  591

PART 4 Divided Ownership of Land

proprietorship” was used instead of the term “joint tenancy”. Nevertheless, it was convenient for the draftsman to adopt the law relating to joint tenancy to the joint proprietorship and thus provisions such as s 100(1) of the Real Property Act 1900 were inserted. However, apart from the use of the new expression, the statutes have “left the incidents of joint tenancy to be determined by the common law and any other relevant statute”.91 In New South Wales, Victoria, South Australia and Western Australia the position appears to be that if co-​owners are designated “joint proprietors” in the registered document, prima facie, they will be viewed as persons having the rights of joint tenants and third parties will be entitled to deal with them as if they were joint tenants. It may be possible, however, to demonstrate from the registered document that the proprietors are not joint tenants because the statutory provisions do not provide that they are joint tenants, but that they “deemed to be entitled as joint tenants”. For instance, if the document provides that A and B are joint proprietors in the shares two-​thirds and one-​third respectively, the presumption in favour of the joint tenancy would be rebutted.92 [12.225]  In New South Wales a further difficulty arises in relation to the interaction of s 26

of the Conveyancing Act 1919 (NSW) with s 100(1) of the Real Property Act 1900 (NSW).93 At first reading, the Torrens provision may appear to be inconsistent with the general property statute provision for the former presumes a joint tenancy whilst the latter presumes a tenancy in common. In Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501, however, the Supreme Court of New South Wales took the view that there was no inconsistency between s 26 and s 100(1). In this case, the defendant agreed to grant the Hircocks a lease of a unit at a fixed rental for a term lasting for the lifetime of the survivor. Subsequently, a lease in registrable form was executed under which the lease was granted to the Hircocks for 10 years with an option to renew for a further 10 years, but subject to the proviso that the lease and any extension would determine upon the death of the survivor of the lessees. The lease was registered. Mrs Hircock died during the 10-​year term and at the expiration of the term Mr Hircock sought to exercise the option. A question arose as to whether he was entitled to do so as the surviving joint lessee or whether the personal representative of Mrs Hircock’s estate had to join with him in exercising the option. Mr Hircock argued that, upon registration of the lease, he and his wife held the lease as joint tenants pursuant to s 100(1) of the Real Property Act 1900. He argued that s 26(1) of the Conveyancing Act 1919, deeming them to be tenants in common, was inapplicable to documents registered under the Torrens statute as it was inconsistent with s 100(1). As s 26(1) was not expressly stated to apply to Torrens land, it would not do so pursuant to s 6 of the Conveyancing Act 1919 if it were inconsistent with a Torrens statute provision. In the Supreme Court of New South Wales Hutley  JA was of the opinion that no inconsistency existed between these provisions. Section 100(1) simply applied the incidents of the joint tenancy to the term “joint proprietorship”: it did not deem all co-​owners to be joint tenants. Therefore, s 26 could operate and under s 26(1) the parties were presumed to hold the beneficial estate as tenants in common. On the facts of the case, however, the presumption was rebutted, and the lease fell within s 26(2) and the parties held as joint tenants. In determining

91 92 93

Wright v Gibbons (1949) 78 CLR 313 at 324 per Latham CJ. Note that it is most unlikely that a document in such a form would be registered. The same problem exists in the Australian Capital Territory: see [12.120].

592 [12.225]

Co-ownership  Chapter  12

that the lease fell within s 26(2), the court took into account the context of the lease and all the surrounding circumstances. As Hutley JA stated (at 506): “[In order for s 26(2) to operate] it is not necessary that it should be expressly stated that the intention was to create a joint tenancy”. It should be noted that the court took the view that even had the Hircocks been regarded as tenants in common, the option could still have been exercised by Mr  Hircock alone.94 [12.230] In practice the problems may not be as great as they appear even in the joint

proprietor jurisdictions. In order to avoid the inherent difficulties created by the wording of the provisions, Registrars have generally required that instruments presented for registration, under which two or more persons are to take concurrent interests, must state whether the co-​ owners are to take as joint tenants or tenants in common. That is, the Registrars have avoided registering documents in which the term “joint proprietors” is used unless the parties are clearly intended to take as joint tenants.

RIGHTS OF ENJOYMENT BETWEEN CO-​OWNERS General [12.235] There are a number of areas where problems may arise between co-​owners as to

the use of the land and financial adjustments. On the one hand, disputes may relate to the occupation of property, one co-​owner may exploit the land to a greater extent than other co-​ owners or take the rents and profits flowing to the property. On the other hand, a co-​owner may seek contributions from other co-​owners for the discharge of obligations or towards improvements made to the land. [12.240] Claims against a co-​ owner with respect to that co-​owner’s use of the land are

complicated by the existence of three different processes by which a claim may be made. Often the principles governing liability are intertwined with the processes, but the text below will attempt to explain the processes and then examine the bases of liability. The three processes in the different jurisdictions reflect different adoptions of English statutes.

Processes [12.245]  The starting point is that of the general law prior to statutory reform. It seems to be

widely accepted that equity has always95 permitted accounting between co-​owners where one co-​owner has received more than his or her share. In fact, it has been stated that the suit in equity was preferred because of the complex and expensive nature of the proceedings for account under later statutes. The position may have been that in the absence of an agreement between the parties, the bill for an account in equity was only available when sought as part of a bill for partition or possibly when all the criteria for a legal action for account have been satisfied.96 94 95 96

Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 at 507 per Hutley JA and at 508 per Samuels JA. See, however, Churcher v Danis Hotels Pty Ltd (1980) 8 BPR 15,863. See Langdell, “A Brief Survey of Equity Jurisdiction” (1889) II Harv LR 241 at 263. See Hill v Hickin [1897] 2 Ch 579; Lorimer v Lorimer (1820) 5 Madd 363; 56 ER 934; Hill v Fulbrook (1822) Jac 574; 37 ER 967. Denys v Shuckburgh (1840) 4 Y & C Ex 43; 160 ER 912 at 52 (Y & C Ex). Re Tolman’s Estate (1928) 23 Tas LR 29 does not support the general availability of the action in equity. It was held that equity could order an accounting where the parties did not know the state of the accounts. [12.245]  593

PART 4 Divided Ownership of Land

[12.250]  An authority favouring the general and independent availability of the suit in equity

for accounting between co-​owners is the old case of Strelly v Winson (1685) Vern 297; 23 ER 480, which concerned co-​ownership of a ship. In obiter dicta it was held that there was a liability to account between the co-​owners when the ship profits. It can be argued, however, that the Strelly case was an example of a bailiff relationship existing between the co-​owners. That is, it was a case where one tenant in common managed by the mutual agreement of all for their mutual benefit.97 In at least two subsequent decisions the view has been taken that the Strelly case was not authority for the proposition that a suit in equity for account between co-​owners lies whenever one co-​owner receives more than his or her share or proportion.98 In Ryan v Dries (2002) 10 BPR 19,497, however, the New South Wales Court of Appeal upheld the authority of Strelly v Winson. The position remains unresolved but the better view seems to be that an independent action in equity is available.99 [12.255] This common law position was changed by a 1705 Statute of Queen Anne, the

Administration of Justice Act 1705 4 & 5 Anne c 3. This statute provided that an action for account could be brought and maintained by one co-​owner against another for receiving more than “his just share or proportion”. In South Australia, Tasmania and Western Australia the imperial legislation continues to apply. In New South Wales and the Australian Capital Territory the Administration of Justice Act 1705 4 & 5 Anne c 3 (Eng) has been repealed, but it has not been replaced with a substitute provision. Consequently the conclusion as to the independent availability of a suit in equity remains important. Ryan v Dries (2002) 10 BPR 19,497 not only is authority for the historic position, but supports the continued availability of an action in New South Wales and the Australian Capital Territory. [12.260]  In Victoria, Queensland and the Northern Territory different procedures apply. In

these three jurisdictions specific statutory provision has been made for accounting between co-​owners in a similar manner to the 1705 Statute of Anne.100 In Victoria, under ss 234, 234A and 234B of the Property Law Act 1958 (Vic), these actions can now be heard at VCAT.101 97

In Henderson v Eason (1851) 17 QB 701; 117 ER 1451 Parkes B referred to Anon in Chancery and stated that the court was referring to a case where there was an agreement between the parties concerning management. His Honour stated: “for [the court] gives it as an illustration of the rights of a part owner of a ship to an account when the voyage is undertaken by his consent, express or implied”. Further, in Horn v Gilpin (1755) Amb 255; 27 ER 170 the court stated that Vernon’s report of Strelly’s case was misstated. See Charles Lord Tenterden, Abbott on Shipping (10th ed, 1856) where co-​ownership in shipping is discussed. In the shipping cases agreement between co-​owners as to management for the mutual benefit of all was very readily inferred in order to ensure as great a productivity as possible. 98 Henderson v Eason (1851) 17 QB 701; 117 ER 1451; Horn v Gilpin (1755) Amb 255; 27 ER 170. 99 See, for example, Meagher, Heydon and Leeming, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (4th ed, LexisNexis, Sydney, 2002), p 880. 100 This was not done in Victoria until 1998. See Property Law Act 1958 (Vic), s 28A inserted by Property Law Amendment Act 1998 (Vic); Property Law Act 1974 (Qld), s 43; Law of Property Act (NT), s 45. Unlike the NSWLRC, the QLRC took the view that the old Imperial statute of 1705 should not be repealed without a substituting provision. The view was expressed that such a provision was necessary as a means of providing a privity relationship between the co-​tenants; without such a provision a co-​tenant could not point to a bailiff relationship on which to base an action in law or a suit in equity: see QLRC, Report No 16 (1973), pp  29–​30. 01 Section 28A of the Property Law Act 1958 (Vic) applies to accounting in respect of all property, not simply 1 land and goods. VCAT only has jurisdiction in relation to land and goods. Any action under s 28A concerning accounting in relation to other forms of property (eg, intellectual property) will have to be heard in a court. 594 [12.250]

Co-ownership  Chapter  12

A  co-​owner may seek an accounting independently of any action for sale or division. The wording of the statutory provisions suggests the intention is for the law to be as it was under the Statute of Anne as interpreted in Henderson v Eason (1851) 17 QB 701; 117 ER 1451: see [12.260].

Common law principles [12.265]  Once the processes by which an action may be maintained are settled, the governing

principles must be established. Recent cases seem to be turning those principles on their head. The traditional starting point is that all co-​owners are regarded by the common law as entitled to use each and every part of the land co-​owned, so long as they do not exclude other co-​ owners from the land.102 The right of user extends to the exploitation of the land and, while cases have involved the growing of crops,103 the carrying on of a business would seem to be equally justified. The co-​owner who exploits the land is entitled to keep personally the profits of this exploitation unless the exploitation has involved an arrangement which properly accrues for the benefit of all co-​owners, such as a lease of the land.104 No obvious mechanism exists for the resolution of differences as to how the land should be exploited and the absence of any mechanism places pressure on the co-​owners to reach agreement. While this principle means that a co-​owner may exploit the land and keep the rewards, income that relates to the land itself should be shared between the co-​owners. In the case of Henderson v Eason (1851) 17 QB 701; 117 ER 1451 it was held that where one co-​ owner receives money paid by a third party in respect of the land (eg, rent), the co-​owner must account for the rent. This decision is more concerned with the impact of legislative provisions on accounting for enjoyment, but recently in Callow v Rupchev [2009] NSWCA 148, where there was no relevant legislative provision, accounting for rent was required. In circumstances where an account can be taken, a co-​owner is only liable for the rents he or she has received and not for rents and profits that could have been accumulated if the property had, for example, been better managed.105 [12.270] The 1705 Statute of Queen Anne, the Administration of Justice Act 1705 4  & 5

Anne c 3, provided that an action for account could be brought and maintained by one co-​ owner against another for receiving more than “his just share or proportion”. In the case of Henderson v Eason (1851) 17 QB 701; 117 ER 1451 it was held that this statutory provision covers only the case where one co-​owner receives money paid by a third party in respect of the land and does not extend to the case where one co-​owner receives more than another as a result of his or her own exertions. Thus, under this provision, a co-​owner must account to the other co-​owners for benefits received from a third party, but not for benefits taken from the soil as a result of his or her own exertions. 102 103 104

105

Luke v Luke (1936) 36 SR (NSW) 310; McCormick v McCormick [1921] NZLR 384; Dennis v McDonald [1982] 2 WLR 275. Rees v Rees [1931] SASR 78. Henderson v Eason (1851) 17 QB 701. This case gave such a narrow interpretation to the statute 4 Anne c 3, s 27 (1705), that the repeal of that statute in New South Wales would appear to have little effect, although Meagher JA in Forgeard v Shanahan (1994) 35 NSWLR 206 asserted critically that the repeal put litigants in New South Wales back in the position they would have been in before 1705 in England: see [12.250]. Boulter v Boulter (1898) 19 LR (NSW) Eq 135 at 138–​139; Thrift v Thrift (1975) 10 ALR 372. This result ensues because co-​owners are not fiduciaries for one another and their relationship is not one of partnership or agency: see Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p—​ 929. [12.270]  595

PART 4 Divided Ownership of Land

[12.275] Thus, even after the Statute of Anne, the general rule is that a co-​owner in sole

occupation is under no obligation at law or in equity to pay occupation rent to the non-​ occupying co-​owners.106 This rule has been criticised. For example, Kirby  P in Forgeard v Shanahan (1994) 35 NSWLR 206 at 212took the view that the prima facie position should be that an occupation rent becomes payable where one co-​owner has exclusive use of the land. Others have argued that a change to a position where occupation rent is generally payable by an occupying co-​owner, would undermine one of the main principles of co-​ownership and would not automatically produce a more equitable result.107 There are, however, three situations in which a co-​owner in sole occupation may be obliged to pay occupation rent108 to the other co-​owners. First, when the co-​ownership comes to an end109 and a co-​owner who has been in sole occupation claims from the other co-​owners an allowance for improvements he or she has made to the property, the occupying co-​owner will only get that allowance if he or she submits to being charged with an occupation rent.110 The second circumstance in which an occupation fee is payable is where there is an agreement between the co-​owners that occupation rent is to be paid by the occupying co-​owner to the co-​ owner or co-​owners not in occupation.111 Thirdly, if the occupying co-​owner has wrongfully excluded the other co-​owner or co-​owners from possession, occupation rent is payable.112 [12.280] The third exception that if the occupying co-​owner has wrongfully excluded the

other co-​owner or co-​owners from possession, occupation rent is payable has been so expanded that it may be regarded as overturning the traditional starting point.113 The expansion results from the adoption of a concept of constructive ouster.

106 107

108

109

110

11 1 112

113

Luke v Luke (1936) 36 SR (NSW) 310; Scapinello v Scapinello [1968] SASR 316; Marriott v Franklin (1993) 60 SASR 457; Forgeard v Shanahan (1994) 35 NSWLR 206. See Brereton, “The Rights Between Co-​owners of Land” (1995) 69 ALJ 316 at 318; Conway, “Partition Actions and Accounting Adjustments Between Co-​owners” (1999) 7 APLJ 207. For instance, if one co-​owner leaves the land and forces the other to accept sole responsibility, it seems inequitable to require the latter to pay occupation rent (see Conway, “Partition Actions”, p 217). Cases where disagreement has occurred between the co-​owners and one co-​owner feels unable to occupy the land, could be overcome by having a broader, more liberal definition of ouster (see Brereton, p 318). Any money payable is not strictly “rent”: any liability is more properly attributable to mesne profits (profits lost to the owner of land as a result of wrongful dispossession). The measure of damages is usually the value of market rent which the trespasser should have paid. It does not depend on whether the owner would have been able to let the premises: see Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432. See also Re Thurgood (1987) Q ConvR 54-​239 –​suggestion that occupation rent calculated to reflect market rental and proportionate interest of which occupation has been enjoyed. This may occur on an application for partition or sale or in other circumstances such as a mortgagee’s sale or proceedings relating to claims of co-​owners under resulting or constructive trusts: see Ryan v Dries (2002) 10 BPR 19,497. See generally Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 255. Pascoe v Swan (1859) 27 Beav 508; 54 ER 201 at 509 (Beav), 202 (ER); Brickwood v Young (1905) 2 CLR 387; Luke v Luke (1936) 36 SR (NSW) 310; Marriott v Franklin (1993) 60 SASR 457; Cardinaels-​Hooper v Tierney (1995) 7 BPR 14435; Forgeard v Shanahan (1994) 35 NSWLR 206. See, for example, Leigh v Dickeson (1884) 15 QBD 60. This can be maintained as an independent action for ejectment or trespass and mesne profits or as part of a partition action: see, for example, Ferguson v Miller [1978] 1 NZLR 819. See also Catanzariti v Whitehouse (1981) 55 FLR 426. This can be maintained as an independent action for ejectment or trespass and mesne profits or as part of a partition action: see, for example, Ferguson v Miller [1978] 1 NZLR 819. See also Catanzariti v Whitehouse (1981) 55 FLR 426.

596 [12.275]

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Many cases concerning ouster arise in the context of disputes between co-​owners who are domestic partners. Whilst Australian courts have accepted the principle of “constructive ouster” some act of exclusion is necessary. The criterion of “wrongfully excluded” is not satisfied because one co-​owner exercised his or her rights as a co-​owner and the exercise of those rights made the occupation of the other co-​owner or co-​owners less pleasant.114 Similarly in Segal v Barel [2013] NSWCA 92 mere enjoyment of exclusive possession was held not to lead to any inference of exclusion. On the other hand in Callow v Rupchev [2009] NSWCA 148 the parties were in a de facto relationship which broke down without fault on either side. A contribution was required from the party who retained possession because it would be unfair to require them to live together. Ouster by violence was not necessary. The court recognised that potential liability where property was vacant but one party had control and the quantum of liability were further issues it would not resolve. In Paroz v Paroz [2010] QSC 203 the court stated that ouster could be constructive liability to pay an occupation fee existed where it became no longer reasonable or practically sensible to expect the partners to co-​occupy the one property. [12.285] In some cases concerning property disputes between co-​ owners the question of

ouster or wrongful exclusion may not be determinative in resolving an issue as to whether allowance should be made for the fact that one co-​owner has enjoyed sole occupation for a time.115 Ordinary property principles applicable between co-​owners “may sometimes be distinguished when the court is required to determine the nature and extent of a trust binding parties in relation to a property when one of the parties has obtained greater benefits than the other from it”.116 As occurred in Baumgartner v Baumgartner (1987) 164 CLR 137, the court may take a much broader view and make such adjustments in relation to contributions made before and after the parties were living together as are necessary to provide appropriate relief based on the degrees of unconscionability.117

Calculation of the occupation rent [12.290] When occupation rent is payable, calculation of the amount is not necessarily a

straightforward matter.118 The co-​ownership relationship is not transformed into a landlord-​ tenant relationship and any moneys required to be paid are not rent, but in the nature of mesne profits.119 Although mesne profits are generally based on the open market rental of the property, the position seems to be different in the case of occupation rent payable in the co-​ownership situation. It has been suggested that calculation by reference to open market rental may be inappropriate in this situation as “an actual letting of the property where there is already a

114

See, for example, Ferguson v Miller [1978] 1 NZLR 819. See also Catanzariti v Whitehouse (1981) 55 FLR 426; Chieco v Evans (1990) 5 BPR 11,297. 115 See Stone v Owen [2001] 1 Qd R 419; Baumgartner v Baumgartner (1987) 164 CLR 137. 116 Stone v Owen [2001] 1 Qd R 419 at 423. See also Ryan v Dries (2002) 10 BPR 19,497. 117 See also, for example, Anson v Anson (2004) 12 BPR 22,303; Penzikis v Brown [2005] NSWSC 215. 18 See, for example, Ryan v Dries (2002) 10 BPR 19,497. See Skapinker, “Careful Calculations: Deciding the 1 Rights and Obligations of Co-​owners” (2002) Law Soc J (NSW) 56; Conway, “Co-​owners and Equitable Accounting: A Comparative Commonwealth Analysis” in Cooke (ed), Modern Studies in Property Law, Vol 3 (2005), Ch 6, pp 111–​130; Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 932. 119 Dennis v McDonald [1982] Fam 63 at 81; Biviano v Natoli (1998) 43 NSWLR 695 at 704. Mesne profits are not rent: Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 39. [12.290]  597

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co-​owner in occupation would not attract a market rental based on full occupation”.120 Thus, half of the open market rental in the case of a co-​ownership of two persons may not be a realistic or achievable rent, as any tenant would be sharing with the co-​owner in occupation.121 These reservations were further reinforced In Callow v Rupchev [2009] NSWCA 148. On the other hand, adjustments may be made in favour of the sole occupier who has paid capital expenses such as local council rates and taxes.122 The calculation “combines an element of compensation for lost enjoyment of the land with a component of restitution for contributions made by the sole occupier which have preserved or enhanced the value of the co-​owned estate”.123 Where there is a mortgage over the property and the occupying owner has made the payments, a practice or “rule of convenience” has been applied by some courts that the occupation rent is to be calculated as being equivalent to the mortgage interest payments and offset against them.124 The inherent difficulties involved in these sorts of calculations and the possible disadvantage to the non-​occupying co-​owner have led two commentators to suggest that the quantification should be based on the relevant proportionate open market rental and there are cases which support this view.125 [12.295]  It has been argued126 that the exceptions to the general rule that occupation rent

is not payable (particularly in the area of ouster) have been extended to such a degree that the courts now simply have regard to what is “necessary in order to do equity between the parties”.127 Gray and Gray suggest that in England the prima facie position now is that occupation rent is payable by a co-​owner in sole occupancy except where the non-​occupying co-​owner chose not to occupy the premises and was not excluded by any relevant factor.128 Recent Australian developments point in the same direction.

Victorian provisions [12.300] In Victoria the principles relating to the payment of occupation rent have been

set out in legislation and provide a broader base for the payment of such rent. The Property (Co-​ownership) Act 2005 (Vic) replaced Pt  IV in the Property Law Act 1958 (Vic) with a

120 121 122

23 1 124 125

26 1 127 128

Biviano v Natoli (1998) 43 NSWLR 695 at 704. Biviano v Natoli (1998) 43 NSWLR 695 at 704. Biviano v Natoli (1998) 43 NSWLR 695 at 704 (on facts in Biviano, this adjustment not made). Query reduction of occupation rent for payment of maintenance sums by sole occupier; although not usually claimable by sole occupier, may be part of overall adjustment of occupation rent: Kangas v Tsangaras (1990) 5 BPR 11,254 at 11,256. Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 932. See Leake v Bruzzi [1974] 1 WLR 1528; Re Pavlou (A Bankrupt) [1993] 1 WLR 1046; Re Gorman (A Bankrupt) [1990] 1 All ER 717. Conway, “Co-​owners and Equitable Accounting: A Comparative Commonwealth Analysis” in Cooke (ed), Modern Studies in Property Law, Vol 3 (2005), Ch 6, pp 111–​130; Cooke, “Equitable Accounting” [1995] Conv 391. See Swordheath Properties v Tabbet [1979] 1 WLR 285; Beresford v Booth (1999) 202 LSJS 160; [1999] SASC 166. Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 931. Re Pavlou (A Bankrupt) [1993] 1 WLR 1046 at 1050 per Millett J. See also Chhokar v Chhokar [1984] FLR 313; Mayo v Mayo [1966] NZLR 849. Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 931. See Dennis v McDonald [1982] Fam 63 at 71 per Purchas J.

598 [12.295]

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new Pt IV.129 The new Pt IV gives the Victorian Civil and Administrative Tribunal (VCAT) broad powers in relation to co-​ownership disputes130 and sets out the principles governing the circumstances and manner in which remedies can be sought. Under s 233(1)(a), in a proceeding for sale or division VCAT may order that compensation or reimbursement be paid by one co-​ owner to another. Section 233(1)(c) provides that VCAT may make an adjustment to one co-​ owner’s interest to take account of amounts payable. Generally it seems clear that a co-​owner who has expended funds on the property will be entitled to an order for compensation from the other co-​owner or co-​owners “to a greater extent” than was previously the case.131 In relation to occupation rent, s 233(3) provides that in any proceedings for the sale or division of land VCAT cannot make an order requiring the co-​owner who has occupied the land to pay rent to the non-​occupying co-​owner except in three situations. Thus the basic common law and equitable position of occupation rent not being payable to a non-​occupying co-​owner, except in certain circumstances, is maintained. The circumstances in which occupation rent may be payable under s 233(3) are similar to, but generally broader than, the common law and equitable exceptions. First, a co-​owner who has occupied the land and who is seeking compensation, reimbursement or accounting for money expended by him or her in improvements, maintenance, insurance and other outgoings may be ordered to pay occupation rent.132 The position prior to the statutory amendment (and which continues in the other jurisdictions) is that an occupation rent is claimable where the occupying co-​owner makes a claim for improvements. Claims for contributions to joint debts paid by one co-​owner, while legitimate claims, do not give rise to an offsetting claim for occupation rent, and payments made by one co-​owner for general maintenance, which do not amount to joint debts, may not be claimable against the other co-​owner at all.133 By s 233(1) and (2) of the Property Law Act 1958 (Vic), in proceedings for sale or division VCAT can make an order for compensation or reimbursement to be paid from one co-​owner to another and for an adjustment of property interests between co-​owners, taking into account a variety of matters including amounts reasonably spent by a co-​owner in improving the land, costs reasonably incurred by a co-​owner in maintenance or insurance, payment by a co-​owner of more than the co-​owner’s proportionate share of other outgoings such as rates and mortgage repayments and damage caused by a co-​owner’s unreasonable use of the land. The clear change from the common law position is that all maintenance costs reasonably incurred by a co-​owner can be claimed. Thus costs incurred by an occupying co-​owner to ensure that the property does not depreciate in value, for example, can be properly taken into account under the provision. When an occupying co-​owner makes such a claim, the corollary is that he or she should be subject to an occupation rent. The provision permitting damage caused by a co-​owner to be taken into account arguably also broadens the previous position. By providing that all expenditure and costs can be taken into account when the property is sold or divided, the Victorian provision allows for a fair outcome between

129

See Victorian Law Reform Commission, Disputes between Co-​owners Report (2002). The new Pt IV was based on recommendations made in this report: see Recommendations 31–​59. 130 VCAT was seen as an accessible, affordable forum for the settlement of co-​ownership disputes: Victorian Law Reform Commission, Disputes between Co-​owners Report (2002), Recommendation 31. 131 Mulvany, “The Road to VCAT –​Recent Changes to Co-​ownership Law” (2006) 80 LIJ 37 at 38. 32 Property Law Act 1958 (Vic), s 233(3)(a). 1 33 See Forgeard v Shanahan (1994) 35 NSWLR 206. 1 [12.300]  599

PART 4 Divided Ownership of Land

co-​owners and ensures that all relevant matters can be considered and taken into account at the time the co-​ownership is brought to an end. The corollary is that co-​owners will need to keep detailed records of all expenditures in order to substantiate claims when the co-​ ownership comes to an end.134 By s 228(1), VCAT is given broad powers to make any order it thinks fit to ensure that a just and fair sale or division occurs.135 Secondly, an occupying co-​owner may be liable to an amount equivalent to rent (occupation rent) to the other co-​owner if he or she has excluded the other co-​owner from the property. As set out previously, an exclusion requires such a denial of title and right to possession of the other co-​owner as to effectively be an ouster.136 The third circumstance in which occupation rent is payable demonstrates an attempt by the legislature to provide compensation for a co-​owner who leaves the property as a result of a relationship breakdown. By s  233(3)(c), VCAT may order occupation rent to be paid by the occupying co-​owner where the co-​owner claiming the rent has suffered a detriment because it was not practicable for that co-​owner to occupy the land with the other co-​owner. The Victorian provision has not, therefore, extended the payment of occupation rent to cover all situations where one co-​owner remains in occupation at the end of a relationship. If the departing co-​owner has suffered detriment (eg, by having to take and pay for alternative accommodation), this should be able to be taken into account by requiring the occupying co-​ owner to pay occupation rent. [12.305]  The Victorian legislation excepts disputes concerning married persons and domestic

partners now all under the Family Law Act 1975 (Cth) (see [8.340]ff), partnerships covered by the Partnership Act 1958 (Vic) and testator’s family maintenance claims under Pt  IV of the Administration and Probate Act 1958 (Vic). Apart from those exceptions, the rules set out in Pt IV cover all land and goods that are held in co-​ownership, and are intended as a substitute for all existing principles and cases. Disputes are to be heard by VCAT.137 Although there are a number of specific provisions on jurisdictional issues, there remain some areas of uncertainty.138 By s 222, “co-​owner” is defined as “a person who has an interest in land or goods with one or more persons” as either a joint tenant or tenant in common. Thus, it is possible that joint-​venture disputes with respect to co-​owned land or goods and claims based on resulting and constructive trusts (where specific legislation is not being relied on) may be heard at VCAT.139 Although the new Pt IV sets out a detailed set of rules, a question arises as to whether VCAT, in interpreting the new provisions, will take into account the old common law and equitable principles where appropriate. For example, an issue arises as to the method for calculation of

134 35 1 136 137

Mulvany, “The Road to VCAT –​Recent Changes to Co-​ownership Law” (2006) 80 LIJ 37 at 38. Victorian Law Reform Commission, Disputes between Co-​owners Report (2002) at [4.70], p 86. See [12.275]. Section 234C(1) of the Property Law Act 1958 (Vic) provides that the Supreme and County Courts do not have jurisdiction to hear applications under Pt IV. With respect to matters arising under the State provisions set out in s 234C(2), the Supreme and County Courts have jurisdiction and, of course with respect to disputes arising under the Family Law Act 1975 (Cth), the Family Court has jurisdiction. See also ss 234C(4), (5) and 234D for limited exceptions where a court can hear a claim under Pt IV. 138 The difficulties were referred to by Tooher in a lecture to a Property Law Conference (Melbourne, September 2006). 39 Mulvany, “The Road to VCAT –​Recent Changes to Co-​ownership Law” (2006) 80 LIJ 37 at 38. 1 600 [12.305]

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the occupation rent. Section 233(2)(e) and (3) refers to the payment of “an amount equivalent to rent to a co-​owner who did not occupy the land” –​is the amount equivalent to rent to be based simply on an open market rental or are the concerns raised by the New South Wales Court of Appeal in Biviano v Natoli (1998) 43 NSWLR 695 applicable to the Victorian legislation? In view of VCAT’s power to take into account all the payments set out in s 233(2), it is suggested that the former is more likely. In relation to compensation for improvements by an occupying co-​owner, the common law and equitable principles limit the compensation to the cost of the improvements or the increase in the value of the land, whichever is the lesser; an occupying co-​owner is prevented from gaining compensation for expenditure which has not benefited the other co-​owners. Under the Victorian statutory regime, by s 233(2)(a), VCAT must take into account “an amount a co-​owner has reasonably spent in improving the land”. In this case, VCAT may choose to be guided by the pre-​statutory regime in determining what is “reasonable”.140 Part IV makes no provision for the situation where the co-​owners have made an agreement as contributions, payments and adjustments. It seems likely, however, that VCAT, with its broad powers to reach a just and fair solution, would follow the common law and equitable position and give force to any such agreement.

Issues other than occupation rent [12.310]  Beyond financial claims for occupation, the parties may disagree as to the appropriate

use of the land. The absence of any mechanism to resolve differences as to the exploitation of the land means that a co-​owner who wishes to leave land undeveloped cannot prevent another from developing it so long as the other is prepared to rely upon that other’s own money. However, a co-​owner cannot destroy or substantially injure the property.141 This obligation has been expressed in terms of rules of good husbandry and to forbid the cutting down of ornamental trees or the removal of valuable turf and peat.142 More recently the restraints of the law of waste have been applied by a New Zealand court between co-​owners. These restraints have traditionally applied between life tenants and remaindermen: see [13.45]ff. In Ferguson v Miller [1978] 1 NZLR 819 the owners of three adjoining parcels of land were in turn co-​owners of a strip of land providing access to the land. One of the co-​owners sought to restrain a scheme whereby a 15-​foot-​wide concrete or asphalt carriageway was to be laid on this strip. This carriageway would replace an existing surface but would be 50% wider and slightly longer than that surface. The objector considered that the improvement would detract from the existing amenity by destroying the country-​lane appearance and atmosphere. The claim to restrain the work on the basis of the doctrine of waste was rejected. McMullin J considered that the resealing of the existing surface would be merely an act of repair and its extension would be an act of betterment. On the other hand, an alternative proposal which would have involved the removal of some trees was considered to be likely to amount to waste. The application of the doctrine of waste as between co-​owners was argued to flow from the Statute of Westminister II (1285). 140 Query also whether VCAT can take into account amounts expended by predecessors in title to the co-​ owner: see Brickwood v Young (1905) 2 CLR 387, discussed at [13.70]. 141 Durham and Sunderland Ry Co v Wawn (1840) 3 Beav 119; 49 ER 47 at 123 (Beav), 48 (ER). In Marriott v Franklin (1993) 60 SASR 457 the occupying co-​owners had altered a house so as to diminish the value of the property. In the distribution upon sale that co-​owner’s share was reduced by the extent of diminution of value of the property. 142 Wilkinson v Haygarth (1847) 12 QB 837; 116 ER 1085 at 845 (QB), 1088 (ER). [12.310]  601

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An alternative basis of liability has been expressed that if the actions of a co-​owner amount to a destruction of the whole or part of the commonly held property, the other co-​owners can maintain an action in trespass.143 A similar imposition of liability with little explanation of the underlying principle occurred in Paroz v Paroz [2010] QSC 203. In that case the co-​ owned property was grazing land and the complaint against the plaintiff was that he exceeded the grazing capacity of the land. The court stated that “a co-​owner who does an act which changes the character of the land, such as the planting of a grove, without the consent of the other co-​owners, acts in breach of the rights of the other co-​owners” (at [32]). The court went on to hold that the excessive grazing amounted to a constructive ouster. [12.315]  Co-​owners may hold a leasehold interest. All co-​holders are jointly and severally

liable for performance of the obligations under the lease. Where one tenant causes damage to the property, liability for compensation may fall on the other co-​holder, particularly if the party causing the damage is the irresponsible one. In such cases the innocent co-​holder may wish to bring the tenancy to an end. It is clear that a fixed-​term tenancy terminates on the expiration of the term and cannot be extended without the agreement of all co-​holders. But, particularly under residential tenancy legislation, a periodic tenancy continues until notice to terminate is given. In Hammersmith and Fulham London Borough Council v Monk [1992] 1 AC 478 the House of Lords held that one joint tenant could give such notice.

REIMBURSEMENT OF EXPENDITURE [12.320]  A co-​owner may expend money on the land. That expenditure may not be voluntary

because it relates to a debt charged against the land. The accepted principle seems to be that a co-​owner who pays rates or taxes or a mortgage over the land may recover contributions towards that payment. Although mortgage repayments, of the capital component of a mortgage debt at least, have been treated as “improvements” for this purpose in several cases,144 the better view is such payments should not be so classified.145 Mortgage payments represent “necessary expenditure”; all co-​owners are liable for a joint debt and if one makes all the payments, he or she can automatically seek equitable contribution from the others without being subject to the payment of occupation rent.146 In Callow v Rupchev [2009] NSWCA 148 it was not questioned that a contribution should be made towards mortgage payments. A broader principle of recovery was adopted in Official Receiver in Bankruptcy v Cameron [2008] QSC 89. In that case a husband and wife were co-​owners. The husband was declared to be bankrupt and his interest passed to the Official Receiver. A mortgage over the land had

143

See Mulvany, “The Road to VCAT –​Recent Changes to Co-​ownership Law” (2006) 80 LIJ 37 at 39. Mulvany refers to a decision under the new provisions (O’Byrne v Gillett (Real Property) [2006] VCAT 1053), where VCAT heard and determined a dispute in the context of a former relationship, where there were no current or contemplated proceedings under Pt IX of the Property Law Act 1958 (Vic). 144 Re Pavlou [1993] 3 All ER 955; Re Gorman [1990] 1 All ER 717 at 725; Ryan v Dries (2002) 10 BPR 19,497 (all payments into account); Brennan v Duncan (No 2) [2006] NSWSC 851. 145 Scapinello v Scapinello [1968] SASR 316; Carkeek v Tate-​Jones [1971] VR 691; Tracy v Bifield (1998) 23 Fam LR 260; Forgeard v Shanahan (1994) 35 NSWLR 206. See Cooke, “Equitable Accounting” [1995] Conv 391 at 396; Conway, “Co-​owners and Equitable Accounting: A Comparative Commonwealth Analysis” in Cooke (ed), Modern Studies in Property Law, Vol 3 (2005), Ch 6, pp 111–​130 at 123–​124. 146 Conway, “Co-​owners and Equitable Accounting: A Comparative Commonwealth Analysis” in Cooke (ed), Modern Studies in Property Law (Vol 3, 2005), Ch 6, pp 111–​130 at 124. 602 [12.315]

Co-ownership  Chapter  12

been made for the benefit of the husband and it was repaid by the wife. She was held to be entitled to be reimbursed by the Official Receiver on the basis of the equity of exoneration. [12.325]  Exploitation of the land may involve the expenditure of money on improvements

to the land. In this regard “improvements” include only improvements and repairs of a lasting character, rather than running costs and simple maintenance, such as repainting.147 A spending co-​owner cannot claim contributions for improvements until the co-​ownership is brought to an end. Normally this termination has occurred through the disposition of the land by all co-​ owners to a third party. It is unclear whether the estate of the spending joint tenant co-​owner has a claim against a surviving co-​owner when the death of the spender terminates the co-​ ownership through survivorship. The claim has been allowed in actions involving the general adjustment of rights in the property, such as distributions of the proceeds after compulsory acquisition148 or after a judicial sale.149 Expenditure of money on the land creates an equitable lien in favour of the spending co-​owner over the interests of the other co-​owners.150 The lien exists for the amount of the outlay to the extent that the value of the shares of the owners has been improved.151 No allowance seems to be made for inflation so that the effluxion of time will substantially detract from the worth of the lien. Furthermore, because the expenditure has to be reflected in an increase in value of the property, improvements which add to the property rather than maintenance works are likely to the expenditures whereby the lien has significant value. The ability to claim at all for mere repairs and maintenance rather than improvements has been denied.152 In Squire v Rogers (1979) 39 FLR 106; 27 ALR 330 the plaintiff and defendant were joint holders of a perpetual lease of a Darwin caravan park. The plaintiff had not occupied the land for 16 years. During this time the defendant made substantial improvements to the land. However, Cyclone Tracey to a significant extent destroyed these improvements. Consequently, an expenditure of $100,000 resulted in an increase in value of only $15,000. The claim for compensation was limited to this amount. The court was clear that if the figures were reversed so that $15,000 expenditure produced an increased value of $100,000, the claim is again limited to the $15,000. The claim for compensation is an equitable right in favour of the spending co-​owner against the other co-​owners. It is an equitable lien on the interests of the other owners in favour of the spending owner.153 The interest passes to successor in title of the spending co-​owner and is enforceable against successors in title of the other owners. This consequence is subject to the fact that as it is an equitable charge, a successor in title may not be subject to the equitable interest because of the bona fide purchaser rule or the indefeasibility principle of the Torrens system.

147 148 149 150 151 152 153

McMahon v Public Curator [1952] St R Qd 197 at 204; Forgeard v Shanahan (1994) 35 NSWLR 206 at 225. Brickwood v Young (1905) 2 CLR 387. Boulter v Boulter (1898) 19 LR (NSW) Eq 135; Squire v Rogers (1979) 39 FLR 106; 27 ALR 330. Brickwood v Young (1905) 2 CLR 387. Squire v Rogers (1979) 39 FLR 106; 27 ALR 330. Forgeard v Shanahan (1994) 35 NSWLR 206 following McMahon v Public Curator [1952] St R Qd 197; a claim for repairs had been allowed in Noack v Noack [1959] VR 137. Brickwood v Young (1905) 2 CLR 387 at 396. [12.325]  603

PART 4 Divided Ownership of Land

Moreover, the situation where a claim for compensation for improvements is made is one of the exceptions to the rule that a co-​owner, who enjoys sole occupation, is under no liability for an occupation rent to a co-​owner out of possession. Liability for rent is based on the maxim that he who seeks equity must do equity. The accounts are reciprocal:  equitable assistance to get part of the expenditure requires a willingness to be charged for what is not otherwise chargeable.154 Furthermore, the claim for an occupation rent is limited to the amount of the claim for improvements.155

CONVERSION OF A JOINT TENANCY TO A TENANCY IN COMMON Meaning of severance [12.330]  Although the term “severance” strictly includes partition,156 it is generally used for

the purpose of describing the means by which a joint tenancy is converted into a tenancy in common. It is the process by which the share of a joint tenant is separated off “so that concurrent ownership will continue but the right of survivorship will no longer apply”.157 It is often stated that severance is effected by the destruction of one of the unities.158 Although unity of time cannot be destroyed and destruction of the unity of possession renders co-​ownership impossible, severance of the unity of title or of interest converts a joint tenancy into a tenancy in common. [12.335]  The interests of all joint tenants to gain the shares of another joint tenant on that

tenant’s death might be regarded as inconsistent with any dealing during the joint tenancy other than by agreement. A joint tenant cannot dispose of that tenant’s interest by will as the right of survivorship is a characteristic of the joint tenancy. However the courts have recognised a number of situations in which a joint tenancy might be severed without agreement. The classic statement on severance of joint tenancies in this manner is set out in the judgment of Sir W Page-​Wood V-​C in Williams v Hensman (1861) 1 J & H 546; 70 ER 862 at 557 (J & H), 876 (ER) where the Vice Chancellor stated that as well as mutual agreement a joint tenancy could be severed by disposal by one joint tenant of that tenant’s interest and by conduct sufficient to indicate that the interests of all were mutually treated as tenants in common. It is also accepted that a joint tenancy will be severed by the acquisition by one joint tenant of a greater interest and by the killing of one joint tenant by another. The courts have relied upon their aversion to joint tenancy as creating uncertainty, but as the High Court recognised in Trustees of Cummins (a bankrupt) v Cummins [2006] HCA 6; (2006) 227 CLR 278 in domestic relationships a joint tenancy often reflects a considered arrangement for the transfer of property on the death of one partner. Nonetheless the courts upheld an ingenious method of transfer in Wright v Gibbons (1949) 78 CLR 313 and been prepared to enforce agreements not satisfying normal formality requirements and to give effect to mutual conduct which would not normally have legal effect.

154 155 156 157 158

Re Jones; Farrington v Forrester [1893] 2 Ch 461; Teasdale v Sanderson (1864) 33 Beav 534; 55 ER 476. Forgeard v Shanahan (1994) 35 NSWLR 206. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 495 fn 141. Harris v Goddard [1983] 1 WLR 1203 at 1210 per Dillon LJ. Harris v Goddard [1983] 1 WLR 1203 at 1210 per Dillon LJ.

604 [12.330]

Co-ownership  Chapter  12

Severance by agreement [12.340]  One method of severance set out in Williams v Hensman (1861) 1 J & H 546; 70

ER 862 is severance by mutual agreement between the joint tenants.159 Such a severance is one in equity and it is clear that all joint tenants must be party to the agreement to sever before it can be concluded that the co-​owners hold as tenants in common. There is some uncertainty as to whether the agreement must be specifically enforceable in order to effect a severance. In Lyons v Lyons [1967] VR 169 at 171 McInerney J took the view that there could be no severance in equity under this second head “unless there is a note or memorandum in writing sufficient to satisfy the Statute of Frauds or circumstances giving rise to the doctrine of part performance”. As interests in land are affected, the view of McInerney J appears logical.160 The more modern view, however, is that the agreement does not have to be in the form of a specifically enforceable agreement in order to effect a severance.161 The decisions supporting this view emphasise that the important criterion for severance by mutual agreement is that the agreement, whether or not specifically enforceable, demonstrates that the parties were of one mind in that they intended, from the time of agreement, to hold as tenants in common.162 The decision of McInerney J was rejected by Croft J in Mischel v Mischel Holdings Pty Ltd (in liq) [2012] VSC 292, Croft J emphasised the contrary decision of the English court of Appeal in Burgess v Rawnsley [1975] Ch 429. It has further been suggested, the severance in equity may be justified on the basis of a constructive trust; the mutual agreement to sever may result in equity requiring that the joint tenants hold the legal estate on trust for themselves as tenants in common.163 [12.345] The mutual agreement to sever may be an express one. It is clear, however, that

the agreement to sever may be implied from the conduct of the joint tenants in relation to the property.164 For example, married persons who hold property in joint tenancy may, upon separation, enter into negotiations and make agreements which demonstrate directly or indirectly that they intend to hold separate and distinct shares in the jointly owned property. If the court is satisfied that there is such a concluded agreement between the parties, severance will be effected. In Re Pozzi [1982] Qd R 499, a husband and wife were joint tenants of the matrimonial home. After dissolution of their marriage, they executed an agreement pursuant to which the wife was to have sole use and occupancy of the matrimonial home until a particular event and then the property was to be sold and the proceeds divided in the manner stated. The

159

See also Child v Bulmer [1891] 3 Ch 59 at 61–​62; Wright v Gibbons (1949) 78 CLR 313 at 322; Lyons v Lyons [1967] VR 169 at 170; Abela v Public Trustee [1983] 1 NSWLR 308 at 315, 316; Corin v Patton (1990) 169 CLR 540 at 547, 548, 574 and 587; Magill v Magill (1993) 5 BPR 12,022 at 12,024 and 12,025; Facchetti v Facchetti [2004] NSWSC 898. 160 Compare Burgess v Rawnsley [1975] Ch 429. 161 Gebhardt v Dempster [1914] SASR 287; Burgess v Rawnsley [1975] Ch 429; Abela v Public Trustee [1983] 1 NSWLR 308; Magill v Magill (1997) NSW ConvR 55-​795 (NSWSC), affirmed Young J; Magill v Magill (1993) NSW ConvR 55-​663; Facchetti v Facchetti [2004] NSWSC 898; Fenato v Antonello [2006] NSWSC 763. See Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 951. Compare Corin v Patton (1990) 169 CLR 540; Penny Nominees Pty Ltd v Fountain (No 3) (1991) NSW ConvR 55-​561; (1990) 5 BPR 11,284. 162 See also Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 140–​143. 63 See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 278-​279. 1 164 Williams v Hensman (1861) 1 J & H 546 at 557; 70 ER 862 at 866–​867. See Mendes da Costa, “Co-​ ownership under Victorian Land Law” (1961) 3 MULR 137 at 141. [12.345]  605

PART 4 Divided Ownership of Land

agreement was registered under s 86 of the Family Law Act 1975 (Cth). The husband died. The Supreme Court of Queensland held that there had been a severance of the joint tenancy.165 Where the parties make a joint application under s 79 of the Family Law Act 1975 (Cth) to the Family Court for settlement of their jointly owned property, such application alone is insufficient to effect a severance.166 If, however, it can be shown that behind the application there was an agreement between the parties that they intended to hold separate and distinct shares from the time of the agreement, even if there was no agreement as to the proportions, a severance will have been effected. It is the agreement, rather than the application or the court order, which severs the joint tenancy.167 If the parties seek a court order with respect to the settlement of their jointly owned property and the court order obtained requires any form of dealing with the property, the joint tenancy is severed in equity from the date of the court order.168 In fact, any order which settles the parties’ interests in the jointly held property in a manner which is inconsistent with the continuation of the joint tenancy severs the joint tenancy.169 Severance at law does not occur until the relevant legal title is effectively passed.

165

166

167

168

169

See also Calabrese v Miuccio (No 2) [1985] 1 Qd R 17, where, after dissolution of their marriage, the husband and wife agreed that jointly held funds should be divided in a particular manner such that the wife would receive more than the husband and that agreement was sanctioned pursuant to s 87 of the Family Law Act 1975 (Cth). The husband then withdrew consent for the sanctioning of the agreement, and the wife died. On the issue as to whether the joint tenancy had been severed the Full Court of the Supreme Court held that the joint tenancy had been severed when the agreement was made. In Bourke v Bourke (No 2) (1994) 121 FLR 124 a husband and wife entered into a consent order under s 79 of the Family Law Act 1975 (Cth) pursuant to which the joint tenancy was severed. Subsequently the parties agreed to the setting aside of the consent orders. The wife died. The Full Court of the Family Court, while not having to decide the issue, suggested that the agreement to set aside the original s 79 order may have “revived” the joint tenancy. In Public Trustee v Pfeiffle [1991] 1 VR 19 (Full Ct of Vic Sup Ct) an agreement under s 87 of the Family Law Act 1975 (Cth) was approved by the Family Court. Inter alia it provided that jointly owned property was to be sold and the proceeds divided upon either party remarrying. It was held that the common intention of the joint tenants was to sever as evidenced by their mutual agreement and the severance took place immediately. The mechanism for sale did not fix the time of severance. See also Abela v Public Trustee [1983] 1 NSWLR 308; Burgess v Rawnsley [1975] Ch 429; Public Trustee v Grivas [1974] 2 NSWLR 316. Perstoulis v Perstoulis (1980) FLC 90,823 –​the court took the view that as the parties may withdraw their applications at any time before an order of the court is made, there is no concluded agreement between them. See Sprott v Harper (2000) Q ConvR 54-​ 545. Discussed in Note, Severance of Joint Tenancies after Separation –​Case Note; Sprott v Harper (2002) 76(8) ALJ 482. The court also held that a course of dealing would have been satisfied too. Once the agreement is made, the joint tenancy is severed finally. If one of the parties subsequently changes his or her mind, it appears that the joint tenancy cannot be revived: see Burgess v Rawnsley [1975] Ch 429. See also Re Shannon’s Transfer [1967] Tas SR 245, where the concept of “suspension” of the joint tenancy in these circumstances is discussed. Re Johnstone [1973] Qd R 347; Public Trustee v Grivas [1974] 2 NSWLR 316; In the Marriage of Bourke (1993) 16 Fam LR 779; Official Trustee in Bankruptcy v Mateo (2003) 202 ALR 571 at 606 per Merkel J, at 586–​587 per Wilcox J, at 599 per Branson J (semble); Jones v Daniel (2005) 212 ALR 588. Compare McKee v McKee (1986) 10 Fam LR 754; Corry v Corry (1983) FLC 91-​343, where it was held there was no severance because the order was subject to conditions precedent; McVey v Dennis (1984) FLC 91-​521, where it was held that there was no severance by order of the court because the wife died before the decree was made absolute; Penny Nominees Pty Ltd v Fountain (No 3) (1991) NSW ConvR 55-​561; (1990) 5 BPR 11,284, where it was held that if there is an order subject to a condition eg, the decree for dissolution of marriage becoming absolute), the severance which would be affected by the order does not occur until the condition has been fulfilled. Berdal v Burns [1990] WAR 140.

606 [12.345]

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[12.350]  An unusual method of severance by agreement is where the joint tenants agree to

make mutual wills and then carry out that intention by making the wills.170 Although one joint tenant cannot overcome the jus accrescendi by the making of a will, if all joint tenants agree and do make mutual wills, the joint tenancy can be severed. [12.355]  The joint tenants may agree not to sever the joint tenancy.171 It has been argued that

the unilateral right to sever is inherent in the joint tenancy and should not be denied by such a contract.172 There is authority, however, for the proposition that an agreement between the joint tenants not to sever the joint tenancy is effective to prevent severance in equity, even if severance has been effected at law.173

Severance by conduct of the parties [12.360]  Severance cannot occur by the mere unilateral act of one joint tenant. If there is no

agreement or no alienation of an interest, the mere treatment by one joint tenant of the interest as severed or an indication that the joint tenant desires severance will not achieve the desired result. In Corin v Patton (1990) 169 CLR 540 Mason CJ and McHugh J specifically considered whether a unilateral declaration of intent can cause a severance. Relying on observations by Lord Hardwicke LC in Partrche v Paulet (1740) AH 54; 26 ER 430 at 55 (AH), 431 (ER), their Honours concluded that there are powerful reasons to hold that a unilateral act by one of the parties to a joint tenancy should not effect a severance. In Hulme v Schaecken [1999] NSWSC 1291 Austin J followed these dicta. In McCoy v Estate of Caelli [2008] NSWSC 986 a mother and son were co-​owners. The son purported to sever the joint tenancy by executing a severance form. However, the son retained possession of the form and it was not registered. The court held that no severance had occurred. [12.365]  Page-​Wood V-​C in Williams v Hensman (1861) 1 J & H 546; 70 ER 862 stated that

there may be a severance “by any course of conduct sufficient to intimate that the interests” of all joint tenants are to be treated as interests under a tenancy in common. Although this third method of severance may appear to be simply a sub-​category of severance by agreement, and although there may often be overlap between the two methods, severance by a course of dealing and yet not by agreement may result when negotiations or a “course of dealing” make it clear that the interests of all joint tenants are treated by all as being held in tenancy in common.174

170

Re Wilford’s Estate; Taylor v Taylor (1879) 11 Ch D 267; Szabo v Boros (1967) 64 DLR (2d) 48; see also Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 143. 171 As to the effectiveness of such an agreement, see Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 140. 72 See Butt, “Agreement Not to Sever Joint Tenancy” (2001) 75 ALJ 7. 1 73 Parry v Sullivan (1979) 9 RFL (2d) 349; Anderson v O’Donnell (2000) 10 BPR 18,501 (a purported agreement 1 not to sever and the parties assumed in argument that such an agreement would be enforceable); Goyal v Chandra (2006) 68 NSWLR 313; [2006] NSWSC 239 (specific finding that an agreement not to sever leaves the joint tenant with the power to deal with his or her interest at law but “imposes an obligation in equity not to do so” at [28] per Brereton J). 174 See, for example, Abela v Public Trustee [1983] 1 NSWLR 308; Magill v Magill (1997) NSW ConvR 55-​795 at 55-​795. It appears that severance pursuant to a course of conduct may be easier to demonstrate where the joint tenants are, or have been, engaged in a personal relationship with each other. See Abela v Public Trustee and Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 954. The negotiations must clearly [12.365]  607

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A course of dealing such that the interests be mutually treated as held in common implies that all joint tenants must be parties to negotiations constituting the course of dealing. Thus, a declaration of unilateral intention to sever by one joint tenant whether communicated or not to the other joint tenants does not, in Australia, constitute a severance of the joint tenancy pursuant to this third method of severance.175 Even when the joint tenants have discussed the matter, unconcluded negotiations between the parties which have not progressed significantly are insufficient to constitute a relevant course of dealing for this purpose.176 Thus, although an application to court by a joint tenant seeking sale and distribution of the proceeds may be a declaration of an intention to sever, it is not such an action as will sever the joint tenancy.177 By contrast Croft J in Mischel v Mischel Holdings Pty Ltd (in liq) [2012] VSC 292 relied on separate acts of each of two joint tenants to indicate mutual conduct. The husband in an inventory declared a divided interest and the wife took a loan dependent on a half-​share of the property.

Alienation by a joint tenant [12.370]  The simplest means of severing a joint tenancy by a transfer of a joint interest and

one by which the joint tenant retains legal and equitable ownership, involves a conveyance by the joint tenant to himself or herself. This method of severance depends upon the existence of a statutory provision permitting a person to assure land to himself or herself. Except in Queensland and the Northern Territory, the general property statutes contain such provisions.178 Despite some initial hesitation179 it appears that this method of severance is permissible and effective.180 In order for the severance to be effected, the legal interest must

175

176 177 178

179 180

establish, however, that each party regarded the severance as having been brought about: see Slater v Slater (1987) 12 Fam LR 1 (NSWSC, Cohen J). See Corin v Patton (1990) 169 CLR 540; Hulme v Schaecken [1999] NSWSC 1291; Lennon v Bell [2005] QSC 286. Neither does it constitute an effective method pursuant to the first method of severance. See also Golding v Hands [1969] WAR 121; Davies v Davies (1982) 8 Fam LR 188; Patzak v Lytton [1984] WAR 353, which all followed this view as expressed by Walton J in Nielson-​Jones v Fedden [1975] Ch 222. Compare the English decisions of Hawksley v May [1956] 1 QB 304; Re Draper’s Conveyance [1968] 2 WLR 166 and Burgess v Rawnsley [1975] Ch 429. See generally Tooher, “Windfall by Wager or Will? Unilateral Severance of a Joint Tenancy (Part 1)” (1998) 24 Mon LR 399. Lennon v Bell [2005] QSC 286. See Patzak v Lytton [1984] WAR 353. Compare Badcock v Badcock (1979) FLC 90-​723. Conveyancing Act 1919 (NSW), s 24; Property Law Act 1958 (Vic), s 72(3); Law of Property Act 1936 (SA), s 40(3); Property Law Act 1969 (WA), s 44; Conveyancing and Law of Property Act 1884 (Tas), s 62(1), (2); Civil Law (Property) Act 2006 (ACT), s 208; cf Property Law Act 1974 (Qld), s 14(3); Law of Property Act (NT), s 13(3) providing that a person may convey to herself or himself only lesser interests than a fee simple absolute. The Queensland provision is discussed in Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), p 249. Note that in Queensland and the Northern Territory severance of a joint tenancy of Torrens land can be achieved by registration of a transfer by a joint tenant to himself or herself and thus the s 14(3) provision is of little importance in practical terms. Rye v Rye [1962] 2 WLR 361; see Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 157. See, for example, Samuel v District Land Registrar [1984] 2 NZLR 673; Re Murdoch and Barry (1975) DLR (3rd) 222; McNab v Earle [1981] 2 NSWLR 673 (no registration of the transfer and thus, no severance); Freed v Taffel [1984] 2 NSWLR 322 (as in McNab’s case, no registration of a transfer and so no severance); Public Trustee of the Australian Capital Territory v Hall [2003] ACTCA 27.

608 [12.370]

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have passed.181 With respect to general law land, the proper execution of a deed suffices; in relation to Torrens land, registration of a transfer must have taken place.182 In New South Wales, Queensland, Tasmania and the Northern Territory there are specific provisions in the Torrens legislation for severance by this means. The relevant sections provide that registration of a transfer by a joint tenant of the joint tenant’s interest to himself or herself severs the joint tenancy.183 A  further alternative, and one by which the joint tenant would retain beneficial ownership, involves a conveyance or transfer of the legal title to a trustee who in turn holds it on trust for the joint tenant.184 [12.375]  If all joint tenants together alienate by, for example, selling, leasing or mortgaging

the joint property, there is no severance at law or in equity.185 However, where land is held

181 It has been argued that, despite the decision in Corin v Patton (1990) 169 CLR 540, severance by this means should only be permitted in relation to Torrens land upon registration of a transfer. If severance were permitted upon the execution of a transfer by a joint tenant to himself, “joint tenants could execute transfers, not register them and wait to see who of the joint tenants dies first”). The surviving “severing” joint tenant could then destroy the transfer and claim by survivorship: see Sherry, “Unilateral Severance of Joint Tenancies” (1995) 3 APLJ 1 at 3. Compare Tooher, “Windfall by Wager or Will? Unilateral Severance of a Joint Tenancy (Part 1)” (1998) 24 Mon LR 399 at 415; Public Trustee of the Australian Capital Territory v Hall [2003] ACTCA 27. 182 Registration of a transfer might be impeded by, for example, a mortgagee refusing to produce the duplicate certificate of title. In Public Trustee of the Australian Capital Territory v Hall [2003] ACTCA 27, however, the ACT Court of Appeal held that a bank holding a certificate of title of joint tenants could be compelled by one of the joint tenants to produce the certificate for the purpose of that joint tenant securing severance by way of transfer to himself or herself. In the Hall case the bank had actually produced the certificate of title at the request of the wife and a transfer, effectively severing the joint tenancy, had been registered before the wife’s death. At first instance the trial judge held that, although a severance had been effected at law, the conduct of the transferring joint tenant gave rise to a personal equity in the other joint tenant sufficient to impugn the transaction in equity (Hall v Public Trustee (ACT) (2003) 150 ACTR 8). On appeal, the decision was reversed, the Court of Appeal holding the severance to be effective at law and in equity: the wife had no obligation to inform the husband of her actions and the husband would have had no grounds to prevent the production of the certificate of title. See Severance of Joint Tenancy (2004) 78 ALJ 499. 183 Real Property Act 1900 (NSW), s 97; Land Title Act 1994 (Qld), s 59; Land Titles Act 1980 (Tas), s 63; Land Title Act (NT), s 59. The Queensland provision was recently considered by the High Court in Peldan v Anderson (2006) 227 CLR 471 and it was held that a severance under s 59(1) of the Land Title Act 1994 (Qld) was not a transfer void as against the trustees in bankruptcy under s 121 of the Bankruptcy Act 1966 (Cth). 184 See Corin v Patton (1990) 169 CLR 540. 185 See Re Allingham; Allingham v Allingham [1932] VLR 469 (where there was a sale by all joint tenants to a stranger, the joint tenants of the land became joint tenants of the proceeds of sale); Ex parte Railway Commissioners (NSW) (1941) 41 SR (NSW) 92 (resumption of land owned by joint tenants where the former joint tenants of the land were held to have a joint claim for compensation); Doe d Aslin and Finch v Summersett (1830) 1 B & Ad 135 at 140; 109 ER 738 at 140 (B & Ad), 739 (ER) (lease of the fee simple by all joint tenants does not effect a severance). Compare, however, Hammersmith and Fulham London Borough Council v Monk [1992] 1 AC 478 (CA) and Crawley Borough Council v Ure [1995] 3 WLR 95 (CA), where it was held (at least in the case of a periodic tenancy) that notice to quit given by one of the joint tenants without the consent of the other is effective to terminate the tenancy. See also Scmeling v Stankovic (1984) NSW ConvR 55-​193 (joint tenants who mortgage general law land hold the equity of redemption as joint tenants. Where a licence is only granted by one joint tenant, there is no severance: further, a grant of occupation which does not give rise to any proprietary interest in the occupier does not give rise to any rights against the other co-​owners). It seems that the non-​granting co-​owners may terminate the licence without the authority of the grantor: see Robson-​Paul v Farrugia (1969) 20 P & CR 820; Annen v Rattee (1985) 273 EG 503; State of New South Wales v Koumdjiev (2005) 63 NSWLR 353 (unilateral termination permitted at least where licence is “beyond what is reasonable and incidental to the grantor’s [one tenant in common’s] interest and which prejudices the other tenants in common’s interest”); cf Hong v Choo [2004] HKCFI 24 and Pitt v Baxter (2006) 159 A Crim R 293. See Gray and Gray, Elements of Land Law (5th ed, OUP, London, [12.375]  609

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in joint tenancy by two persons and one of the joint tenants alienates his or her interest to a stranger, the joint tenancy is severed and the grantee and the remaining tenant hold as tenants in common. Unity of title does not exist. If land is held by three or more joint tenants and one joint tenant alienates his or her interest to another, the grantee holds the interest acquired as a tenant in common with the other joint tenants. As between themselves, the remaining tenants continue to hold as joint tenants. The following is a simple example of the principle. A, B and C are joint tenants in fee simple of Blackacre. A conveys her interest to X. X is a tenant in common with B and C. B and C continue to hold two-​thirds as joint tenants between themselves. It is necessary to draw a distinction between alienation at law and alienation in equity. This is obvious where the joint tenants hold only the legal interest or only the equitable interest. However, even where the joint tenants hold the whole estate, it may be important to differentiate between legal and equitable interests for severance may have been effected in equity, but not at law. [12.380]  There is an effective alienation at law if there is compliance with the requirements

for the passing of a legal interest in land. With respect to land falling under the general law land system, all jurisdictions except Queensland and the Northern Territory require the proper execution of a deed in order for legal title to pass.186 In relation to Torrens land, registration of a transfer is required before legal title passes to the grantee.187 An effective alienation of the legal interest by a joint tenant results in a severance of the joint tenancy at law. In Wright v Gibbons (1949) 78 CLR 313 the High Court considered whether there had been a severance of a joint tenancy. Two sisters, Olinda and Ethel Gibbons, and their sister-​ in-​law, Bessie Gibbons, were registered as joint tenants of a fee simple estate. The land in question fell under the Torrens system of land registration. Olinda and Ethel wished to sever the joint tenancy and purported to do so by executing a document which provided that Olinda transferred her one-​third share to Ethel and Ethel transferred her one-​third share to Olinda. The document of transfer was registered and the former joint tenants, Olinda, Ethel and Bessie, were registered as tenants in common in equal shares. Bessie survived Olinda and Ethel and sought a declaration in the Supreme Court that the joint tenancy had not been severed. The High Court held that the joint tenancy had been effectively severed. Each of the judges discussed the effect of a transaction pursuant to which a joint tenant transferred his or her interest to another joint tenant, rather than to a stranger. Latham CJ stated at 323: Where one joint tenant transfers his interest to another joint tenant the transfer (which at common law was effected by release because each joint tenant is conceived as holding every part and the whole of the land …) does not operate by way of extinguishment of the estate. A mere extinguishment would enure in favour [of all remaining joint tenants and it is clear that a joint tenant can transfer his interest to one, some or all of the remaining joint tenants] … [A]‌lthough such a transaction should be carried out by release, a grant is interpreted as a release.

2009), p 1299, where it is argued that while unilateral revocation is correct in principle, its application may place victims of domestic violence at risk. 186 See, for example, Property Law Act 1958 (Vic), s 52(1). For the other statutory provisions, see [7.95]. 87 See, for example, Transfer of Land Act 1958 (Vic), s 40(1) and generally Chapter 4. 1 610 [12.380]

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The complicating factor in Wright v Gibbons was that the relevant transfers were contained within the one document and the document came into effect at a particular time, the time of registration. Latham CJ, Rich J and Dixon J all took the view for varying reasons that, upon registration, the document had the effect of severing the joint tenancy at law.188 [12.385]  Even if there has been no severance at law, an effective alienation of the equitable

interest by one of the joint tenants will result in severance of the joint tenancy in equity. Equitable interests may be alienated in a number of ways. In this context, the two most relevant methods are the declaration of trust and the contract of sale.189 First, where a joint tenant declares himself or herself a trustee of the interest for another, equity will enforce the trust providing there has been compliance with the statutory requirements in relation to declarations of trust.190 The declaration of trust severs the joint tenancy in equity.191 Secondly, until recently, the principle in Lysaght v Edwards (1876) 2 Ch D 499 ensured that where a joint tenant enters into an enforceable contract to sell his or her interest, equity will deem as done that which ought to be done and regard the purchaser as the owner of the interest in equity.192 The understanding was that severance would occur in equity as soon as an enforceable contract of sale existed. The recent High Court decision in Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 has cast doubt on the principle that the vendor under a specifically enforceable contract of sale is automatically a constructive trustee for the purchaser. Where the contract is wholly or partly executory, the High Court has suggested that no such trust exists. In the context of severance, the result would be that the execution of a contract of sale by one joint tenant of his or her interest does not necessarily constitute an “alienation” of an equitable interest. In practice, severance at law will usually occur later upon the execution of a deed (general law land) or upon the registration of a properly executed transfer (Torrens land).

Alienation by gift by a joint tenant [12.390]  Some difficult questions relating to severance have arisen in relation to the situation

of a gift by a joint tenant of his or her interest in Torrens land. Upon registration of a voluntary transfer from a joint tenant in favour of the grantee, the joint tenancy is clearly severed at law and in equity. The issue which has arisen is whether it is possible for there to be a severance in equity before the registration of the transfer. That is, will equity regard the grantee/​volunteer as being the owner in equity before the legal title has passed? Generally, equity does not assist a volunteer or perfect an imperfect gift. However, in Milroy v Lord (1862) 4 De GF &

188 Latham CJ stated that the document should be construed in accordance with the principle ut res magis valeat qum pereat –​it is better for a thing to have effect than to be made void. Rich and Dixon JJ took the view that the system for transferring and registration of interests under the Torrens system permitted such an effect (ie, severance). It should be noted that if the same fact situation arose under the general law land system, separate deeds of conveyance would be required to effect a severance: see Dixon and Rich JJ. 189 For further examples, see Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 144–​145. 190 See, for example, Property Law Act 1958 (Vic), s 53(1)(b). 191 Re Sorensen and Sorensen (1977) 90 DLR (3d) 26; Ogilvie v Littleboy (1897) 13 TLR 399, aff 15 TLR 294 sub nom Ogilvie v Allen. 192 Walsh v Lonsdale (1882) 21 Ch D 9; Lysaght v Edwards (1876) 2 Ch D 499; Chan v Cresdon Pty Ltd (1989) 168 CLR 242. Compare Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. [12.390]  611

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J 264; 45 ER 1185, a case concerning the transfer of shares by way of gift, it was held that if the donor has done “everything which, according to the nature of the property comprised in the settlement, was necessary to be done [by him] in order to transfer the property” (at 274, 1189), equity will view the gift as being complete and perfect and hold that equitable title has passed to the volunteer. The settlor retains the legal estate holding it on trust for the donee. In Brunker v The Perpetual Trustee Co Ltd (1937) 57 CLR 555 the High Court held that the principle enunciated in Milroy v Lord did not apply to Torrens land.193 Therefore, even where a joint tenant had executed a transfer of his or her interest by way of gift in favour of the grantee and physically delivered the transfer and the duplicate certificate of title to the grantee, the equitable interest did not pass to the grantee. Pursuant to the principle in Brunker, severance of the joint tenancy did not result until registration of the transfer. Such registration vested title (legal and equitable) in the grantee and it was at the time of registration that severance occurred. Although the High Court in the Brunker case was not prepared to apply the Milroy v Lord principle to Torrens land and thus view the volunteer as having an equitable interest before registration, Dixon J took the view that the volunteer may obtain a right to have the transfer registered, a right which the donor or his or her executors could not defeat. [12.395]  The High Court reconsidered its position on this matter in the case of Corin v Patton

(1990) 169 CLR 540. Mr and Mrs Patton were the joint registered proprietors of the property in dispute. Mrs Patton had a terminal illness and did not want her husband to take the estate by way of survivorship on her death. In an attempt to sever the joint tenancy, Mrs  Patton executed a transfer of her interests to Mr Corin, her brother, in consideration of, and pursuant to, the terms of a deed of trust entered into between the transferor, Mrs  Patton, and the transferee, Mr Corin. Under the deed of trust, Mr Corin declared that he held his interest as tenant in common with Mr Patton, on trust for Mrs Patton. Although a solicitor had taken the executed documents with a view to doing what was necessary to finalise the transactions, the transfer had not been registered at the time of Mrs Patton’s death. The certificate of title was held by a bank as unregistered mortgagee and Mrs Patton had taken no action to gain production of the certificate for the purpose of registration of the transfer. The principal issue was whether the joint tenancy had been severed for if it had not been so severed, Mr Patton would take the estate by way of survivorship. Clearly the joint tenancy had not been severed at law as the transfer had not been registered. The majority of the High Court194 took the view that its earlier decision in Brunker v The Perpetual Trustee Co Ltd (1937) 57 CLR 555 was wrong and that the rule in Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185 applied to Torrens land. The court held that there was little support in the statute for the concept of a personal right reflecting “the [Milroy v Lord] rule in scope but differing in effect”.195 They concluded, therefore, that the principle is that “if

193

194 195

See also Re Ward; Gillet v Ward [1968] WAR 33; Taylor v Deputy Federal Commissioner of Taxation (1969) 123 CLR 206; Golding v Hands [1969] WAR 121; In the Marriage of Badcock (1979) 5 Fam LR 672; Caratti v Grant (1978) 3 ACLR 322. See also MacCallum, “Severance of a Matrimonial Joint Tenancy” (1980) 7 Mon LR 17 at  25–​29. Corin v Patton (1990) 169 CLR 540 at 551–​556 per Mason CJ and McHugh J, at 580–​582 per Deane J. Query Toohey J and cf Brennan J. Corin v Patton (1990) 169 CLR 540 at 556 per Mason CJ and McHugh J. See also Deane J at 582.

612 [12.395]

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an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognise the gift”.196 According to the majority in Corin, the Torrens provisions such as s 40(1) of the Transfer of Land Act 1958 (Vic), which provides that no instrument is effective to pass an interest until registration and which influenced the decision in Brunker, did not prevent the application of the Milroy v Lord principle to Torrens land. As Mason CJ and McHugh J found, this is because such provisions do not affect rights created behind an instrument. Thus, in the same way as a specifically enforceable contract of sale behind an instrument of transfer may be effective to pass an equitable interest to the purchaser,197 so too is a completed gift effective to pass an equitable interest to the donee. In Queensland the position is governed by legislation which achieves a like result to that in Corin v Patton. Section 200 of the Property Law Act 1974 (Qld) provides that a voluntary assignment is effective in equity when the assignor has done everything necessary to transfer the property. Despite the application of the principle in Milroy v Lord to Torrens land, on the facts, Mr Corin failed to satisfy the court that there had been a completed gift. Mrs Patton had not done all that was necessary to pass legal title to Mr Corin. The majority found that although it may not always be “necessary” for the donee to have possession of the certificate of title in order to gain registration, a gift of land was not complete while the donor retained possession or control of the certificate of title, for in such a case the donor has not done everything necessary to pass legal title.198 Increasingly, land registers are being held in electronic form on computer databases (see [4.45]), with the ultimate objective being a paperless register with no certificate or duplicate certificates of title being issued to registered proprietors of lots. In some jurisdictions already, a paper certificate of title is not automatically issued to the registered proprietor (eg, in Queensland: see [4.45]). In cases where no certificate of title has been issued, the registered proprietor could do all that is necessary to pass legal title by executing a transfer in appropriate form and giving possession of the document to the donee.199 The facts of Corin differed from the typical gift situation as defined in the Brunker case. Mrs Patton did not intend to make a gift of the beneficial interest to Corin, for Corin was to hold the estate on trust for Mrs Patton. Nevertheless, Corin was held to be a volunteer because the consent of Corin to act as trustee was not valuable consideration. The members of the High Court were concerned by this anomaly. Indeed, Deane J held specifically that equity could not intervene to confer on Corin an interest which neither he nor the transferor ever

196 197 198

199

Corin v Patton (1990) 169 CLR 540 at 559 per Mason CJ and McHugh J. See also Deane J at 582 for a detailed discussion of the rule. Lysaght v Edwards (1876) 2 Ch D 499. Compare Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315. See Motor Auction Pty Ltd v John Joyce Wholesale Cars Pty Ltd (1997) 23 ACSR 647. Santow J held that where the certificate of title is held on behalf of the putative donor and the non-​assigning donor, the gift is revocable by the donor and incomplete, even though its production may have been compellable. The gift is only complete when the donor’s direction is acted upon by the actual production of the certificate of title. If the land is subject to a registered mortgage and the mortgage provides that no dealing may be registered without the mortgagee’s consent, that consent should be obtained in order for the gift to be complete: see Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), pp 246–​247. In the case where the transferor dies after executing the transfer and delivering it, together with the certificate of title, to the transferee, but before registration, the better view appears to be that severance has occurred in equity and the transferee has a right to present the transfer for registration and to be registered: Watt v Lord (2005) 62 NSWLR 495. See also s 187 of the Land Title Act (NT), which provides [12.395]  613

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intended he should have.200 Toohey J (at 588–​589) also refused to apply the Milroy v Lord and Brunker principles to a transaction which was clearly not a gift. Despite their reservations, Mason  CJ and McHugh  J proceeded to treat the transaction as a gift and interpreted and applied the law on that basis. [12.400] The principle expounded by the High Court in Corin v Patton (1990) 169 CLR

540 was used by the New South Wales Court of Appeal in Costin v Costin (1997) NSW ConvR 55-​811, but, on the facts, it was held that the gift had not been perfected. The father and one of his sons, Robert, were joint tenants of a property. The father executed a transfer of his interest to his other son, Nicholas, and also signed an authority and direction to the solicitors who held the certificate of title (on behalf of the father and Robert) to produce it so that the transfer could be registered. At first instance, Santow J held that the gift to Nicholas was complete despite the fact that the certificate of title had never been produced.201 In his Honour’s view, the donor had done all that was necessary to pass legal title by giving an irrevocable authority to the solicitors to produce the certificate of title; the joint tenancy had been severed in equity. The Court of Appeal took a different view of the facts, holding that the release of the certificate of title required the joint authority of both registered proprietors and further, that the father could have revoked his authority at any time.202 Apart from the declaration of trust, the contract of sale and the gift, alienation in equity may also be seen to occur if the circumstances of the particular case would give rise to the imposition of a constructive trust.203

Dealings less than total alienation by a joint tenant [12.405]  The discussion to this point assumes total alienation of the interest of a joint tenant.

In some instances partial alienation by a joint tenant is sufficient to effect a severance of the joint tenancy; the partial alienation should be one that destroys the unity of title or of interest. Generally it has been accepted that the grant of an estate by a joint tenant does effect a severance, but that the grant of an encumbrance by a joint tenant does not do so.204 Thus, either the grant of a life estate by a joint tenant205 or the grant of a legal mortgage of general

that if a person signs an instrument, but dies before it is registered, the instrument can still be registered and is valid despite the person’s death. 200 Corin v Patton (1990) 169 CLR 540 at 577–​578. Deane J accepted, however, the view of Mason CJ and McHugh J that the Milroy v Lord principle is applicable to Torrens land. See also Gardiner v Chief Commissioner of State Revenue (2004) 59 NSWLR 549, where it was held that, even if a transfer had been executed and a certificate of title handed to the proposed transferee, no equitable interest would pass if there was no intention to effect a gift. 201 Costin v Costin (1994) NSW ConvR 55-​715. 202 Query the position in Queensland under s 200 of the Property Law Act 1974 (Qld). Section 200 does not seem to require the donor to be in a position where it is impossible for him or her to withdraw the authority. See Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), p 247. 03 See Delaney v Molloy (1993) NSW ConvR 55-​664. 2 04 See Hedley v Roberts [1977] VR 282; Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672. See also 2 Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 143, 146. For a discussion of the effects of partial alienation, see Fox, “Unilateral Demise by a Joint Tenant: Does It Effect a Severance” [2000] Conv 208. 205 Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 147. 614 [12.400]

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law land by a joint tenant would effect severance of the joint tenancy as the partial alienation amounts to the grant of an estate. In relation to an equitable mortgage, where it takes effect as an assignment of the equitable interest with a right of redemption in the mortgagor, the unities of title and interest are destroyed and severance results.206 If, however, the security takes effect as an equitable charge, the position is probably different and severance is not effected.207 As McInerney J commented in Lyons v Lyons [1967] VR 169 at 173 with respect to the mortgage by a joint tenant of general law land: under the general law the mortgagor conveys his estate in the mortgaged land to the mortgagee. There is thus vested in the mortgagee all the estate and interest formerly vested in the joint tenant mortgagor: but the mortgagee obtains that estate and interest under a different instrument or judicial act than the other joint tenant or tenants, and there is thus no unity of title between the mortgagee and them.

The grant of an easement or of a rentcharge by a joint tenant does not effect a severance as the grant of an encumbrance only is involved.208 [12.410]  For some time, it was unclear whether two types of partial alienation by a joint

tenant, namely the mortgage of Torrens land209 and the lease, would effect a severance of the joint tenancy. In 1967 the matter was resolved with respect to the mortgage by a joint tenant of Torrens land when McInerney J delivered his judgment in Lyons v Lyons [1967] VR 169.210 His Honour (at 175) took the view that such a mortgage does not sever the joint tenancy. Unlike the mortgage of general law land, the mortgage of Torrens land operates by way of a charge, not by way of a transfer of the interest of the mortgagor to the mortgagee. Although it is clear that the mortgagee of Torrens land acquires an interest in the land, such an interest is separate from the fee simple interest retained by the mortgagor. Thus, according to the reasoning of McInerney J, the four unities remain intact as between the joint tenants after one joint tenant mortgages his or her interest. It has been argued that a finding that a mortgage of Torrens land does not effect a severance may lead to unfair results.211 If the joint tenant who mortgaged his or her interest dies first, the land vests in the surviving joint tenant or tenants free of the mortgage.212 The mortgagee is, therefore, at risk of losing the security. In view of this possible scenario, mortgagees do

206 Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 147; Nield, “To Sever or Not to Sever: The Effect of a Mortgage by One Joint Tenant” [2001] Conv 462. Compare the view of Meagher JA in Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672 at 680. 207 See generally Lyons v Lyons [1967] VR 169; Nield, “To Sever or Not to Sever: The Effect of a Mortgage by One Joint Tenant” [2001] Conv 462; Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 147–​148. Compare Cedar Holdings Ltd v Green [1979] 2 All ER 517 and First National Securities Ltd v Hegerty [1985] 1 QB 850. 208 See Hedley v Roberts [1977] VR 282; Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672. 209 There had been some doubt as to whether the Torrens mortgage operated as a security or transfer. This is discussed by McInerney J in Lyons v Lyons [1967] VR 169 at 174. 210 See also Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672; Capital Access v Welch (2002) 218 LSJS 177. Compare Clark v Raymor (Brisbane) Pty Ltd (No 2) [1982] Qd R 790 (probably incorrectly decided). 211 Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 148; cf Cedar Holdings Ltd v Green [1979] 2 All ER 517. 212 See Sinn v National Westminster Finance Ltd [1985] VR 363 at 366. The opposite applies as well. If the joint tenant who mortgaged his or her interest survives the other joint tenants, the mortgage is effective against the whole estate. [12.410]  615

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not and should not accept as a viable security, a mortgage by one joint tenant.213 If the joint tenant of an encumbered interest, however, transfers (or more correctly “releases”) the interest to the other joint tenant pursuant to a court order, the mortgage remains enforceable against the mortgaged moiety.214 In such a case “the releasee derives title from the release not the jus accrescendi”.215 There is some doubt as to the issue of severance where one joint tenant has granted a lease of his or her interest. Older English authority suggests that such a unilateral lease by one joint tenant does sever the joint tenancy, but the better view accepted in a number of Australian cases is that it constitutes a suspension of the joint tenancy during the lease term, not a severance. In Frieze v Unger [1960] VR 230 at 242–​243216 Sholl J reviewed the authorities exhaustively and found that such a demise: effects a “severance for the time” or “suspends” the joint tenancy pro tem [and] involves the proposition that the reversion expectant on the term will pass to the survivor of the joint tenants, so that any `severance’ or “suspension” is such only as is necessary to procure for the lessee the enjoyment during the term of grantor’s moiety both after as well as before the grantor’s death.217

In the case of joint tenants of a leasehold estate, it appears to be well accepted that the grant of a sublease by one joint tenant effects a complete severance of the joint tenancy.218 [12.415]  The joint tenancy is severed if the interest of a joint tenant is alienated by operation of

law. For example, s 58(1) of the Bankruptcy Act 1966 (Cth) provides that, upon sequestration, the property of the bankrupt vests in the trustee in bankruptcy. Thus, if A  and B are joint tenants in fee simple and A is declared bankrupt, A’s interest vests in the trustee in bankruptcy, and B and the trustee in bankruptcy hold as tenants in common in equal shares.219 By s 58(2) of the Bankruptcy Act 1966 (Cth), however, if the transmission of property is required to be registered by statute (such as a State or Territory Torrens statute), the estate

213

Re Shannon’s Transfer [1967] Tas SR 245 per Neasey J, approved Lyons v Lyons [1967] VR 169. See Preece, “The Effect of Partial Alienation by a Co-​owner of Land” (1981) 55 LIJ 115. 214 Lord Abergavenny’s Case (1607) 6 Co Rep 78b; 77 ER 373; Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672. 215 Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672 at 680 per Meagher JA. Note, however, that it is only the mortgaged moiety which is subject to the mortgage after the transfer. Contrast the situation where judgment is given against one of two joint tenants, but, before execution, the joint tenant against whom judgment has been procured, died. The surviving joint tenant takes by way of survivorship and free of the mortgage. 216 See also Wright v Gibbons (1949) 78 CLR 313 at 330 per Dixon J. The judgment of Sholl J assumes the grant of a lease for a term of years. Query the situation where a joint tenant grants a periodic tenancy from year to year, month to month or week to week. Contrary to the submission of counsel in Frieze v Unger [1960] VR 230, it is suggested that the principle expressed by Sholl J with respect to a lease for a term of years should similarly apply to such tenancies. 217 Discussed in Fox, “Unilateral Demise by a Joint Tenant: Does It Effect a Severance” [2000] Conv 208 at 220–​223. Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), pp 948-​949 take the view that although the matter remains in doubt, modern authority supports the view that there is a suspension of the joint tenancy. 18 Frieze v Unger [1960] VR 230 at 243. 2 19 Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165. This case was affirmed by the High Court 2 in Trustees of the Property of Cummins (A Bankrupt) v Cummins (2006) 227 CLR 278, and in Peldan v Anderson (2006) 227 CLR 471, and applied by the Queensland Supreme Court in Official Receiver in Bankruptcy v Cameron [2008] QSC 89. 616 [12.415]

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does not vest in the trustee in bankruptcy at law (notwithstanding that it vests in equity) until the registration occurs. In Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165 a question arose as to the precise time severance occurs when a joint tenant is bankrupted. Fisher  J held that, despite the existence of s  58(2), when the husband/​joint tenant became bankrupt, there was a “disposal” of the husband’s share in equity and thus severance of the joint tenancy in equity.220 As the bankruptcy relates back to the act of bankruptcy, the joint tenancy is severed from that date rather than the date of the court order.221 In Sistrom v Urh (1992) 40 FCR 550 the Full Court of the Federal Court applied the same principles. A husband and wife were joint tenants of a property. The husband was declared bankrupt in 1987 and, although the trustee in bankruptcy lodged a caveat, he did not apply for registration. In 1989 the bankrupt husband died and the wife applied to the Land Titles Office to become the sole registered proprietor by way of survivorship. Although the trustee was given notice of the application, he did nothing. His caveat lapsed and the wife became the sole registered proprietor. In the ensuing dispute the Full Court held that the joint tenancy was severed in equity at the time of the sequestration order; the trustee in bankruptcy held an interest as equitable tenant in common with the wife.222 After the wife’s registration as sole proprietor, she held the estate as trustee for herself and the trustee in bankruptcy as tenants in common in equal shares. [12.420]  A court order which requires a joint tenant to transfer his or her interest to the other

co-​owners constitutes a severance.223 This may commonly occur in cases concerning disputes between domestic partners.224 Similarly, a court order which requires a dealing with jointly owned property that necessarily infers a joint tenancy cannot continue is effective to sever the joint tenancy.225 When a judgment or secured creditor executes against a joint tenant’s share, a severance of the joint tenancy is effected.226

Severance by acquisition of a greater interest [12.425]  If one of the joint tenants subsequently acquires a greater interest in the land than

the other joint tenants, the joint tenancy is severed.227 For example, if A and B are joint tenants for life and A  subsequently acquires the fee simple remainder, the joint tenancy is severed. The subsequent acquisition is said to destroy the unity of interest and, thus, the joint tenancy. However, if the original grant is to A  and B for life as joint tenants and then to A  in fee

220 Severance at law cannot be effected until the transmission in favour of the Official Trustee has been registered. The court in Re Francis; Ex parte Official Trustee in Bankruptcy (1988) 82 ALR 333 followed Re Holland; Ex parte Official Trustee in Bankruptcy (1985) 5 FCR 165. Compare Re Oswald; Ex parte the Official Trustee in Bankruptcy (1985) 1 FCR 276. 221 Re Dennis [1995] 3 All ER 171. 222 This principle was accepted in Australian & New Zealand Banking Group Ltd v Prestia [2001] FCA 7 at [23]–​[24]. 223 Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672; Re Johnstone [1973] Qd R 347; Penny Nominees Pty Ltd v Fountain (No 3) (1991) NSW ConvR 55-​561; Bank of Western Australia Ltd v Studman [2000] WASC 287. 224 Berdal v Burns [1990] WAR 140. 225 Mitrovic v Koren [1971] VR 479. 226 Guthrie v ANZ Banking Group Ltd (1991) 23 NSWLR 672. 227 Morgan’s Case (1590) 2 And 202; 123 ER 620; Wiscot’s Case; Giles v Wiscot (1599) 2 Co Rep 60b; 76 ER 555. See Mendes da Costa, “Co-​ownership under Victorian Land Law” (1961) 3 MULR 137 at 143. [12.425]  617

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simple in remainder, the joint tenancy between A and B is valid and operative. Although the distinction is a curious one, it is firmly entrenched. It is based on the fact that unity of interest is destroyed in the first instance but exists in the second instance.228 There is a further example of severance of a joint tenancy under this category. Where the land is held by A, the life tenant, with remainder in fee simple over to B and C as joint tenants, and A conveys his life estate to B, the joint tenancy between B and C is severed.229 Severance does not occur under this heading unless the estate acquired differs from the estate held in joint tenancy. For example, if A, B and C are joint tenants in fee simple and A conveys his interest to B, B holds the one-​third share conveyed by A, as a tenant in common with himself and C who hold the remaining two-​thirds as joint tenants.

Severance by killing of one joint tenant by another joint tenant [12.430]  Severance of a joint tenancy may result from one joint tenant unlawfully killing

another.230 The rationale behind this is that a wrongdoer should not profit from his or her crime.231 While it has been suggested in some cases that the homicide is the severing event,232 the more widely accepted view now is that the loss of the estate by the surviving joint tenant is based on the imposition of a constructive trust.233 Thus the surviving joint tenant takes the legal estate by way of survivorship, but equity requires him or her to hold it on constructive trust for himself or herself and the estate of the deceased joint tenant. This was the approach adopted in Rasmanis v Jurewitsch [1968] 2 NSWR 166.234 A and B were joint tenants of a fee simple estate. A  unlawfully killed B.  Although at law the jus accrescendi operated, so that the legal estate vested in A, this was subject to the imposition of a constructive trust on A. A held the legal estate on a constructive trust for himself and the estate of B as tenants in common in equal shares. The court took the view that while public policy considerations required that the felon should not gain by what he had done,235 they did

228 Mendes da Costa, “Co-​ ownership under Victorian Land Law” (1961) 3 MULR 137 at 143 finds the distinction, and the reason for the distinction, strange. The reason for the distinction is that in the latter instance both the interests of A are created by the same instrument and are therefore not separate estates –​ thus merger does not operate. In the former instance, the interests of A are separate estates as they are separately acquired and so A’s life estate merges with the remainder and destroys the unity of interest. In fact, Mendes da Costa argues that the distinction may no longer be upheld. 229 Compare the situation where A surrenders the life estate to B. Such a surrender extinguishes the life estate, both B and C benefit and the joint tenancy continues. 230 See Tooher, “Killing the Goose That Lays the Golden Eggs” (1998) 32 ALJ 14; Youdan, “Acquisition of Property by Killing” (1973) 89 LQR 235. For an excellent review of the principles behind this form of severance, see Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 958ff. 231 Public Trustee v Evans [1985] 2 NSWLR 188 at 193. 232 See, for example, Re Barrowcliff [1927] SASR 147; Kemp v Public Curator of Queensland [1969] Qd R 145. This is problematic as it has also been accepted that severance can only occur before death: Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 960; Rasmanis v Jurewitsch [1968] 2 NSWR 166; affd (1969) 70 SR (NSW) 407. 233 Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), p 960. 234 Affd (1969) 70 SR (NSW) 407. See also Re Thorp and Real Property Act [1962] NSWR 889; Re Stone [1989] 1 Qd R 351; Public Trustee v Evans [1985] 2 NSWLR 188; Neubacher v Good (2003) 11 BPR 20,877. Compare Re Barrowcliff [1927] SASR 147; Kemp v Public Curator of Queensland [1969] Qd R 145, where the notion of enforcing principles of public policy by resort to equity was rejected. The act of killing effected a severance of the joint tenancy. 235 Should not be unjustly enriched. 618 [12.430]

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not require that either compensation be paid to the victim or that the felon be punished by loss of property.236 Where there are more than two joint tenants, the situation is more complex. In Rasmanis there was a further block of land held by A, B and C as joint tenants. The court had to reach a decision as to whether C, the third joint tenant, or the estate of B would be the more suitable recipient for the enhancement in value of which the felon had to be deprived. As the idea of public policy was to ensure that the felon did not gain by the felony and was not to compensate the victim and, as C should not be deprived of the enjoyment of such enhancement as would flow from the victim’s death, C was considered the more suitable recipient. Street J at first instance, therefore, found that A and C held the legal estate as joint tenants on a constructive trust for A as to one-​third and for C as to two-​thirds. There was no appeal as to the way in which the beneficial interests should be distributed and thus the Court of Appeal affirmed the decision of Street J. However, it appears clear the Court of Appeal took the view that the public policy aim of preventing A from acquiring a benefit from B’s death would have been adequately and properly served simply by B’s beneficial interest being severed and settled upon C by leaving intact the equitable joint tenancy as to the remaining two thirds. That is, if the issue of the equitable proportions had been before it, the Court of Appeal may have found that A and C held the legal estate on a constructive trust for C as to one third and for A and C as joint tenants as to two-​thirds.237 [12.435] Where the killing is unlawful, but does not constitute murder, the question has

arisen as to whether public policy considerations similarly preclude the wrongdoer benefiting from his or her crime.238 In several cases the courts have found that the relevant public policy principle (the forfeiture rule) should not apply where the homicide is justifiable or excusable.239 In Re Barrowcliff [1927] SASR 147, however, the court held there could be no right of survivorship where a joint tenant has unlawfully killed the other joint tenant.240 Further, in Troja v Troja (1994) 33 NSWLR 269 the New South Wales Court of Appeal held that the forfeiture rule should be applied strictly to prevent a person from gaining any benefit from the killing of another.241 The effect of this decision has been overridden in New South Wales by the Forfeiture Act 1995 (NSW), which provides that, except in the case of murder, the forfeiture rule may be modified if the justice of the situation requires it to be so modified.242 Similar legislation exists in the Australian Capital Territory and has been recommended for

36 It has been argued that the killer’s position is indirectly enhanced. 2 237 Gray and Gray, Elements of Land Law (5th ed, OUP, London, 2009), pp 962–​963 suggest that a fairer result would have been achieved by a decision that B’s estate take a one-​third share and A and C a two-​thirds share as joint tenants. 238 See also Dillon, “When Beneficiary Slays Benefactor: The “Forfeiture Rule” Shall Operate as a Principle of the General Law” (1998) 6 APLJ 254. See Re Stone [1989] 1 Qd R 351, where the charge was reduced from murder to manslaughter on the ground of diminished responsibility and the principle of Rasmanis v Jurewitsch [1968] 2 NSWR 166 was still applied. 239 Public Trustee v Fraser (1987) 9 NSWLR 433 (on the facts, forfeiture rule applied); Public Trustee v Evans (1985) 2 NSWLR 188; Re Keitley [1992] 1 VR 583. 240 Re Barrowcliff [1927] SASR 147. 241 Troja v Troja (1994) 33 NSWLR 269. See similarly Estate of Soukup (1997) 97 A Cr R 103. 242 Forfeiture Act 1995 (NSW), ss 4, 5(2), (3). In Batey v Potts (2004) 61 NSWLR 274 it was held that where a person’s entitlement was accelerated by the felony, the appropriate remedy was to deprive the felon of enjoyment of the entitlement for the period of the victim’s life expectancy. [12.435]  619

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introduction in Tasmania.243 The kinds of cases where the principle has been modified include killing in the context of domestic violence,244 suicide pacts245 and diminished responsibility in the killer.246 It has been suggested that the constructive trust analysis may be used to effect a severance where public policy considerations other than unlawful killing exist and arguably warrant the imposition of such a trust.247 The possible scope for severance in this area is wide. It is unclear, however, whether the courts will be prepared to apply the Rasmanis v Jurewitsch [1968] 2 NSWR 166 principle to circumstances not involving an unlawful killing.

TERMINATION OF CO-​OWNERSHIP General [12.440]  At common law, any dealing with the land as a whole, either to divide it between the

co-​owners or to dispose of it to a third party, required the agreement of all co-​owners. The first statutory power enabling one co-​owner to compel action was conferred in the 16th century whereby partition could be compelled. Partition has been held to require a complete division of the land. In Segal v Barel [2013] NSWCA 92, the parties put forward a plan for the substantial division of the land but to procure access to the land, a strata title was proposed with separate units and common property for the access land. The strata title legislation produced separate titles for the land constituting the units but the access land was common property for which title was vested in a body corporate holding that land on trust for the unit holders. The New South Wales Court of Appeal held that the proposal did not constitute partition as complete separation of ownership was required and shared ownership remained through the beneficial ownership of the common property. This strict approach makes partition even more difficult in higher density urban environments. Furthermore, planning constraints may mean that physical division of the land might not be able to be carried out so as to produce a fair distribution between the co-​owners and might not be practicable. Indeed, in Australia today subdivision of land is subject to stringent statutory controls and partition is thus a remedy of limited usefulness.248 However, in Francis v Francis [2009] SASC 363 parents and a daughter were co-​owners in unequal shares of land on which a transportable home had been erected. It was a condition of the planning consent for the erection of the home that it be removed if the land was sold. The daughter’s interest would be best preserved if she could retain the portion of the land on which the home was erected. The parents would be properly recompensed by proceeds from the remainder of the

243

Forfeiture Act 1991 (ACT), ss 3, 4; Tasmanian Law Reform Institute, The Forfeiture Rule (Report No 6, December 2004). 244 Re K [1985] Ch 85. 245 Dunbar v Plant [1998] Ch 412. 246 Jans v Public Trustee [2002] NSWSC 628. 247 See Public Trustee v Grivas [1974] 2 NSWLR 316 at 322; Delaney v Molloy (1993) NSW ConvR 55-​664. 248 Nonetheless, it has been held that where a request for partition is made and neither party requests a sale, the court is obliged to order partition: De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56. Apparently the order for partition is made without regard to the restrictions on subdivision and subject to the ability of the parties to apply for alternative orders if partition is not possible. 620 [12.440]

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land. Partition was therefore desirable. An application for partition was adjourned to enable the co-​owners to obtain planning permission for the subdivision of the land.

Partition or sale [12.445]  From the second half of the 19th century the courts have been empowered to order

sale in lieu of partition and statutory provisions to this effect249 exist in South Australia, Western Australia and Tasmania. These provisions contain three distinct powers:  one in the case of special circumstances; the second in the case of an application by the holder or holders of a half share or more; the third in any other circumstance.250 In the case of special circumstances, the court has a general discretion to act as it thinks fit in the interests of the co-​ owners. In the case of an application by the holder of a half share, a sale shall be ordered unless there is good reason to the contrary. In Peck v Peck [1965] SASR 293251 a husband brought an action for the sale of a home owned jointly with his wife. The wife argued that she had been deserted by her husband and the sale would deprive her of her residence. This argument is held to be an insufficient reason to deny sale. In circumstances other than special circumstances or applications by the holders of the half share or more, the court has a discretion whether to order sale. However, in these cases the remaining co-​owners have a right to buy out the applicant. Because the three powers are distinct the right to buy out does not extend to cases of special circumstances or applications by half share holders; though it is difficult to see why such an offer should be refused.

General discretion [12.450]  In Victoria and the Australian Capital Territory a general discretion with respect

to partition or sale is conferred. In Victoria a co-​owner may apply to the VCAT for an order under Div 2 of Pt IV of the Property Law Act 1958 (Vic). In the Australian Capital Territory ss 243 and 244 of the Civil Law (Property) Act 2006 (ACT) confer a similar discretion. Under s 244, the court is directed to take into account a number of factors, including the nature of the property, the number of owners and any disability of an owner, reflecting the best interests of the parties. Where application for sale is made by the holders of a half share or more, sale is to be granted.

Statutory trusts [12.455] In New South Wales, Queensland and the Northern Territory legislation

provides for statutory trusts. The statutory trust legislation confers power on the court, on application by a co-​owner, to appoint trustees and vest the co-​owned property in them upon the “statutory trust for sale” or upon the “statutory trust for partition”.252 In these jurisdictions one or more co-​owners may apply to the court for the appointment of trustees. These trustees may be appointed under a statutory trust for sale or a statutory trust for

249 250 251 252

Law of Property Act 1936 (SA), Pt VIII; Property Law Act 1969 (WA), Pt XIX; Partition Act 1869 (Tas); see Cock, “Co-​ownership: Back to the Partition Act” [1982] Conv 415. Perman v Maloney [1939] VLR 376. See also Bray v Bray (1926) 38 CLR 542. Conveyancing Act 1919 (NSW), Pt IV, Div 6; Property Law Act 1974 (Qld), Pt V, Div 2; Law of Property Act (NT), Pt 5, Div 2. [12.455]  621

PART 4 Divided Ownership of Land

partition.253 Appointment on the trust for partition may be ordered if the court is satisfied that partition is more beneficial than sale for the holders of a half share or more.254 Where trustees for sale are appointed, they hold on trust for sale and hold the proceeds and income prior to sale upon trust to give effect to the rights of the co-​owners.255 In the case of either trust, the trustees should consult the beneficiaries and give effect to their wishes so far as practicable and consistent with the general interest of the trust.256 This legislation means that in principle, and not merely because of practicalities, emphasis has shifted from partition as the primary right with sale in special circumstances to sale as the primary right with partition in special circumstances.257 The interests in the land are transferred into equitable interests in the proceeds of sale.258 Even where partition is shown to be more beneficial than sale to the majority co-​owners, the court retains a discretion; hardship on the minority is a ground for refusal of partition.259 However, in the three jurisdictions sale is now the primary remedy and will be granted unless the party opposing sale can make out grounds against sale.260 That party has the onus of establishing special circumstances which make it inappropriate for the applicant co-​owner to be granted sale. Such circumstances would be an agreement not to sell without unanimous consent, some other obligation on the applicant or conduct that makes a sale unconscionable.261 In Segal v Barel [2013] NSWCA 92, the court held that only monetary factors could be taken into account and disregarded the benefit to one co-​owner of continuing to reside in a family home. Additionally, in the three jurisdictions a stay of proceedings may be appropriate where other proceedings are in progress, in particular where family law proceedings have been commenced, as those proceedings involve a broader range of considerations.262

Dealings by a co-​owner [12.460]  While dealing with the land as a whole requires the consent of all co-​owners, the

alienability of any proprietary interest means that a co-​owner can dispose of the co-​owner’s own share. In the case of a joint tenancy, the disposition converts the co-​ownership into a tenancy in common. However, co-​ownership might result from a joint enterprise in which the co-​owners expect to deal with their fellow co-​owners personally. Consequently they may 253 254 255 256 257 258 259 260

261 262

Conveyancing Act 1919 (NSW), s 66G(1); Property Law Act 1974 (Qld), Pt V, Div 2; Law of Property Act (NT), Pt 5, Div 2. Conveyancing Act 1919 (NSW), s 66G(4); Property Law Act 1974 (Qld), Pt V, Div 2; Law of Property Act (NT), Pt 5, Div 2. Conveyancing Act 1919 (NSW), s 66F(2); Property Law Act 1974 (Qld), Pt V, Div 2; Law of Property Act (NT), Pt 5, Div 2. Conveyancing Act 1919 (NSW), s 66H; Property Law Act 1974 (Qld), Pt V, Div 2; Law of Property Act (NT), Pt 5, Div 2. Bendall v Tyack [2010] NSWSC 431; Re Cordingley (1948) 48 SR (NSW) 248. Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2008] NSWSC 839. Hayward v Skinner [1981] NSWLR 590; Pannizutti v Trask (1987) 10 NSWLR 531. Re Tettell (1952) 52 SR (NSW) 221; Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068; Stephens v Debney (1959) 60 SR (NSW) 468; Ex parte Eimbart Pty Ltd [1982] Qd R 398. Re Wlodarczyk [2000] 2 Qd R 216 emphasised the need to sell in the case of a wasting asset. See also Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 286, 290-​291 and Wallace, Weir and McCrimmon, Real Property Law in Queensland (4th ed, Law Book Co, Sydney, 2015), pp 262–​242. Jolevski v Jolevska [2010] NSWSC 416. Norris v Norris [1985] 1 NSWLR 472.

622 [12.460]

Co-ownership  Chapter  12

make an agreement that no co-​owner will dispose of that co-​owner’s share to an outside party without the consent of the other co-​owners. Alternatively, co-​owners might agree that an application by one co-​owner for the exercise of the statutory powers of partition or sale not be made without prior notice to the other co-​owners or a first offer of the property to the other co-​owners. Such agreements may fail as infringing the public policy against restraints upon alienation.263 In Elton v Cavill (No 2) (1993) 34 NSWLR 289 Young J in the New South Wales Supreme Court held that a restraint upon a disposition by one co-​owner would not be invalid where its purpose is to serve as collateral benefit. Such a benefit would include reasonable controls over who should be the owner of other undivided shares in the same property. However, a restraint would not be valid if used to achieve rights of pre-​emption not otherwise existing, or to create a position where the terms of any sale could be dictated. In Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 Brennan J in the High Court considered a restraint upon an application for sale or partition. He considered that a qualified restraint would not be invalid as the agreement served the same purpose as the legislative provisions in setting out a procedure for the termination of the co-​ownership. But again, an absolute prohibition was not endorsed. [12.465] Every co-​owner has an interest which can be dealt with. The issue commonly arising

in the cases of grants of rights of possession, security interests or other encumbrances is the relationship between the grantee and the non-​granting co-​owners. Where the grantor is a joint tenant, rather than a tenant in common, the grant may effect a severance of the joint tenancy. In the absence of severance the grantee’s rights may be affected by survivorship on the death either of the grantor or of the other co-​owners. [12.470] A co-​owner may grant a lease of that owner’s interest and the grantee will gain the

co-​owner’s right to enjoy possession of each and every part of the land but in common with the non-​granting co-​owners. Consequently, a co-​owner who is not a party to the lease may occupy the land, but may not interfere with the tenant’s concurrent occupation. In Catanzariti v Whitehouse (1981) 55 FLR 426 a wife left a jointly owned home. Her husband granted a lease of the premises for a period of 12 months. Subsequently, the wife moved back onto the premises and interfered with the tenant’s personal effects. In was held that while entry by the wife onto the land was not wrongful as against the tenant, she could not prevent the tenant from exercising the right of use and occupation. Therefore damage to the personal effects was an actionable wrong. It is unclear whether a lease by a joint tenant severs the joint tenancy. However, the lease does operate as a suspension of the joint tenancy for its duration.264 Thus, even if the joint tenant who has granted the lease dies, the tenant’s rights continue until termination of the lease. Survivorship does not operate during the term of the lease.265 However, where the lease may be terminated by notice, any one of the co-​owners probably can give notice to terminate the lease.266

263 264 265 266

Hall v Busst (1960) 104 CLR 206. Frieze v Unger [1960] VR 230. Frieze v Unger [1960] VR 230. Doe d Aslin and Finch v Summersett (1830) 1 B & Ad 135; 109 ER 738. Complications may arise in the case of statutory regulations of tenancies; cf Bradbrook, MacCallum and Moore, Residential Tenancy Law and Practice –​Victoria and South Australia (Law Book Co, Sydney, 1983), pp 625–​627. [12.470]  623

PART 4 Divided Ownership of Land

[12.475] Where an encumbrance is granted by one co-​ owner, that encumbrance will be

enforceable against the other co-​owners if it does not interfere with the rights of the others to possession of the land. In Hedley v Roberts [1977] VR 282 one co-​owner granted an easement to use a toilet on the co-​owned land. Harris J considered that this right would not subject the other co-​owner to any undue interference with the right to use the land. In that case the granting co-​owner was a tenant in common. There was thus no question of cessation of the interest on the death of the grantor. Harris J indicated that an encumbrance granted by a joint tenant would cease on the death of the joint tenant before the death of the other joint tenant. The principle of survivorship meant that the grantor’s interest ceased and the encumbrance granted over that interest ceased with it. Similarly a mortgage granted by a joint tenant binds only the granting co-​owner267 and ceases to have effect on the death of the joint tenant.268 Under the Torrens system, a mortgage as a charge over the land can be granted by a joint tenant without severance of the joint tenancy; a common law mortgage will sever the joint tenancy because there is a transfer of the interest of the joint tenant.269 One co-​owner may grant a right to occupy premises which does not confer any proprietary interest upon the grantee, such as a licence to occupy premises, or a contract to provide board or lodgings. The nature of the interest means that the grantee’s remedies exist only against the grantor and would not exist against the other co-​owners. Furthermore, it has been held that a co-​owner other than the grantor can give notice to terminate a licence without the authority or consent of the grantor.270

267 268 269 270

Fulton v 523 Nominees Pty Ltd [1984] VR 200. Lyons v Lyons [1967] VR 169. Lyons v Lyons [1967] VR 169. Annen v Rattee (1985) 273 EG 503; Slatter, “Co-​ owners and Licensees: Not So Simple” (1985) 135 New LJ 885.

624 [12.475]

CHAPTER 13

Management Where Ownership Is Divided [13.05] [13.20] [13.45] [13.70]

MULTIPLE DECISION-​MAKERS..................................................................................... 625 SETTLEMENTS AND TRUSTS FOR SALE........................................................................ 627 DOCTRINE OF WASTE................................................................................................. 629 DEVELOPMENT OF STRATA AND COMMUNITY TITLES............................................... 632 [13.70] Overview..................................................................................................... 632 [13.85] Scope of current legislation............................................................................ 633 [13.110] MANAGEMENT AND SETTLED ESTATES....................................................................... 636 [13.110] Scope of the settled land legislation............................................................... 636 [13.115] Key terms under the settled land acts............................................................. 637 [13.125] Role of life tenant and trustees...................................................................... 638 [13.150] Repairs, maintenance and improvements....................................................... 641 [13.165] Exploitation of the land................................................................................. 642 [13.175] Sales and other dispositions.......................................................................... 643 [13.185] MANAGEMENT AND TRUSTS AND TRUSTS FOR SALE................................................. 644 [13.185] Impact of settled land legislation................................................................... 644 [13.195] General powers of trustees............................................................................ 645 [13.215] Repairs, maintenance and improvements....................................................... 647 [13.230] Exploitation of the land................................................................................. 649 [13.235] Sales and other dispositions.......................................................................... 649 [13.265] MANAGEMENT AND STRATA AND COMMUNITY TITLES............................................ 652 [13.265] The corporation............................................................................................ 652 [13.285] Property rights.............................................................................................. 655 [13.310] Property management.................................................................................. 659 [13.350] Financial obligations..................................................................................... 662 [13.365] Community rules.......................................................................................... 664 [13.385] Building decline............................................................................................ 665 [13.395] Dispute resolution and winding up................................................................. 666

MULTIPLE DECISION-​MAKERS [13.05] Conflicts as to the responsibility for the repair, maintenance and improvement of

buildings and land areas can arise whenever the rights of ownership and occupation are not all vested in a single person. Issues between co-​owners are analysed in Chapter 12. Landlord and tenant agreements confer rights of occupation of limited duration so that the use of the land by the tenant who is currently in possession may well affect the condition of the land upon its return to the landlord; the rules as to management responsibility in respect of that relationship are discussed in Chapter  15. Even the existence of a mortgage can create management differences as a mortgagee has an interest in the maintenance of buildings to the fullest extent possible. This chapter is concerned with disputes which occur because of the division of ownership. Division of the legal and beneficial ownership because of a trust, and the existence of successive interests as a result of estates less than a fee simple, present complications because of the balance between current enjoyment and preservation of the land for future beneficiaries. Often there will be both a trust and successive interests as a trustee holds for a life tenant, and [13.05]  625

PART 4 Divided Ownership of Land

then on a trust for the holders of remainder interests. In such cases, as well as mere differences of opinion as to what is best for the land, there are obvious advantages and disadvantages between the parties, including whether work is charged against income or capital. Further, in such cases an enforceable consensus may be impossible because of the lack of contractual capacity of some of the parties. Finally, attention is directed to the most elaborate structure for multiple landholding in today’s society: strata and community titles. Unlike co-​ownership, individual owners have separate rights to part of the land and an organisation for holding shared land and resolving disputes. [13.10] Management decisions relating to repair, maintenance and improvement tend to

revolve around two questions:  What is best for the land? How should work be paid for? Payment for work on the land raises questions as the ability to compel contributions from persons having similar or different interests in the land. Persons with different financial resources may differ as to the appropriate degree of property maintenance and repair. The value of the land itself is another source of payment as money may be raised by a mortgage over the land –​the mortgage imposes liability for repayment. Damage to the land can result from a particular event (such as flood, fire or earthquake) and insurance to cover such events is common, but divided ownership presents scope for argument as to responsibility for and the appropriate level of insurance. In the absence of insurance, liability for repair presents similar divisions. The extreme management decision is disposal of the property itself. A property may become unsuited to the needs of those with interests in it or may present potential for considerable profit from redevelopment by others. With today’s shortage of urban land and urban consolidation principles, sale of part of the land is a further possibility. Holders of limited interests can only dispose of what they have. As already mentioned, not all holders may have full contractual capacity, but, that problem aside, they may simply disagree. A life tenant can transfer only an estate for the transferor’s life.1 Even a more limited disposal by a life tenant, such as a fixed-​term lease, cannot be transferred except subject to termination on the transferor’s death. Even holders of strata or community title interests may wish to dispose of shared property. Disagreement may not be fairly settled by majority rule or by a capacity for a particular party and the parties may seek processes for dispute resolution other than expensive litigation. [13.15] The common problems of repairs, maintenance and improvement, exploitation of

the land, sale and other dispositions can be identified as applying to settlements, trusts and strata or community titles. However, the legal rules for the resolution of those problems have developed quite separately in relation to the three forms of divided ownership. It is necessary to examine the legal framework relevant to each of the three forms and then consider how that framework copes with the common problems. Before the three forms of divided ownership and their solutions to the problems are considered, there are three preliminary matters. The first is the development of settlements and trusts for sale. There is a considerable overlap between settlements and trusts generally and the division is only important because of the retention of statutory law relating to settlements. This law is significant today in Victoria and Tasmania only:  see [13.115]. The second background matter is the law of waste. This doctrine has been most significant in relation to settlements but has some potential as a restraint upon present exploitation in the 1

The estate per autre vie: see [2.135].

626 [13.10]

Management Where Ownership Is Divided  Chapter  13

interests of future owners. The third matter is the development of the statutory structures in each of the eight jurisdictions for strata and community titles.

SETTLEMENTS AND TRUSTS FOR SALE [13.20] Traditionally, divided ownership in English law arose from what were known as

“strict settlements”. These settlements were used to preserve land within families. The fee tail estate of itself provides a means for such preservation but strict settlements were more complicated arrangements providing for a succession of interests. Most commonly, the successive interests were established by a formal arrangement entered into by a living grantor, but that fact reflected the ability to impose the greatest restrictions, rather than the legal impossibility of creating a settlement by a will. Again, interests tended to be legal rather than equitable because of the status desired for the holders of interests. The creation of such interests not only restricted the disposition of land subject to a settlement, but also what could be done with the land. Increasing environmental awareness has led today’s society to the point where the need to balance development and conservation is appreciated. Consequently, the preservation purpose is treated with less scorn today than it was by 19th century jurists and text writers. The doctrine of waste, which set out most of the restrictions, may therefore repay renewed consideration. Of course the fact that preservation was an incidental result of settlements does not mean that the landed classes were concerned so much with the environment as the preservation of power, which was the express purpose of the settlement. [13.25]  The fact that the fee tail estate was recognised by statute2 rather than by the common

law is an early reflection of the fact that what might appear technical legal argument is concerned with the balance between preservation of the status quo and development. The common law recognition of devices, whereby a fee tail owner could bar the entail or effectively pass a fee simple interest, weakened the preservation effects of settlements.3 At the same time, the efforts of conveyancers were directed towards adaptations of settlements to prevent destructive endeavours. Consequently, settlements took the form of a life estate in favour of the settlor’s eldest son, followed by estates in tail to that son and other sons and an ultimate remainder to the heirs in general of the eldest son. Such settlements have not featured in Australian property dealings. The continued recognition of the fee tail estate in some States seems only to reflect a perverse legislative desire not to interfere with antiquities.4 [13.30]  The term “settlement”, at least in a property context, covers any disposition by which

property is held for different persons in succession. Thus a simple devise of land to a spouse for the spouse’s lifetime followed by a remainder to the devisor’s children is a settlement. It is still possible in most States, even under the Torrens system, that the spouse and children could be registered legal owners of their interests. In Queensland future interests must be equitable.5 Even in the other States it is more common, but not essential, for a trust to be employed for such a settlement. Whereas the strict settlement was the product of much legal thought and 2 3 4

5

De Donis Conditionalibus 1285: see [2.110]. These devices are discussed at [2.115]. The fee tail estate has been abolished in New South Wales, Victoria, Queensland, Western Australia, the Australian Capital Territory and the Northern Territory; in South Australia and Tasmania the tenant in tail in possession is empowered to dispose of a fee simple interest by transfer inter vivos or by will: see [2.115]. Property Law Act 1974 (Qld), s 30. [13.30]  627

PART 4 Divided Ownership of Land

that thought extended to provision for most conceivable (and sometimes barely conceivable) eventualities, the simple devise to the spouse and children may ignore altogether possible complications in their future. Reliance on rules of law rather than the terms of settlement may therefore be greater in the cases of the simple devise. A further impact upon settlements has been the development of death duties. A  settlor could expose the estate to greater duties than would otherwise be payable as a result of the form of that settlement. While such duties have been abolished in Australia today, the form of disposition on death may affect other taxation imposts –​principal of which at the time of writing is the capital gains tax. [13.35]  Once a settlement of any sort has been created, a dealing with the land as a whole

is impossible unless all parties entitled to an interest are alive, have legal capacity and concur in the proposed course of action. In the mid-​19th  century these restrictions on the development of land were tackled by English legislation. Different Australian jurisdictions adapted different stages of these reforms. New South Wales (and consequently the Australian Capital Territory) and South Australia (and consequently the Northern Territory) adopted earlier legislation which requires the concurrence of the courts for the exercise of the powers. The comprehensive reform came in the 1882 Settled Land Act. This Act entitled the life tenant, despite that person’s limited estate, to sell the fee simple and provided the life tenant with extensive powers of management. That legislation was adopted, not faithfully, in Queensland, Victoria, Western Australia and Tasmania. Recently the appropriate balance between those with current interests (surviving family members) and those with subsequent Interests arose in Royal Melbourne Hospital v Equity Trustees Ltd [2007] VSCA 162. The purpose of the settled land legislation was stated by Bell AJA at [245] and [246] to be: 245 The Settled Land Act descends from English legislation brought in to ensure land was not put beyond productive use. Under the inheritance laws of that country, land could be “kept in the family” by passing it down from generation to generation –​in those days, strictly along the male line -​without conferring a capacity to sell or lease the land, even in part, and even when it was imperative to do so because, for example, the generation in possession could not “keep up the estate”. The situation was brought to a head in the agricultural depression of the early 19th century. Much farmable land was not worked because the family in possession had neither the money, nor the capacity to obtain the money, to do so. Yet, under the settlement, they could not sell or lease the land, even to somebody who had the intent and the means to work it. 246 As introduced in England in 1882, the Settled Land Act applied, among things, to land and interests in land left to persons in succession in wills. The will was the “settlement” and the land or interest was the “settled land”. The Act gave the “tenant for life” the power to sell or lease the land, in whole or in part.

Bell AJA also pointed out that the later settled land legislation contained strong measures to support the exercise of powers by the life tenant to turn land into capital. More recently, Queensland, Western Australia and seemingly the Australian Capital Territory have repealed their settled land legislation and assimilated settled land with trust property so that the powers are exercised by the trustees. Academic opinion leans strongly in support of the Queensland and Western Australian initiatives vesting powers in the trustees.6

6

Harvey, Settlements of Land (Sweet & Maxwell, London, 1973), p 80.

628 [13.35]

Management Where Ownership Is Divided  Chapter  13

The Queensland position, which makes future interests equitable and confers statutory powers overriding the settlement, seems the best way to enable the land to be dealt with responsibly and to protect beneficiaries of the settlement. [13.40] The settlement envisaged the use of the land itself by the holders of the successive

interests. The land could provide for those persons by conversion into money. Therefore, land could be left to trustees for these beneficiaries, but on the basis that the land was to be sold and the proceeds invested for the beneficiaries. Wherever trustees are directed to sell trust property, there is a trust for sale. A trust for sale does not impede development in the same way as a settlement because the trustees had the capacity, indeed a duty, to transfer a fee simple interest. Powers of management may not, however, be addressed in the settlement, particularly as emphasis is upon sale. By 1925, the English Settled Land Act did not apply to trusts for sale. Thus trusts for sale could be used where it was desired that the powers of sale and management vest in trustees, rather than the tenant for life. The trustees could be chosen because they were indeed less likely to sell than the life tenant. Similarly, consent for the exercise of powers could be required from someone unlikely to consent. One author gives the example of a trust for sale, subject to the consent of the holder of a contingent remainder, entitled only if the property is unsold at the life tenant’s death.7 In all cases where there is a trust, trustees may seek powers to dispose of, or manage, the land. There is a potential for conflict between trustees and life tenants. In Australia the relationship between settled land legislation and trusts for sale varies between the four States and two Territories which retain settled land legislation. The relationship between the powers of life tenants and those of trustees similarly varies.

DOCTRINE OF WASTE [13.45]  Because of the general doctrine that persons can only dispose of such interests as

they have, owners of estates less than freehold cannot as a rule deal with the whole interest in the land. However, the owner of a lesser estate will at some point be entitled to possession –​ the person is then described as holding an interest in possession. The use of the land can significantly affect its longer-​term value. In Australia land degradation because of an absence of soil conservation measures is a major environmental harm.8 Even the absence of regular painting may cause serious building decay. The exercise of the right of possession can therefore cause injury to the interests of the holders of future interests. To protect their interests, the common law developed the doctrine of waste whereby the owners of limited interests are limited in their use of the land. The doctrine has been recently applied to impose responsibilities upon a mortgagor in favour of a mortgagee9 and has long been used as part of the law defining the repair obligations of tenants (periodic or fixed-​term) in favour of landlords and may be relevant as between co-​owners. [13.50]  Traditionally there have been said to be four categories of waste: voluntary waste,

permissive waste, ameliorating waste and equitable waste. Voluntary waste is the commission

7 8 9

See Harvey, Settlements of Land (Sweet & Maxwell, London, 1973), p 79, citing Re Inns [1947] Ch 576. Bradsen, “Land Degradation –​Current and Proposed Legal Controls” (1987) 4 E & PLJ 113. Crocombe v Pine Forests of Australia [2005] NSWSC 151, discussed at [13.65]. [13.50]  629

PART 4 Divided Ownership of Land

of acts harming the property. The simplest form is damage to the fabric of improvements on land.10 But, because the doctrine of waste is concerned with long-​term preservation of the land, some acts of exploitation are regarded as waste and, if intentionally undertaken, as voluntary waste, in particular the opening of a mine11 and the cutting of timber.12 Permissive waste occurs where harm is allowed to occur –​typically a failure to repair. Ameliorating waste is an alteration to the land which constitutes an improvement to the land.13 There is therefore some doubt whether ameliorating waste amounts to waste at all. As Jessell MR stated:14 “The erection of buildings on land which improve the value of the land is not waste. In order to prove waste you must prove an injury to the inheritance”. The more traditional view seems to be that any alteration to the nature of the land constitutes waste and that if the alteration benefits the land, technically, ameliorating waste has been committed. However, such waste does not give rise to any remedy by way of injunction15 or in damages.16 It has been suggested17 that modernisation of an historic building could constitute ameliorating waste and could well be the subject of concern. The acts of modernisation might result in an increase in value of the land, but different opinions exist as to whether the land is improved. The issue then is whether the courts would restrain the modernisation. That issue seems to be moving towards a judgment as to the merits of modernisation against the merits of preservation. The courts would have little by way of legal guidelines for such a judgment. In the only case in which the issue arose (in a co-​ownership context), the court resolved the matter by asserting that the works amounted to a betterment and would not be restrained.18 This conclusion does seem to be a value judgment as to the merit of the works and to take the law of waste into the realm of aesthetics and similar considerations. The fourth class of waste is equitable waste, which clearly is a subspecies of voluntary waste, in that it occurs when intentional and serious harm is done to the property. Examples of equitable waste have included stripping a building of lead, iron, glass, doors and boards19 or the removal of trees providing ornament or shelter.20 In the Australian rural environment the destruction of vegetation essential for soil conservation could be an act of equitable waste. Equitable waste has been developed because of limits on liability for voluntary waste. [13.55]  The categories of waste have been developed to differentiate the levels of responsibility

owed by owners of limited interests in land. These levels have largely depended upon the provisions of the instrument creating the limited interest. Liability for permissive waste exists only if the instrument imposes a liability to repair.21 If the instrument is silent, there 10 11

12 13 14 15 16 17 18 19 20 21

Marsden v Edward Heyes Ltd [1927] 2 KB 1. Saunder’s Case (1599) 5 Co Rep 12a; 77 ER 66; Spotswood v Hand (1874) 5 AJR 85; Dashwood v Magniac [1891] 3 Ch 306. Working an already opened mine would not constitute waste as the grantor has shown an intention that it is to be worked and its profits enjoyed. Re Hart [1954] SASR 1. Doherty v Allman (1878) 3 AC 709; Meux v Cobley [1892] 2 Ch 253; Hockley v Rendell (1909) 11 WALR 170. Jones v Chappell (1875) LR 20 Eq 539 at 542. Doherty v Allman (1878) 3 AC 709; Meux v Cobley [1892] 2 Ch 253. Hockley v Rendell (1909) 11 WALR 170. Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), p 132. Ferguson v Miller [1978] NZLR 819. Vane v Barnard (1716) 2 Vern 738; 23 ER 1082. Turner v Jackson (1856) 1 VLT 127; Weld-​Blundell v Wolseley [1903] 2 Ch 664. Re Cartwright (1889) 41 Ch D 532.

630 [13.55]

Management Where Ownership Is Divided  Chapter  13

is no liability for permissive waste. An owner is, however, liable for voluntary waste unless exempted by the instrument.22 An exempted owner is said to be unimpeachable for waste. However, even an owner unimpeachable for waste is liable for equitable waste.23 Again, the instrument could confer an exemption for this liability. [13.60]  The rules as to waste govern the ability to cut timber without liability to holders of

future interests. If the instrument is silent as to liability for waste, the owner will be impeachable and thus liable if he or she cuts timber. If the instrument makes the owner unimpeachable, he or she will be able to cut timber without liability unless what is to be cut comprises trees providing ornament or shelter. However, not all trees are classified as timber. In England the traditional timber trees were oak, elm and ash. Furthermore, a life tenant could remove young trees for the benefit if other growing trees and could cut trees grown as part of a timber estate. [13.65]  The issue of the liability in Australia of a life tenant cutting down trees first arose in

Re Hart [1954] SASR 1. In that case land was left by will in 1951 to trustees on trust for life interests. The land comprised a rural property in the south-​east of South Australia on which there was a house, an orchard and a number of pinus radiata trees; part of the land was used for grazing. The trustees sold 713 trees and netted over 4,000 pounds. The issue was whether this sum was income or capital and that issue depended on whether the trees could have been cut by the life tenants without liability. Reed J pointed out that although oak, ash and elm were the traditional timber trees, even in England other trees could be classified as timber if by the custom of the district the trees were used for building. Reference was made to the practice in some parts of South Australia of building houses from mallee posts stopped with clay and with mallee rafters carrying the roof. In such places, mallee would be regarded as timber. However, in the area of the land, pinus radiata trees were not used for the construction or repair of buildings and were therefore not timber. A life tenant could therefore cut such trees and keep the proceeds. Reference was made to further rights of life tenants to cut even timber. First, young trees could be cut to allow the proper growth of other trees. Secondly, trees planted as a timber estate could be cultivated and cut in the regular course of management. The result in Re Hart as to the scope of the concept of timber was changed in Crocombe v Pine Forests of Australia [2005] NSWSC 151, although without any reformulation of the principles espoused.24 The dispute was one between mortgagor and mortgagee and Young CJ in Eq held that a mortgagor in possession could not commit waste. The mortgage had been granted with respect to an investment in a timber plantation of pinus radiata. The plantation was being grown for millable timber for structural building. Young CJ had no difficulty in finding that the pinus radiata was therefore used for building purposes and on the principles of Re Hart constituted timber. However, as a plantation, the trees were being grown to be harvested and it is not waste to fell timber in a timber estate. The mortgagor was entitled to cut these trees.

22 23

24

Woodhouse v Walker (1880) 5 QBD 404. This common rule is now restated by statute in all jurisdictions except Tasmania and the Northern Territory. The provisions appear to impose an obligation at common law for what was equitable waste and thus probably make available legal as well as equitable remedies: Conveyancing Act 1919 (NSW), s 9; Property Law Act 1958 (Vic), s 133; Property Law Act 1974 (Qld), s 25; Law of Property Act 1936 (SA), s 12; Property Law Act 1969 (WA), s 17; Civil Law (Property) Act 2006 (ACT), s 207. Young CJ expressed delight in being able to disprove text writers’ predictions that the definition of timber in Australia would never occur. [13.65]  631

PART 4 Divided Ownership of Land

The weight to be given in Australia today to the “use for building” test as to what constitutes timber must be questioned. The categorisation as timber only imposes liability if the owner is impeachable for waste. At least where trees are grown for wildlife protection or soil conservation or shade and shelter, the interests of future owners probably depends more on classifying the cutting of timber as equitable waste. Furthermore, the cutting of native vegetation or significant trees is now controlled by planning legislation.

DEVELOPMENT OF STRATA AND COMMUNITY TITLES Overview [13.70]  Strata and community titles are a response to the need for more intensive housing

and for commercial and industrial uses where buildings have commonly been divided amongst different landholders. Buildings and land may be shared by persons who acquire property rights. Legislation now exists in all States and Territories for some form of shared interests. The system was designed to facilitate acquisition of a Torrens system title to individual dwellings in a building consisting of multiple dwellings but now extends to a much greater mix of sharing buildings and land. The Australian system has had a considerable influence overseas.25 What is owned can be identified by reference to a building or site plan. Areas not set aside for individual use –​not only grounds, but staircases and other common property –​are vested in a specially created corporation in which all the individual owners hold joint interests. As well as providing a system for shared property ownership, the legislation sets out a management structure based on a body representing all individual owners. Mutual rights and obligations stem from the legislation and rules which the corporation is empowered to make. The current system has developed from innovations starting in the 1950s. Conveyancers of the time sought to find legal structures to allow more diverse forms of land title. The common law allowed vertical and horizontal division of land so the concept that someone owns a cubic space situated between, say, three metres and six metres over ground level is not alien.26 Precise definition of boundaries could nonetheless be difficult. The law of easements would allow for access for persons and utilities, and drainage, and for rights of support and protection from the weather. The law of covenants could ensure the preservation of grounds, but positive obligations to contribute towards maintenance of common areas are not so readily expressed as proprietary interests. The whole property could be the subject of concurrent ownership, but neither joint tenants nor tenants in common have any right to exclusive enjoyment of any part of the land. Contributions to improvements can only be demanded from co-​owners on termination of co-​ownership. A variety of common law techniques could be combined to overcome some of these limitations. Co-​ownership does not allow the partition of separate areas of use for individual co-​owners, but these rights of enjoyment can be conferred by lease and positive undertakings enforced by leasehold covenants. However, the grant of leasehold interests came to be controlled by subdivision regulations. Moreover, the leasehold structure would commonly mean that the co-​owners as lessors granted a lease of particular portions to individual co-​ owners. This structure created a problem of decision-​making between the joint lessors. On

25 26

Pavlich, Condominium Law in British Columbia (Butterworths, Vancouver, 1983), pp 31–​32. Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73.

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the other hand, a company form provides a mechanism for this decision-​making; rights of enjoyment of individual areas can be attached to particular shareholdings and contributions imposed upon shareholders. However, this model means that the individuals own shares in a company and the company is the legal and beneficial owner of the land. Ownership of land has been important for the purpose of borrowing money, as security over land has a special significance for moneylenders. Title to individual living units was difficult, although not impossible to create. [13.75] The legislative strata or community title systems are based on techniques adopted

by conveyancers using a combination of common law rules. In particular, they use the company form to provide for ownership of common areas, the enforcement of maintenance contributions and, for a decision-​making process, to balance the interests of the individuals involved. However, the statutory scheme does confer upon individuals a title to that part of the land or building to be occupied by the individuals. They thus have a registered title which can be used as security and dealt with in the same way as any other title to land. [13.80] The traditional strata title involves the sharing of a building and the area around

it. The unit that is owned by the individual person has boundaries that are defined by walls or ceilings of the building. The common area provides for basic human needs, such as open space, entry to units and supply of services such as water and electricity. The concept of common property provides an opportunity for a range of developments with shared facilities. Facilities which cannot be afforded by individuals may become feasible on a shared basis –​sporting and recreational facilities such as tennis courts or boating marinas for residential users or technological facilities for commercial users. Common areas may also be used to preserve areas of natural attraction. In these cases the common property is essential, but shared buildings may not be. The individual lots may comprise separate parcels of land. Creation of such lots prior to the construction of any dwelling may be desired. More complex developments may not be completed in one stage. New forms of development, such as staged building programmes, may mean that a once-​off division of the land into common property and units is impractical. Developments have changed from division of an existing building to allocation of space and promises of what will occur. Regulation has therefore included deposit of statements of future development, compliance with these statements and divided management within an overall scheme. However, as legislation seeks to allow more complex arrangements, its requirements may be excessive for smaller blocks of units with simpler management needs.27

Scope of current legislation [13.85]  Strata titles for units flow from the deposit with the Land Titles Office of a strata

plan.28 If the plan is accepted, existing certificates of title must be cancelled and new strata titles issued for each unit and the common property. The common property consists of all land

27

28

The Western Australian strata title legislation contains a number of exemptions from its administrative requirements; where only two individual units are involved (Strata Titles Act 1985 (WA), s 36A), where three, four or five units are involved (s 36B). Strata Schemes Development Act 2015 (NSW), s 9; Subdivision Act 1988 (Vic), s 28; Land Title Act 1994 (Qld), ss  49–​49D; Community Titles Act 1996 (SA), s 22; Strata Titles Act 1985 (WA), s 32(1); Strata Titles Act 1998 (Tas), s 8; Unit Titles Act 2001 (ACT), s 24; Unit Titles Schemes Act (NT), s 20. [13.85]  633

PART 4 Divided Ownership of Land

or space not within a building and common areas within a building and such items as pipes, cables, wires, ducts or drains not for the exclusive use of a unit. There may be an additional area, commonly described as a subsidiary interest, set aside for the separate use of the occupier of a unit. In Queensland, South Australia, Tasmania and the Australian Capital Territory the strata plan must contain at least two units and common property.29 In the Northern Territory there must be three units and common property.30 In New South Wales and Western Australia there need only be two units.31 In Victoria the concept of a strata plan has been abolished, but whenever there is common property a body corporate must be created; moreover, more than one body corporate may be created.32 [13.90]  Community titles differ from strata titles (in their traditional sense) because of the

ability to own separate buildings and share common property. Under a traditional strata plan, a unit must comprise the whole or part of a building. A unit may be on one or more levels of the building. The plan must delineate the boundaries of all buildings and the boundaries of all units. It is now possible for each unit to comprise the whole of the separate building as long as there is common property shared by the unit holders. To provide for the different forms of development, the traditional strata title legislation has been expanded to allow for schemes which do not involve any sharing of buildings, but a sharing of surrounding space. All jurisdictions now all allow division beyond that within buildings. In New South Wales the creation of subdivisions with shared land was first enabled by the Community Land Development Act 1989 (NSW); this legislation operates alongside the traditional strata legislation. In other States attempts have been made to institute single procedures for traditional strata schemes and community title schemes. In Victoria, Queensland and the Australian Capital Territory the processes of subdivision and strata management were separated so that subdivision controls could allow for flexible forms of land division, and management regulation to be in place only where common property was present.33 In South Australia and Tasmania, and to an extent in Western Australia and the Northern Territory, the legislatures have sought to vary the basic legislation to allow for both traditional and community schemes.34 [13.95]  In some jurisdictions, legislation dealing with property management of strata schemes

has been separated from that dealing with title issues. As mentioned above, one purpose of the separation has been to allow a broader range of property divisions, but the two functions are to an extent regarded as different. This separation first occurred in New South Wales, where the creation of subdivisions with shared land is enabled by the Community Land Development Act 1989 (NSW) and the arrangements for management of the shared land are

29 30 31 32 3 3 34

Land Title Act 1994 (Qld), ss 49–​49D; Community Titles Act 1996 (SA), s 22; Strata Titles Act 1985 (WA), s 32(1); Strata Titles Act 1998 (Tas), s 8; Unit Titles Act 2001 (ACT), s 24. Unit Titles Schemes Act (NT), s 10. Strata Schemes Development Act 2015 (NSW), ss 9, 10; Strata Titles Act 1985 (WA), s 3; In Western Australia provisions are varied for single tier schemes: Strata Titles Act 1985 (WA), ss 3A, 3AB. Subdivision Act 1988 (Vic), s 27A. In relation to Victoria, a reference to a strata title means a title on which there is common property and, therefore, a body corporate. Title issues are governed by Subdivision Act 1988 (Vic); Land Title Act 1994 (Qld); Unit Titles Act 2001 (ACT). The South Australian Act uses the term “community title” for all schemes, although strata schemes existing at the time of the legislation are preserved.

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regulated by the Community Land Management Act 1989 (NSW). Beyond community title schemes the Strata Schemes Development Act 2015 (NSW) deals with subdivision matters, and the Strata Schemes Management Act 2015 (NSW) deals with management aspects. In Victoria, Queensland and the Australian Capital Territory, land title matters are separate from management issues, because the range of strata and community title possibilities has been enabled by incorporating the land title issues within respectively the general title and subdivision legislation.35 [13.98]  The need for greater regulation of management processes, in particular to overcome

misuse of majority power,36 has been recognised by the adoption of more extensive controls in New South Wales, Victoria and the Australian Capital Territory.37 New South Wales has been engaged in an extensive process of consultation on strata title reform leading to the 2015 legislation. The government has pointed to the significance of strata and community schemes in the property sector; in 2013 there were more than 72,000 strata and community schemes in New South Wales and more than 1,500 licenced strata and community scheme managing agents. The key reforms seek to improve decision-​making by communities, to enable the identification and rectification of building defects, to make fairer the process for sale and renewal of strata schemes, to strengthen budgetary planning, and to simplify the dispute resolution procedures. [13.100]  As well as the flexibility of schemes without sharing of parts of a building, developers

have sought to create strata schemes in stages. In these cases as well as the individual lots and common property there are areas designated for future division into individual lots and common property. This area is increasingly being described as a development lot. Specific provision is now made for such schemes in the legislation in all jurisdictions.38 The problem for purchasers of units in the first stage of such developments is that they expect the further stages to be completed in accordance with representations made to them by the developer. The developer is now required to lodge a disclosure statement as to future development and is under statutory obligations to fulfil that disclosure.39 [13.105]  Because strata titles can normally be issued only on completion of the buildings,

dealings in relation to proposed units are likely to be desired by owners seeking financial contributions from prospective purchasers and by such purchasers seeking to secure desired units. Legislation controlling subdivision prevents the sale, transfer or mortgage of less than a whole allotment. Parties have sought to make contracts for the sale of part of an allotment subject to the obtaining of appropriate approvals. The form of such contracts has not been

35 36 37

38

39

The separate management legislation is the Owners Corporation Act 2006 (Vic), the Body Corporate and Community Management Act 1997 (Qld); the Unit Titles (Management) Act 2011 (ACT). An example of an argument as to abuse of majority power is found in Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46. Strata Schemes Development Act 2015 (NSW), ss 76–​83; Subdivision Act 1988 (Vic), s 38; Land Title Act 1994 (Qld), s 57; Community Titles Act 1996 (SA), s 13(3); Strata Titles Act 1985 (WA), ss 68–​70; Strata Titles Act 1998 (Tas), s 46; Unit Titles Act 2001 (ACT), s 7(1); Unit Titles Schemes Act (NT), s 20. Strata Schemes Development Act 2015 (NSW), s 10(1)(c); Subdivision Act 1988 (Vic), s 37; Land Title Act 1994 (Qld), s 36; Community Titles Act 1996 (SA), s 13; Strata Titles Act 1985 (WA), ss 10, 18, 19; Strata Titles Act 1998 (Tas), ss 35, 46; Unit Titles Act 2001 (ACT), s 17; Unit Titles Schemes Act (NT), s 18. This matter has been addressed in recent Victorian legislation: Subdivision (Amendment) Act 1989 (Vic), s 44(6); Sale of Land (Amendment) Act 1989 (Vic), s 9AA; cf Real Property Act 1886 (SA), s 223(1B)(4). [13.105]  635

PART 4 Divided Ownership of Land

without difficulty. Legislation has allowed for conditional contracts and, more recently, to make it clear that there is a binding contract subject to the condition, legislation has allowed contracts subject to a condition that performance of the contract will not be effected without appropriate approval.40 It seems that a purchaser under such a contract has a caveatable interest with respect to the title of the undivided land.41

MANAGEMENT AND SETTLED ESTATES Scope of the settled land legislation [13.110]  The differences between the settled land legislation42 in the six jurisdictions in which

it is retained are such that, whereas in Victoria and Tasmania a life tenant gains significant powers from the legislation, in New South Wales, South Australia, the Northern Territory and the Australian Capital Territory the powers are so limited that other means of coping with the situation involved are likely to be preferable. Furthermore, only in Victoria and Tasmania does the existence of the life tenant’s statutory powers impinge upon the exercise of powers by trustees. In New South Wales, South Australia and the Northern Territory resort is likely to be had to the powers of trustees which will be available except in the rare situation where the successive estates are legal rather than behind a trust. In Queensland and Western Australia the repeal of the settled land legislation means that the trustees are the holders of powers. In Queensland successive interests cannot be created without a trust as future interests must be equitable. Although there are parallels between the Victorian and Tasmanian legislation and between the New South Wales, South Australian and Northern Territory legislation, the parallels are only at the general level as to whether the life tenants have significant powers of their own motion and not at the level of the details of these powers. These powers are to sell, lease, cut timber and to effect repairs and maintenance including the raising of funds by mortgage for this purpose. In Tasmania the life tenant may exercise these powers, but must give notice of intention to the trustees who may bring any difference before the court. In Victoria the powers can be exercised by the life tenant with the concurrence of the trustees or the court. The management powers (repairs, improvements) are greater in Victoria than in Tasmania. In New South Wales, South Australia and the Northern Territory the life tenant has limited powers to grant short-​term leases, but otherwise may sell or lease only with court approval. In these three jurisdictions, applications for approval require the consent of all persons beneficially entitled; the need for this consent may be dispensed with.43 In South Australia and the Northern Territory court approval may be sought to cut timber, but in none of the three jurisdictions are any management powers conferred.

40 41 42

43

Ovenden v Palyaris Construction Pty Ltd (1974) 11 SASR 65. Conveyancing and Law of Property Act 1898 (NSW), ss 55, 57–​60; Settled Estates Act 1880 (SA), ss 23–​27; Trustee Act (NT), s 69. Conveyancing and Law of Property Act 1898 (NSW), Pt IV; Settled Land Act 1958 (Vic); Settled Estates Act 1880 (SA); Settled Land Act 1884 (Tas); Trustee Act (NT), s 69. In this Part any legislative reference is, unless otherwise indicated, a reference to these Acts. Conveyancing and Law of Property Act 1898 (NSW), s 37(7); Settled Land Act 1958 (Vic), s 8(1)(b)(iv); Settled Land Act 1884 (Tas), s 54; Civil Law (Property) Act 2006 (ACT), s 200.

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Key terms under the settled land acts [13.115] The fundamental concept so far as the application of the Settled Land Acts

is concerned is that of a settlement. A  settlement is defined in all six jurisdictions to exist where an instrument provides that any land is limited to or in trust for any persons by way of succession.44 Land which is the subject of a settlement is described as “settled land”. In Victoria, Tasmania, New South Wales and the Australian Capital Territory a settlement is deemed to exist where a minor is entitled in possession even to a fee simple interest.45 In Victoria the term is extensively defined and includes instances where a person is entitled to a conditional fee simple and where land is charged with the payment of any sum to a person for life or other period.46 Persons entitled to occupy land may be life tenants for the purposes of the Victorian legislation even though they do not hold any proprietary interest and their legislative powers may in turn enable them to grant a lease of the land.47 Settled land exists where there is absolute fee simple ownership but the owner is a minor and therefore lacks full contractual powers. In such a situation there may not be any of the common features of a settlement, such as trustees and successive owners. To overcome many problems, reliance on the courts is essential. The courts may appoint trustees with powers to carry out various types of transaction or sanction a particular transaction. Problems of ownership by a minor arose in Re Klumper [2003] NSWSC 854. A restaurant had been transferred to a minor and, after a period of family management, leasing of the premises was desired to allow for operation of the business. In considering an application under s 46 of the Conveyancing and Law of Property Act 1898 (NSW), Campbell J pointed out that the practice was only to authorise a particular transaction and not transactions of a particular type. It may be that a different approach would be taken for transactions occurring more frequently, such as six-​monthly residential tenancies. In some jurisdictions similar relief can be granted under contracts legislation concerned with contracts made with minors. [13.120]  The operation of the settled land legislation depends upon the life tenant, the trustees

and the court. The person for the time being beneficially entitled to possession of settled land for life is the life tenant. In New South Wales, South Australia and the Northern Territory that person must be entitled to an estate.48 Where two or more persons are entitled to a life interest jointly or in common, they together constitute the life tenant. In Victoria the powers of the life tenant are conferred on a range of persons (the list reflecting the list of arrangements deemed to be settlements).49 A  person entitled to the income of land for life is among those upon whom the powers are conferred. In Victoria and Tasmania the trustees of the settlement are the persons who are, for the time being, under the settlement the trustees with power to sell or to consent to sale or who are appointed trustees for the purpose of the Settled Land Act.50 In 44 45 46 47 48 49 50

Conveyancing and Law of Property Act 1898 (NSW), s 37; Settled Land Act 1958 (Vic), s 8; Settled Estates Act 1880 (SA), s 2; Settled Land Act 1884 (Tas), s 2; Trustee Act (NT), s 69. Settled Land Act 1958 (Vic), s 16. Settled Land Act 1958 (Vic), s 28. Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469; [2007] VSCA 162. Conveyancing and Law of Property Act 1898 (NSW), s 54; Settled Estates Act 1880 (SA), s 22; Trustee Act (NT), s 69. Settled Land Act 1958 (Vic), s 104(2); Settled Land Act 1884 (Tas), s 45(2). Settled Land Act 1958 (Vic), s 30; Settled Land Act 1884 (Tas), s 2(8). [13.120]  637

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New South Wales, South Australia and the Northern Territory trustees have a far lesser role and the only reference to trustees is to all persons who are trustees under the settlement.51 In all jurisdictions the court is the Supreme Court.52 The most troublesome situation with respect to the application of the legislation has been where a personal right of residence has been conferred upon one person and subject to this right the land has been left to another. The definition of “settlement” is in terms of a limitation by way of succession.53 The concept of succession has been held not to have any technical force, though it has been suggested that it contemplates succession on death.54 Consequently, a mere personal right to reside on premises during a person’s lifetime provided that the person has control of the premises has been held to be a sufficient interest to found a succession.55 Even where land is held on trust to pay from the rents and profits a nominated sum to one person for life and subject to that payment to pay the balance of the income to another for life, there was a sufficient succession to constitute a settlement.56 The concept of succession and thus the meaning of “settlement” seems equally broad in all jurisdictions. However, the definition of “life tenant” is broadest in Victoria. In Victoria and Tasmania the definition includes persons entitled by way of succession; in Victoria various others are also included.57 In New South Wales, South Australia, the Northern Territory and the Australian Capital Territory the life tenant must be entitled to an estate. Therefore a person who has a personal right of residence is a life tenant in Victoria and Tasmania, at least unless that right of residence has been declined.58 On the other hand, the holder of such an interest has been held not to be a life tenant under the New South Wales legislation.59 It is possible that the right could be construed as a determinable life interest and thus there would be an estate even in New South Wales, South Australia, the Northern Territory and the Australian Capital Territory. Not only does the Victorian Act not require an estate, but it deems various persons to be the life tenant and confers the powers of the life tenant on other persons. In Re Joseph; Joseph v Equity Trustees Executors & Agency Co Ltd [1960] VR 550, where there was a payment of a fixed sum to one person from the rent and profits and the balance to another, it was suggested that the two recipients together had the powers of the life tenant in that they were together entitled to the income of the land and that the powers of the life tenant are conferred upon the person entitled to the income of land under a trust or direction.

Role of life tenant and trustees [13.125]  In Victoria and Tasmania the life tenant is given wide powers –​in Victoria with the

concurrence of the trustees, in Tasmania subject to the power of the trustees to refer matters 51 52 53 54 55 56 57 58 59

Conveyancing and Law of Property Act 1898 (NSW), ss 55, 61; Settled Estates Act 1880 (SA), s 29; Trustee Act (NT), s 69. Conveyancing and Law of Property Act 1898 (NSW), s 37(8); Settled Land Act 1958 (Vic), s 3(1); Settled Estates Act 1880 (SA), s 3; Settled Land Act 1884 (Tas), s 10(2)(e); Trustee Act (NT), s 50A. Conveyancing and Law of Property Act 1898 (NSW), s 37(7); Settled Land Act 1958 (Vic), s 8(1)(b)(iv); Settled Land Act 1884 (Tas), s 54. Re Hoppe [1961] VR 381 at 402–​403. Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469; [2007] VSCA 162. Re Joseph; Joseph v Equity Trustees Executors & Agency Co Ltd [1960] VR 550. Settled Land Act 1958 (Vic), s 8; Settled Land Act 1884 (Tas), s 2. Re Hoppe [1961] VR 381. Stevenson v Myers (1929) 47 WN (NSW) 94.

638 [13.125]

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to the court. However, the policy of the Act is to increase the alienability of land and not to affect the interests of the parties between themselves. The rights of the parties are transferred from land to the proceeds of the land. While the life tenant is given powers, those powers are to be exercised in the interests of all persons entitled under the settlement. The life tenant is deemed to be in the position of, and have the duties and liabilities of, a trustee for all persons entitled under the settlement.60 The life tenant is subject to directions from the court as to the exercise of his or her powers because of the nature of the life tenant’s position. The life tenant in Chirnside v Chirnside [1947] VLR 183 was the defendant to an action seeking directions with respect to his intended exercise of his powers. The property had been settled by will and the defendant was the settlor’s brother. He had resided in California and not visited Victoria for over 40 years. Another brother, his wife and their two sons had long occupied the property. After that brother’s death a lease had been granted to the widow and one of the sons. The two sons were beneficially entitled to the property on the life tenant’s death. At the time of the application the life tenant was 70. When the lease to the widow and son expired the life tenant proposed to grant a new lease to another. This action was based on an accusation of failure to look after the property. However, it was found that the two sons had obtained experience as graziers and pastoralists and the property and many improvements thereon were in good condition. The court held that it would control a life tenant in the same way as it would control the exercise by an ordinary trustee of any power the trustee had. A trustee would be prevented from exercising a power in any way which was wrong or unreasonable. The judgment on which the life tenant based his proposed exercise of discretion was founded on a complete misconception of the facts. From the point of view of what is best for the property, the persons interested in the inheritance should be preferred as tenants to any outsider. Furthermore, it was unreasonable to eject the widow and the sons from what had been their home for 28 years. The life tenant had shown a capricious disregard for the interests and wishes of the widow and sons. The life tenant would be directed not to lease without first offering a lease on like terms to the sons. In Re O’Shea [1957] VR 353 the life tenants purported to lease hotel premises to a company owned by themselves. The remaindermen were all minors. The trustee of the settlement opposed the lease and brought an action to have the grant of the lease declared an invalid exercise of the life tenants’ powers. The court held that the lease savoured of a grant by the life tenants to themselves. There was a conflict of interest and duty with respect to the enforcement of covenants by the life tenants. The life tenants had little experience of hotel management. There were misgivings as to their suitability as lessees. The tenant company’s financial position was insecure. Therefore the purported lease was declared invalid. [13.130] The legislation seeks to remove any impediments to the proper exercise by a life

tenant of his or her powers. Any provision in any instrument which attempts to induce the life tenant to abstain from exercising his or her powers under the Settled Land Act is declared to be void.61 Any contract by a life tenant not to exercise his or her powers is declared to be void.62 Any interest which is limited to continue so long as the life tenant abstains from

60 61 62

Settled Land Act 1958 (Vic), s 107; Settled Land Act 1884 (Tas), s 48. Settled Land Act 1958 (Vic), s 106(1); Settled Land Act 1884 (Tas), s 46(1). Settled Land Act 1958 (Vic), s 108(2); Settled Land Act 1884 (Tas), s 51(2). [13.130]  639

PART 4 Divided Ownership of Land

exercising any power is freed from determination on that event.63 The exercise by the life tenant of any of the statutory powers is declared not to occasion a forfeiture.64 In Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469; [2007] VSCA 162 Bell AJA held that the anti-​avoidance provision is to be given a wide import and might strike down any provision producing a result adverse to the life tenant; the other members of the Court refrained from comment on this view. The powers of the life tenant are not capable of assignment or release. Consequently, if the life tenant transfers the life interest (which is the interest the tenant has in most cases, though not all), the transferee will acquire an estate per autre vie but the transferor will retain the powers under the Settled Land Act. That transferee’s right can be significantly affected by the exercise of the life tenant’s powers, particularly sale or lease. Victoria and Tasmania split as to their solutions to this happening. In Victoria, since the Settled Land Act 1958 (Vic) commenced, the original life tenant may exercise the statutory powers without the consent of the assignee and the assignee’s rights are transferred to whatever property represents the land.65 In Tasmania, on the other hand, the assignee’s rights may not be affected without consent, except that consent to a lease is necessary only if the assignee is in actual possession.66 [13.135]  The protection for the freedom of the life tenant to exercise the statutory powers

may mean that an attack may be made on common provisions conferring ancillary benefits in addition to life interest. The situation is illustrated by the case of Re Patten, Westminster Bank Ltd v Carlyon [1929] 2 Ch 276. There, a woman was left the use of a house and furniture for her life or so long as she required them. A  power to sublet was denied. The house and furniture were to be sold on termination of occupation. A  capital sum was set aside for the payment from the interest of taxes, rates and repairs of the house. The direction against subletting was regarded as obviously deemed void. Furthermore, the provision for sale of the house on termination of occupation was avoided so far as it would operate in the event of the exercise of the statutory powers. Therefore, should the woman exercise the power to sell or lease she was entitled, during her life, to receive the interest on the proceeds of sale or rent. The gift over the furniture also had the tendency to induce the woman to abstain from the exercise of her powers. Consequently, she was entitled to the furniture during her life or until she ceased to occupy the house for any reason other than the exercise of the statutory powers. The argument with respect to the interest on the capital sum was that on a lease or sale she would lose a benefit. Consequently, there was an inducement not to lease or sell and she should be entitled to have the payments continue or on sale to a sum equivalent to the value of the rates, taxes and repairs. Romer J accepted that on a lease the woman would lose and that loss was an inducement; therefore the payment of the amounts should continue despite a lease. But his Honour declined to grant a benefit on sale. The trust for the payment of outgoings was an extra benefit enabling residence without the expenses, but was not a provision tending to induce the woman to abstain from exercising the power of sale.

63 64 65 66

Settled Land Act 1958 (Vic), s 106(3); Settled Land Act 1884 (Tas), s 46(2). Settled Land Act 1958 (Vic), s 106(3); Settled Land Act 1884 (Tas), s 47. Settled Land Act 1958 (Vic), s 105. Settled Land Act 1884 (Tas), s 45(3).

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[13.140]  The life tenant’s powers may be extended by the instrument creating the interest and

the statutory powers are cumulative upon any provisions of that instrument.67 However, in the case of a conflict between the provisions of the instrument and those of the Act relative to the statutory powers, the provisions of the Act prevail.68 Similarly, the trustees of a settlement may be given additional powers.69 But where the trustees or any other person is given any power exercisable by the life tenant under the Settled Land Act, the consent of the life tenant to the exercise of that power is necessary.70 This proviso significantly affects the balance of powers between the life tenant and trustees and is the major reason why the Settled Land Acts in Victoria and Tasmania retain significance, whatever the powers of the trustees happen to be. Further reference to this relationship is made at [13.185]. [13.145] In Victoria the position of the trustees of the settlement is central in that their

consent is necessary for the exercise of most of the statutory powers. They are directed to have regard to the interests of all parties under the settlement and not to withhold their consent arbitrarily.71 While the trustees may exercise powers under other legislation, they must do so having regard to the position of the life tenant.72 The life tenant may apply to the court if dissatisfied at the withholding of consent.73 In both Victoria and Tasmania notice must be given to trustees of any intended exercise of statutory powers.74 If any difference between the life tenant and the trustees arises, either party may refer the matter to the court.75 The trustees are given various protections with respect to the exercise of their powers.76

Repairs, maintenance and improvements [13.150]  The carrying out of repairs, maintenance and improvements on settled land is addressed

only in the Victorian and Tasmanian legislation. The Victorian Act is much more facilitative of such work in that it allows money for improvements to be raised by way of mortgage of the settled land.77 The Tasmanian Act restricts the raising of money for work on the land to cases of the erection of dwelling-​houses and outbuildings and other buildings for agricultural or horticultural purposes.78 However, capital money may otherwise exist –​either as a result of the original settlement or the exercise of the statutory powers of the Acts. Both Victoria and Tasmania allow for the expenditure of capital money on listed improvements.79 Capital money includes the money which may be raised by the mortgages authorised by the Acts.

67 68 69 70 71 72 73 74 75 76 77 78 79

Settled Land Act 1958 (Vic), s 108(1); Settled Land Act 1884 (Tas), s 51(1). Settled Land Act 1958 (Vic), s 108(2); Settled Land Act 1884 (Tas), s 51(2). Settled Land Act 1958 (Vic), s 109(1); Settled Land Act 1884 (Tas), s 51(1). Settled Land Act 1958 (Vic), s 108(2); Settled Land Act 1884 (Tas), s 51(2). Settled Land Act 1958 (Vic), s 93(a). Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469; [2007] VSCA 162. Settled Land Act 1958 (Vic), s 93(b). Settled Land Act 1958 (Vic), s 101; Settled Land Act 1884 (Tas), s 42. Settled Land Act 1958 (Vic), s 93; Settled Land Act 1884 (Tas), s 41. Settled Land Act 1958 (Vic), ss 97–​99; Settled Land Act 1884 (Tas), ss 38–​39. Settled Land Act 1958 (Vic), s 71(1)(b). Settled Land Act 1884 (Tas), s 9 of the amending Act of 1911. Settled Land Act 1958 (Vic), ss 83–​89; Settled Land Act 1884 (Tas), s 23. [13.150]  641

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[13.155]  In Victoria the lists of authorised improvements are set out in the Second Schedule of

the Settled Land Act 1958 (Vic). That Schedule is divided into three parts: Pt I lists improvements, the costs of which are not liable to be replaced by instalments; Pt II lists improvements, the cost of which the trustees or the court may require to be replaced by instalments; Pt III lists improvements, the costs of which the trustees or the court must require to be replaced by instalments. The Settled Land Act 1884 (Tas) simply authorises the expenditure of capital money on works listed in the Act.80 The Tasmanian list closely resembles Pt I of the Victorian Second Schedule. The works set out in Pt  I of the Victorian Second  Schedule and in the Tasmanian Act are generally substantial and reflect a holding of a substantial piece of land. They include drainage, bridges, irrigation, roads, cottages, farmhouses and reservoirs. Both lists do include additions or alterations to buildings reasonably necessary to enable them to be let. Part II of the Victorian Schedule includes structural additions to or alterations in buildings reasonably required whether the buildings are intended to be let or not, or are already let. [13.160]  The operation of the powers to authorise improvements was reviewed by Sholl J in

Equity Trustees Executors & Agency Co Ltd v Riddell [1954] VLR 161. He pointed out that there may be overlaps between items in the various parts. However, any item which could fairly be regarded as failing under Pt I should be regarded as covered by that Part rather than the others so costs were not liable to replacement. He further considered that building additions or alterations to enable letting were not confined to structural additions or alterations. With regard to items in Pt II where a discretion existed as to replacement, he considered repayment of costs should normally be required over the period for which the benefit of the work ensued. Items which were merely repairs should be paid for out of income. The relationship of the lists to the provisions of the settlement was considered again by Sholl J in Re Joseph; Joseph v Equity Trustees Executors & Agency Co Ltd [1960] VR 550. In that case the will creating the interests had provided for all improvements and repairs to be paid for from income. Sholl  J pointed out that the life tenant could insist on items in the first part of the Second Schedule being paid for from capital. There was therefore a conflict between the Act and the settlement, and the Act prevailed. Similarly, the life tenant was entitled to an exercise of judgment as whether items in Pt II should be paid for out of capital. He considered that a major roof replacement was a structural alteration within Pt II and, because of the significance of the work and the advanced years of the life tenant, should be chargeable to capital. The other item –​unblocking and re-​cementing of drains –​was not properly classified as drainage (a permanent improvement) or a structural alteration, therefore fell outside the Schedule and should be charged to income.

Exploitation of the land [13.165] As between life tenant and remainder, the doctrine of waste clearly applies and

controls any action which might be regarded as detrimental to the land. The instrument creating the settlement remains important as the life tenant is liable for voluntary waste unless made unimpeachable for waste and even then is liable for equitable waste unless such liability is removed.

80

Settled Land Act 1884 (Tas), s 23, as added by s 11 of the 1911 Act.

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The right to carry out improvements (discussed at [13.145]–​ [13.155]) may arguably involve the commission of ameliorating waste, but the right given by the statute would override common law restraints. The other significant addition to the life tenant’s powers is in relation to the cutting of timber. Some authorisation is given to do what would not otherwise be allowed, especially if the life tenant is impeachable for waste and thus unable to cut timber. [13.170] In Victoria, Tasmania, South Australia and the Northern Territory express

provision is made for the cutting and sale of timber. In South Australia and the Northern Territory the court’s power to authorise sale is simply extended to sales of timber.81 In New South Wales the equivalent provision may extend to timber as the timber would be part of the land.82 In Victoria the power to cut and sell timber is conferred upon the life tenant with the concurrence of the trustees or the court.83 Similarly, in Tasmania the power is conferred on the life tenant with the concurrence of the trustees or the court.84 This qualification is unusual in that State’s legislation as the life tenant has even the power to sell without the need for consent. In both Victoria and Tasmania the power exists where the life tenant is impeachable for waste, if unimpeachable the tenant in most instances could cut timber without liability. In Victoria and Tasmania the proceeds of sale are divided one quarter to rents and profits and three quarters to capital. Section  66(3) of the Settled Land Act 1958 (Vic) alone then defines timber to include trees of any species which have a market value for their wood for any use or purpose whatsoever. This definition is considerably broader than the common law, which confines timber to that used for buildings. The broader definition seems to limit the life tenant’s power as the life tenant could otherwise cut and sell non-​timber trees without liability even if impeachable for waste. Although s 108(1) of the Victorian Act states that the statutory powers are cumulative upon other powers, s 108(2) states that in case of conflict as to the exercise of statutory powers the Act prevails.

Sales and other dispositions [13.175]  A power to sell settled land is conferred by statute in all jurisdictions. But this power

is one where the authorisation processes differ. In Victoria concurrence of the trustees or the court is necessary;85 in Tasmania, the life tenant has the power;86 in New South Wales, South Australia and the Northern Territory87 sale requires a court order. In Victoria and Tasmania the sale must be for the best consideration reasonably obtainable. In New South Wales, South Australia, the Northern Territory and the Australian Capital Territory the sale must be in accordance with the rules and practice of sale under an order of the court. In all jurisdictions provision is made for what amounts to a scheme of subdivision of land to be sold with the dedication of streets, establishment of public reserves and provision of drainage.

81 82 83 84 85 86 87

Settled Estates Act 1880 (SA), s 15; Trustee Act (NT), s 69. Conveyancing and Law of Property Act 1898 (NSW), s 48. Settled Land Act 1958 (Vic), s 66. Settled Land Act 1884 (Tas), s 32. Settled Land Act 1958 (Vic), ss 38–​40. Settled Land Act 1884 (Tas), ss 14–​18. Conveyancing and Law of Property Act 1898 (NSW), ss 48–​53; Settled Estates Act 1880 (SA), ss 15–​21; Trustee Act (NT), s 69. [13.175]  643

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[13.180]  The power to lease is the one power which in all jurisdictions can be exercised by

the life tenant without the concurrence of other parties or the court. The powers are broadest in Tasmania, but in the other jurisdictions the life tenant’s limited powers may be extended if the relevant consent is obtained. In all jurisdictions reference is made to various types of leases. The common lease today whereby possession is taken for residential, commercial or industrial purpose is described in New South Wales, South Australia and the Northern Territory, as an occupation lease and forms the residual category in Victoria and Tasmania. The special types of leases referred to –​building, mining and repairing leases –​involve work on the land by the tenant. In all jurisdictions formal requirements are imposed. In Tasmania the life tenant can lease for a period not exceeding 21 years or, in the case of a building lease, 99 years.88 In Victoria the life tenant can lease for up to a 21-​year term provided the tenant is impeachable for waste.89 In New South Wales and the Australian Capital Territory the period is only 10 years again subject to a requirement as to waste.90 In South Australia and the Northern Territory the period is 21 years also, so long as the tenant is not unimpeachable for waste.91 In Victoria the life tenant has wider powers with the concurrence of the trustees or the court. In the case of an ordinary lease the period remains 21 years, but the waste requirement is not essential. In the case of a building lease the maximum period is 50 years and in the case of a mining lease 60 years.92 In New South Wales and the Australian Capital Territory the court may authorise leases beyond the power of the life tenant. In the case of occupation or agricultural leases the maximum term is 10 years, but again without the waste requirement. A maximum term of 40 years is established for mining leases, 15 years for repairing leases and 30 years for building leases. The court may authorise any individual lease or give powers to trustees to grant authorisations.93 The South Australian and the Northern Territory provisions follow those of New South Wales except that the maximum terms are longer: 21 years for occupation or agricultural leases, 40 years for mining leases, 60 years for repairing leases and 90 years for building leases.94

MANAGEMENT AND TRUSTS AND TRUSTS FOR SALE Impact of settled land legislation [13.185] The New South Wales, South Australian and the Northern Territory settled land

legislation gives very limited powers to the life tenant and makes no impediment from the existence of these powers upon powers of trustees. The only relevance of the life tenant’s powers could be that a court could decline to exercise contested powers on the basis of the existence of the settled land powers. But since the life tenant’s powers of their own initiative are so limited and the court’s powers are limited to sale or lease, settled land powers are unlikely to impact upon trustees’ powers in those jurisdictions. 88 89 90 91 92 93 94

Settled Land Act 1884 (Tas), ss 6–​13. Settled Land Act 1958 (Vic), s 42(5). Conveyancing and Law of Property Act 1898 (NSW), ss 68, 69. Settled Estates Act 1880 (SA), ss 4–​14; Trustee Act (NT), s 69. Settled Land Act 1958 (Vic), ss 41–​47. Conveyancing and Law of Property Act 1898 (NSW), ss 38–​47. Settled Estates Act 1880 (SA), ss 44–​45; Trustee Act (NT), s 69.

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[13.190]  In Victoria and Tasmania, as mentioned at [13.140], the powers of the life tenant

are protected. The settled land legislation was attempting to ensure that powers did reside in the life tenant whatever limitations may have been desired by the settlor or other beneficiaries. Accordingly, both States provide that if someone other than the life tenant seeks to exercise powers which could have been exercised by the life tenant then the consent of the life tenant to that exercise is necessary. Section 52(2) of the Settled Land Act 1884 (Tas) states: but, in case of conflict between the provisions of a settlement and the provisions of this Act, relative to any matter in respect whereof the tenant for life exercises or contracts or intends to exercise any power under this Act, the provisions of this Act shall prevail, and accordingly, notwithstanding anything in the settlement, the consent of the tenant for life shall, by virtue of this Act, be necessary to the exercise by the trustees of the settlement or other person of any power conferred by the settlement exercisable for any purpose provided for in this Act.

Section  108(2) of the Settled Land Act 1958 (Vic) is in similar terms. The consequence is that trustees in Victoria and Tasmania will often need the consent of the life tenant for the exercise of powers that otherwise are clearly possessed by them. However, the scope of this qualification is greater in Tasmania because even trusts for sale are subject to the Settled Land Act 1884. In Victoria, trusts for sale are specifically exempted from the operation of the Settled Land Act 1958.95

General powers of trustees [13.195] The role of trustees is a matter to be addressed in the instrument setting up the

trust. Their role may vary from a purely nominal ownership for the benefit of others, to management responsibilities which can include the running of a business, to discretionary duties not just as to looking after property, but as to sale and purchase and the allocation of benefits between a class of potential beneficiaries. In the case of discretionary trusts the potential beneficiaries have no entitlement to any particular property until the discretion is exercised. This feature has been relied upon as part of schemes for tax minimisation and the form of these interests have developed in response to taxation legislation. On the other hand, a bare trust may result from a simple provision in a will to provide for a spouse and children. While the trustees in such a case may appear to have a purely nominal role, the condition of specific property may call for action and the trustees may face a lack of any enabling powers in the will and beneficiaries lacking legal capacity to authorise any action. Trustees have been able to appeal to the general supervisory power over trusts exercised by courts of equity but, more importantly, today in all States the trustees are given powers by legislation.96 Some of these powers are confined to trustees under a trust for sale. Some of the powers may be exercised by the trustees of their own motion. Other powers may be exercised upon application to the court. Trustees may in general receive authorisation for any action which is beneficial for the trust. The court’s powers extend to variations of the trust itself; however, this section of the text is concerned with management of land.

95 96

Settled Land Act 1958 (Vic), s 9. Trustee Act 1925 (NSW); Trustee Act 1958 (Vic); Trusts Act 1973 (Qld); Trustee Act 1936 (SA); Trustees Act 1962 (WA); Trustee Act 1898 (Tas); Trustee Act 1925 (ACT); Trustee Act (NT). In this Part any legislative reference is, unless otherwise indicated, a reference to these Acts. [13.195]  645

PART 4 Divided Ownership of Land

[13.200] The statutory powers have generally been drafted to supplement those of the

instrument creating the trust. They enable the trustee to look after the property where no provision has been made in the instrument. That instrument may, however, express intention that the trustees are to have only limited powers. In Victoria, Western Australia and Tasmania these limitations usually prevail as the statutory powers are expressed as a general rule to be subject to the trust instrument.97 Similarly, in New South Wales, South Australia, the Northern Territory and the Australian Capital Territory most powers are individually expressed to be subject to the trust instrument. In South Australia, however, some powers are stated to override any contrary provision in the trust instrument and in these four jurisdictions some powers are set out without any statement of their relationship with the instrument. In Queensland, on the other hand, while a few powers are made subject to the trust instrument, the usual position is that the statutory powers apply whether or not a contrary provision is made in the trust instrument.98 The Queensland position seems to reflect a policy to override restrictions on land management which was an aim of the life tenant’s powers under the settled land legislation which has been repealed in that State. There are some instances in which the contrary intention referred to is an express contrary intention. Otherwise a contrary intention may flow from the overall purport of the trust instrument.99 [13.205] While there are many specific powers conferred by statute upon trustees, in all

States the courts are given general powers to authorise dealings by trustees.100 It is the breadth of these powers that leads to the proposition that the trustees may receive court authorisation for any action in the interests of the trust. The Victorian provision is as follows: Power of Court to authorise dealings with trust property.

63  (1) Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument (if any) or by law, the Court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose on such terms and subject to such provisions and conditions (if any) as the Court thinks fit and may direct what manner any money authorised to be expended, and the costs of any transaction are to be paid or borne as between capital and income.



(2) The Court may from time to time rescind or vary any order made under this section, or may make any new or further order.



(3) An application to the Court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.

The Queensland and Tasmanian provisions are very close to this section. The Western Australian provision states that an order may be made not only when considered expedient, but also if it would be in the best interests of the persons, or the majority of the persons,

97 98 99 100

Trustee Act 1958 (Vic), s 2(3); Trustees Act 1962 (WA), s 5(3); Trustee Act 1898 (Tas), s 64. Trusts Act 1973 (Qld), s 7A. Re Gertsman [1966] VR 45. Trustee Act 1925 (NSW), s 81; Trustee Act 1958 (Vic), s 63; Trusts Act 1973 (Qld), s 94; Trustee Act 1936 (SA), s 59B; Trustee Act 1898 (Tas), s 50A; Trustees Act 1962 (WA), s 89; Trustee Act 1925 (ACT), s 81; Trustee Act (NT), s 50A.

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beneficially interested under the trust. The New South Wales, South Australian, Northern Territory and Australian Capital Territory provisions are more extensive but to the same effect. [13.210] The provision draws from the inherent powers traditionally exercised by courts

of equity. However, those powers were exercised with great caution and based more upon emergency (often referred to as the salvage jurisdiction), rather than expediency. The language of the section is that of expediency and a conservative construction of this language was rejected by the Australian High Court in Riddle v Riddle (1952) 85 CLR 202. The issue of the scope of the court’s power to authorise dealings by trustees has arisen not in relation to management of land, but in relation to investment of moneys. The challenge of inflation led trustees to seek authorisation for investment in stocks or shares rather than more secure but less profitable government bonds and securities. The courts have approved broader investment proposals, though, in the exercise of their discretion, imposed safeguards such as a spread of investments and investigation of company history.101 The general approach was stated by Williams J in Riddle v Riddle at 222: “The one and only test is the expediency of the act or thing which the court is asked to authorise the trustees to do or abstain from doing. The court has only to be of opinion that the trust property as a whole will in fact benefit from the making of the order”. What is expedient is defined by the interests of the trust as a whole. The trust is to be managed as advantageously as possible in the interests of the trust. The trustees are not entitled to rewrite the trust, but some detriment to one beneficiary might be necessary to produce an overall benefit. In Royal Melbourne Hospital v Equity Trustees Ltd (2007) 18 VR 469; [2007] VSCA 162 a sale of part of the land was aimed to reduce the wastage of the property, particularly through land tax, but could not seriously disadvantage the rights of enjoyment of current occupants (in part derived from the Settled Land Act 1958 (Vic)). Consequently some of the income produced by a sale could be expended on further land tax for their benefit.

Repairs, maintenance and improvements [13.215] The powers of trustees with respect to repairs or maintenance have traditionally

been dependent on the classification of their relationship with the property. The distinction between bare trustees and those with active powers of management has been emphasised.102 “The result of the authorities is that a bare trustee who has no mandate under the trust instrument to expend moneys in repairs has no power to do and should apply to the court if the repairs considered necessary are to salvage the property”. The absence of power is declared even in those cases where the repair is essential for the maintenance of the property because those cases are stated to be ones where assistance might be gained from the courts through the salvage doctrine. Since a power to preserve is denied, an upgrading of the property would seem to be out of the question. The distinction between repairs and improvements has been made in the interpretation of powers conferred by the settlement with the general consequence that repairs are chargeable to income and improvements to capital.103

101 102 103

Re Baker [1961] VR 641; Re Dehnert [1973] VR 449; National Trustees, Executors & Agency Co of Australasia Ltd v Attorney-​General for Victoria [1973] VR 610; Re Sykes [1973] 1 NSWLR 597. Re Dawes [1954] VLR 76. O’Neill v Cottill (1920) 20 SR (NSW) 264. [13.215]  647

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One of the factors apparently relevant to the denial of power to repair is the supposed policy of the Settled Land Act that the life tenant had the powers of management. As has been seen in Australia, only the Victorian Settled Land Act makes any meaningful provision for repairs and thus only in that State can the Settled Land Act provide a starting point for an argument against trustees’ powers. The concession of court authorisation in emergency situations is based upon the now discarded view of the court’s general powers of authorisation. Today the test as to what may be authorised is what is in the interests of the trust property as a whole. Therefore, the court would seem to have power to authorise both repairs and improvements and to be able to do so if the work is in the best interests of the trust, even if no emergency exists. [13.220] Even the narrow statement of the powers of bare trustees to effect repairs or

improvements has been subject to qualification where the nature of the property has been such that work by trustees must have been intended by the settlor. In Harkness v Harkness (1904) 20 WN (NSW) 269 a testatrix left her property to her husband upon trust to convert, but with a full discretionary power to postpone conversion. In her lifetime the testatrix had carried on a business as a builder and contractor. She bought vacant land, built on it and sold or leased the buildings. She raised money for the ventures by way of mortgage. Part of the estate consisted of lands bought for such a venture. The land could not advantageously be dealt with as vacant land and some existing leased buildings were in a state of disrepair and required renovation. The husband sought a declaration that he was entitled to build and renovate and raise money for these purposes by mortgage. He was held to be entitled to do so because of the use of the land by the testatrix and the implied continuation of that use. Similarly, the nature of a vineyard was relied upon by the High Court in Cousins v Cousins (1906) 3 CLR 1198 to justify borrowing by way of mortgage. The jurisdiction relied upon was that relating to the administration of real estate of infants where the court acted parens patriae, but again with emphasis on the salvage doctrine. O’Connor J argued that the children were intended to enjoy the benefit of the vineyard as a going concern. The property could not be so enjoyed unless the vines were restored. The principle would seem today even more strongly to be applicable when the court exercises its general powers to approve what is expedient. [13.225]  In all jurisdictions except Tasmania and the Northern Territory, trustees are given

specific statutory powers with respect to repairs and maintenance. In Victoria trustees for sale are given the powers of the life tenant under the Settled Land Act: Property Law Act 1958 (Vic), s 58. Those powers are discussed at [13.120]. In New South Wales and the Australian Capital Territory a trustee may expend moneys on repairs or improvements, which may include construction and repair of buildings, dams and fences, restocking with livestock and replacement of machinery. Money may be raised by mortgage. A private trustee may spend only the lesser sum of $1,000 or one-​third of the value of the land. The Public Trustee or a statutory trustee may spend $10,000 or a larger sum if all beneficiaries are legally competent and agree. The court may authorise expenditure of larger sums. Trustees for sale and trustees for infants may construct, renovate or repair houses, dams and fences.104

104

Trustee Act 1925 (NSW), ss 82, 82A; Trustee Act 1925 (ACT), s 82.

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Management Where Ownership Is Divided  Chapter  13

In Queensland105 and Western Australia106 trustees are given general powers of repair whether or not the work is necessary for salvage. They may also spend money on the improvement or development of the property, but they require the sanction of the court for amounts over $10,000 (in Western Australia for any one purpose). They may also spend money without limit on works relative to the subdivision of land (in Western Australia provided they have a power of sale). The expenditure may be apportioned between income and capital sources as the trustees consider equitable. In South Australia107 trustees are authorised to carry out such repairs as they consider necessary or proper for the preservation of any building, erection or fixture and apportion expenditure as between income and capital as they consider equitable. They may be authorised by the court to spend money on building or repair or alteration or improvement and to raise money for the purpose by way of mortgage. Again expenditure may be apportioned as considered just.

Exploitation of the land [13.230]  The issue of restraint upon exploitation of the land has not been addressed as such.

The cases have concentrated upon the presence or absence of powers of trustees. The issue could have arisen in Re Hart [1954] SASR 1, the South Australian case involving the cutting of timber, discussed at [13.65]. There the land was held on trust for life interests and then on trust for remainder interests. The trustees cut and sold 713 pinus radiata trees. The case was fought on the question of whether the proceeds were income or capital. It was accepted that the trees were not classified as timber and could be cut by the life tenant without liability. On this basis the proceeds were treated as income. The powers of the trustees were thus linked to the powers of the life tenant. Thus the actions of the trustees are restricted by the rules of waste. The general fiduciary relationship provides a broader basis for respect for future concerns in the exploitation of land. Clearly trustees must have regard to the interests of all beneficiaries in reaching decisions as to what to do with the land. Consequently, any action which makes the land markedly less valuable for holders of future interests would amount to a breach of duty.

Sales and other dispositions [13.235] While a single parcel of land could be subject to arrangements for use by family

members and thus the subject of settlement, where arrangements are made with respect to an individual’s assets generally, those arrangements would normally provide for the conversion of the assets into money and the investment of that money.108 Thus, the duty or trust for sale is often referred to as a “trader’s settlement” in that its subject is a collection of mixed assets and, where substantial, normally produced by commercial activity.109 Trusts for sale are commonly

105 106 107 108 109

Trusts Act 1973 (Qld), s 33(1). Trustees Act 1962 (WA), s 30(1). Trustee Act 1936 (SA), ss 25A, 25B. The interests of the beneficiaries were regarded as relating to the proceeds of sale (and thus personal property) rather than relating to the land. Butt, Land Law (6th ed, Law Book Co, Sydney, 2010), pp 217–​218. [13.235]  649

PART 4 Divided Ownership of Land

regarded as artificial devices in that they provided a means to avoid the powers of the life tenant under the Settled Lands Act to sell the land. If these trusts are so used, then only in Victoria does the purpose have any meaning: see [13.140]. [13.240]  If a settlor creates a trust for sale, the trustees have as their primary duty the sale of

the land. Since their duty is to sell, the question arises as to the time within which that duty must be exercised. That question flows into that of postponement and the power to postpone may be express or implied. If there is a power to postpone, then the question is the extent of that power. Where there is no power of postponement, the trustees are not obliged to sell the property immediately without regard to economic circumstances. They have a responsibility to serve the best interests of the beneficiaries and to ensure that the sale provides the best practicable return for the beneficiaries. As the High Court has stated:110 A trust for sale for whatever purpose with no special power of postponement must be exercised within a reasonable time. It does not imperatively oblige the trustees to sell at once, or at any precise, definite, or particular time; they are entitled to use a reasonable discretion … but the courts have had no difficulty in holding that where there is a trust for sale unqualified by a power of postponement no one would regard it as within the limits of a reasonable discretion to retain the property unsold for as long as 21 years.

This passage does suggest that a period of 21 years is a reasonable time. The only reason for the nomination of 21  years as too long was that there was no possibility of infringing the perpetuity period. The passage does not even imply 20 years is a reasonable time.111 [13.245] Since a duty to sell does not mean an immediate sale, the duty of itself implies

some power to postpone. In all jurisdictions, except South Australia and Tasmania, an express power to postpone sale is conferred by statute subject to differing restrictions.112 Trustees should be able to gain court authorisation for postponement in appropriate cases even if that power is not given by the settlement or statute. Even the power of postponement does not mean that the property may be retained indefinitely. In Re Morish [1939] SASR 305 a residuary estate was left to trustees upon trust to convert with power to postpone conversion for as long as they should think fit and to pay the income to the widow for life and then to the children. Part of the estate was the business of a furniture manufacturer. The testator died in 1905 and the trustees carried on the business until the action in 1939. Not surprisingly, the years 1930–​1937 showed an aggregate loss which amounted to 34,306 pounds. Murray CJ held that, even with a power of postponement, trustees could not postpone realisation for an unlimited time. The business should properly have been sold as a going concern and thus the trustees properly had to operate it until they found a purchaser. But their duty was to seek a purchaser and they had a reasonable time to find one. The trustees had received court authorisation to postpone sale until the end of 1926. Thereafter they had made no effort to find a purchaser as they assumed no one would be prepared to buy. They were held to be in breach of their duty and liable for losses incurred from the beginning of 1929.

110 Cox v Archer (1964) 110 CLR 1 at 7. 111 A similar approach was taken in Neill v Public Trustee [1978] 2 NSWLR 65 at 70. 112 Trustee Act 1925 (NSW), s 27B; Trustee Act 1958 (Vic), s 13; Trusts Act 1973 (Qld), s 32; Trustees Act 1962 (WA), s 27; Trustee Act 1925 (ACT), s 27B. 650 [13.240]

Management Where Ownership Is Divided  Chapter  13

The High Court’s statement of the matter is that a power to postpone does not extend to an arbitrary postponement for an indefinite period.113 [13.250]  Whereas a trust for sale imposes a duty to sell (even where sale is not regarded as

imperative), a power of sale given to trustees extends the trustees’ options with respect to the management of the property. The Settled Lands Acts at least provides a mechanism whereby the land may be sold even though by the life tenant, rather than the trustees. In Queensland the trustees have a power of sale114 and this power cannot be excluded or modified.115 In Western Australia trustees have a power of sale,116 but that power is subject to a contrary provision in the settlement.117 The trustees may be directed to sell by the persons at the time of the direction entitled to an interest in possession.118 This power of direction is effectively vested in the life tenant, but it is unclear whether it is subject to a contrary provision in the settlement. Certainly the court has an express power119 to override provisions of the settlement. A power of sale may arise from the nature of a settlement. In Pagels v MacDonald (1935) 54 CLR 519 a testator left his real and personal property for a life interest and thereafter to be equally divided between his youngest son and his six youngest daughters. The High Court rejected the view that the property was to be transferred to the beneficiaries to be held as co-​ owners. The natural construction of the direction to divide and the direction for equality of shares was that the property should be sold and the proceeds divided. [13.255]  An impediment to sale may be the need for consent. One method to frustrate the

policies promoting alienability would be to create a trust for sale, but subject to the consent of someone with an incentive not to agree to sale. A distinction is drawn between fiduciary and non-​fiduciary powers to consent to the exercise of powers by a trustee. Powers to consent granted for the benefit of the person granting consent are non-​fiduciary. Powers to consent for the benefit of other persons are fiduciary. Fiduciary powers cannot be delegated and must be exercised in the interests of the beneficiaries.120 Where a settlement created a life estate and a remainder and empowered the trustees to sell, but required the consent of the life tenant to a sale during his lifetime, the power to consent was held to be non-​fiduciary.121 The person affected by sale was the life tenant and the provision for consent was inserted solely for his benefit. As a non-​fiduciary consent, the power could be delegated. [13.260] If trustees are to retain property, the production of income from the property

may involve leasing of the property. Again the court’s general powers would include the authorisation of leases. The power to lease may also be implied. Thus in Re Burgess [1899] SASR 145 a business was to be retained by trustees until a child reached the age of 21. Way CJ

113 114 115 116 117 118 119 120 121

Cox v Archer (1964) 110 CLR 1 at 7. Trusts Act 1973 (Qld), s 32(a). Trusts Act 1973 (Qld), s 7A. Trustees Act 1962 (WA), s 27(1)(a). Trustees Act 1962 (WA), s 5(3). Trustees Act 1962 (WA), s 27(4). Trustees Act 1962 (WA), s 89. Commonwealth v Colonial Combing Spinning & Weaving Co Ltd (1922) 31 CLR 421. Re Callen (1918) 18 SR (NSW) 219. [13.260]  651

PART 4 Divided Ownership of Land

held that to make the most of the goodwill of the business until the specified time it was proper that the trustees were impliedly empowered to lease. Implied powers to lease are conferred by statute in all jurisdictions except Tasmania and the Northern Territory. In Victoria trustees for sale have all the powers to lease of life tenants and trustees of the settlement under the Settled Land Act 1958.122 In New South Wales, South Australia and the Australian Capital Territory a trustee with a power to manage and a trustee for sale with a power to postpone sale may lease for a period not exceeding five years in New South Wales and the Australian Capital Territory or 10  years in South Australia.123 Other trustees may lease for three years in New South Wales and the Australian Capital Territory or five years in South Australia.124 In Queensland and Western Australia trustees may lease for a term not exceeding 30 years in the case of a building lease or 21 years in other cases.125 In addition, trustees may lease for any term not exceeding one year or on a yearly or shorter periodic basis.126

MANAGEMENT AND STRATA AND COMMUNITY TITLES The corporation [13.265]  Management functions of a strata or community tile parcel of land are entrusted to

a corporation made up of all the individual unit holders. The body corporate is not only the owner of the common property, but it is the organ by which matters of mutual concern of unit holders are dealt with. In Humphries v The Proprietors of “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597 the High Court emphasised that the corporation is a creature of statute and has the powers conferred upon it by the statute and by-​laws validly made by the corporation. The corporation is subject to the doctrine of “ultra vires”. The major function of the body corporate is to maintain the common property for the benefit of the individual unit holders. In New South Wales and Victoria the management body is called the “owners corporation”,127 in Queensland, Tasmania and the Northern Territory the “body corporate”,128 in South Australia the “community corporation”,129 in Western Australia the “strata company”130 and in the Australian Capital Territory and the Northern Territory the “corporation”.131 The strata corporation is responsible for the maintenance of the common property132 and to ensure

122 123 124 125 126 127 128 129 130 131 132

Property Law Act 1958 (Vic), ss 35(1), 40. Trustee Act 1925 (NSW), s 36; Trustee Act 1936 (SA), s 25C; Trustee Act 1925 (ACT), s 36. Trustee Act 1925 (NSW), s 36; Trustee Act 1936 (SA), s 25C; Trustee Act 1925 (ACT), s 36. Trusts Act 1973 (Qld), s 32; Trustees Act 1962 (WA), s 27. Trusts Act 1973 (Qld), s 32; Trustees Act 1962 (WA), s 27. Strata Schemes Management Act 2015 (NSW), Sch 2; Owners Corporation Act 2006 (Vic), s 4. Body Corporate and Community Management Act 1997 (Qld), s 31; Strata Titles Act 1998 (Tas), s 8; Unit Titles Schemes Act (NT), s 25. Community Titles Act 1996 (SA), s 10. Strata Titles Act 1985 (WA), ss 3, 33. Unit Titles Act 2001 (ACT), s 58. Strata Schemes Management Act 2015 (NSW), s 62; Owners Corporation Act 2006 (Vic), s 4; Body Corporate and Community Management Act 1997 (Qld), s 87; Community Titles Act 1996 (SA), s 75; Strata Titles Act

652 [13.265]

Management Where Ownership Is Divided  Chapter  13

unit holders fulfil their responsibilities with respect to individual holdings. It has the duty to arrange insurance of all property and is empowered to borrow money for capital works. It has the responsibility to convene meetings of the members of the corporation. It has a duty to consider the interests of all members and has been held to be subject to the general corporations law duty not to act so as to treat minorities fraudulently.133 [13.268] The members of the corporation are the unit holders and the affairs of the

corporation can be carried out through general meetings of the members. The corporation must have responsible officers  –​normally a presiding officer, secretary and treasurer.134 Between meetings, the day-​to-​day affairs are normally handled by a committee or council and, in most jurisdictions, it is mandatory for the strata corporation to appoint such a management committee whose constitution and organisation are matters to be determined by the corporation.135 In New South Wales, some provision is made for tenant participation in the affairs of the strata corporation. Such participation is allowed where tenants occupy more than half the units in the scheme.136 The tenants are entitled to nominate one representative for the strata committee.137 That representative is not entitled to vote at meetings of the committee or act as an office-​bearer of the committee.138 [13.270]  Overview of the management of the strata corporation is achieved by an annual

general meeting of the unit holders who are the members of the corporation.139 As well as annual general meetings that must be held, other general meetings may be desired by residents. The power to convene a general meeting depends upon the articles of the strata corporation. In South Australia the power to convene is conferred by legislation upon the presiding officer, treasurer or secretary of the corporation or any two members of the management committee or by unit holders representing at least one-​fifth of the units.140 A  quorum is again a matter for the articles; requirements vary but, for example, it is those entitled in respect of a half of the units in South Australia, the Australian Capital Territory and the

133 134

135

136 137 138 139

140

1985 (WA), s 35; Strata Titles Act 1998 (Tas), s 51; Unit Titles Act 2001 (ACT), s 46; Unit Titles Schemes Act (NT), s 30. Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46. Strata Schemes Management Act 1996 (NSW), Sch 2; Owners Corporation Act 2006 (Vic), s 100; Body Corporate and Community Management Act 1997 (Qld), s 90; Community Titles Act 1996 (SA), s 76; Strata Titles Act 1985 (WA), s 45; Strata Titles Act 1998 (Tas), s 71; Unit Titles Act 2001 (ACT), s 87; Unit Titles Schemes Act (NT), s 30. Strata Schemes Management Act 1996 (NSW), s 16 (mandatory); Owners Corporation Act 2006 (Vic), s 100 (committee mandatory where 13 or more members of the body corporate); Body Corporate and Community Management Act 1997 (Qld), s 90 (depends on relevant Regulation Module); Community Titles Act 1996 (SA), s 82 (not mandatory); Strata Titles Act 1985 (WA), s 44 (mandatory); Strata Titles Act 1998 (Tas), s 79 (mandatory); Unit Titles Act 2001 (ACT), s 81 (mandatory); Unit Titles Act (NT), ss 87, 92 (mandatory). Strata Schemes Management Act 1996 (NSW), s 33(1). Strata Schemes Management Act 1996 (NSW), s 33(2). Strata Schemes Management Act 1996 (NSW), s 33(3). Strata Schemes Management Act 1996 (NSW), Sch 2; Owners Corporation Act 2006 (Vic), s 69; Body Corporate and Community Management Act 1997 (Qld), s 62; Community Titles Act 1996 (SA), s 82; Strata Titles Act 1985 (WA), s 49(1); Strata Titles Act 1998 (Tas), s 75; Unit Titles (Management) Act 2011 (ACT), s 17; Unit Titles Schemes Act (NT), s 78. Community Titles Act 1996 (SA), s 81; Unit Titles (Management) Act 2011 (ACT), s 10; cf Unit Titles Act (NT), s 79. [13.270]  653

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Northern Territory.141 Normally at general meetings each unit carries with it one vote towards ordinary resolutions, though in relation to commercial or business premises votes are often weighted according to unit entitlements.142 The conduct of meetings is subject to procedural rules and these rules protect the membership rights of unit holders. Members must be given notice of the business of meetings, so that business of which they are unaware cannot be conducted. Detailed rules in New South Wales include those governing decision-​making, the manner of voting, the quorum for meetings, minute taking and disclosure of pecuniary interests.143 In HG Royal Park Pty Ltd v Strata Corporation 7176 Inc [2007] SASC 348, the court held that common law rules applied in addition to the legislative requirements. Consequently, notice must inform members as to what is proposed. Rules applicable will prescribe the length of notice required for a general meeting, how a special meeting may be required and whether proxies are allowed. Voting or decision-​making by post may also be allowed. [13.275]  The corporation may employ persons to assist the office bearers of the corporation.144

In New South Wales, in particular, professional managing agents are used to handle the affairs of strata corporations and such a service is offered by some firms of land agents; managing agents must hold a strata managers licence.145 There is a temptation for managing agents to seek remunerative powers, commonly powers of letting individual units. The matter has led to quite an amount of litigation, but in Humphries v The Proprietors of “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597 the High Court held that such a grant by a corporation, at least without an authorising by-​law, was beyond the powers conferred under the then Queensland legislation. The power was not connected with the basic function of management of the common property. Similarly, the powers of the corporation may be delegated and in New South Wales that delegation can be extensive. The scope of delegation was in issue in Owners of Strata Plan 5709 v Andrews [2009] NSWCA 189. The dispute involved a strata title for only two units in Cremorne and the owners disagreed as to the desired extent of repairs to a carport in particular. Ultimately an Adjudicator (see [13.360]) made an order delegating all the functions of the corporation to a managing agent. A  delegation by a corporation cannot include the power to delegate, to make decisions on matters requiring to be decided by the corporation or the levying or required payment of contributions. These limitations do not apply to a manager appointed by an Adjudicator. The manager supported the extensive repair option and made orders for the appropriate contributions. That decision was challenged. The court not only upheld the manager’s power, but also concluded that since the manager had the powers of the

141 142

143 144

145

Community Titles Act 1996 (SA), s 94(4); Unit Titles (Management) Act 2011 (ACT), s 10; Unit Titles Act (NT), s 63. Strata Schemes Management Act 1996 (NSW), Sch 2; Owners Corporation Act 2006 (Vic), s 91; Body Corporate and Community Management (Standard Module) Regulation 1997 (Qld), regs 27–​ 38; Strata Titles Act 1985 (WA), Sch 1, Pt I, cl 11; Strata Titles Act 1998 (Tas), s 76; Unit Titles (Management) Act 2011 (ACT), s 17; Unit Titles Act (NT), s 64. Strata Schemes Management Act 1996 (NSW), Sch 2. Strata Schemes Management Act 1996 (NSW), ss 26, 27; Owners Corporation Act 2006 (Vic), s 119; Body Corporate and Community Management Act 1997 (Qld), ss 102–​112; Strata Titles Act 1985 (WA), Sch 1, Pt I, cl 8(2)(b); Strata Titles Act 1998 (Tas), s 80; Unit Titles (Management) Act 2011 (ACT), ss 49, 59, 66; Unit Titles Schemes Act (NT), ss 90, 92, 93. Strata Schemes Management Act 1996 (NSW), s 26.

654 [13.275]

Management Where Ownership Is Divided  Chapter  13

corporation, no notice had to be given to the unit holders of a meeting to make the decision. The manager exercised the powers of the corporation and the meeting was not one of the corporation. Differences between unit holders may reflect differing desires to spend money on repairs and managers, sometimes with links to the insurance industry, will tend to take the less risky position and carry out the maximum repairs considered appropriate. The result in Owners of Strata Plan 5709 v Andrews [2009] NSWCA 189 is that unit holders are not entitled to notice of a meeting considering a proposal to expend in that case over $100,000. [13.280]  The corporation must balance the sometimes competing interests of the individual

unit holders. The corporation must not unduly favour the majority and is constrained from action which oppresses the minority. In Proprietors of Strata Plan 30234 v Margiz Pty Ltd (1993) 32 NSWLR 294 a corporation sought to install an upgraded air conditioning system for the lower ground floor where the existing air flow was non-​existent or dirty. The court held that the greater benefit to the affected unit holders was insufficient to overturn the decision, but overturned the plan as going beyond repair. It is difficult to conclude that adopting a preference for more extensive repairs unduly oppresses a minority. By contrast, in Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 the majority voted to appropriate common property to the majority’s advantage. This action was restrained.146 Similarly, in Young v Owners of Strata Plan 3529 [2001] NSWCA 1135 a proposal to take away the rights of minority unit holders to use common property was held to be a fraud on that minority.

Property rights [13.285]  Upon the deposit of a strata plan, new certificates of title must be issued for the

units and common property and a strata corporation is created. The title for the units is issued in the name of the registered proprietor of the former undivided land and that of the common property in the name of the strata corporation.147 The common property is held on trust by the strata corporation for the unit holders and this equitable property cannot be dealt with separately from the unit.148 Easements are created between the units and the common property for support and shelter and access for such services as water and electricity, communications cables and drainage access.149 Easements may impinge on the enjoyment of any unit holder as occurs with any right of passage for water supply, drainage or gas or electricity supply. In White v Betalli [2007] NSWCA 243 the court held that purported easements must comply with common law definitions, but split as to whether a right to store a boat on the 146 147

148

149

Wilson v Meudon Pty Ltd [2004] NSWSC 1183. Strata Schemes Development Act 2015 (NSW), s 121; Subdivision Act 1988 (Vic), s 28; Land Title Act 1994 (Qld), s 11; Community Titles Act 1996 (SA), s 23; Strata Titles Act 1985 (WA), s 4(4); Strata Titles Act 1998 (Tas), s 8; Unit Titles Act 2001 (ACT), s 9; Unit Titles Schemes Act (NT), s 32. In Western Australia no separate title is issued for the common property. Strata Schemes Development Act 2015 (NSW), s 23; Subdivision Act 1988 (Vic), s 28; Land Title Act 1994 (Qld), s 37; Community Titles Act 1996 (SA), s 28; Strata Titles Act 1985 (WA), s 17(1); Strata Titles Act 1998 (Tas), s 10; Unit Titles Act 2001 (ACT), s 13; Unit Titles Schemes Act (NT), ss 32, 33. Strata Schemes Development Act 2015 (NSW), ss 106, 107; Subdivision Act 1988 (Vic), ss 12, 24; Land Title Act 1994 (Qld), ss 60–​65; Community Titles Act 1996 (SA), s 24; Strata Titles Act 1985 (WA), ss 11–​13; Strata Titles Act 1998 (Tas), ss 14, 75H, 75L, 75K; Unit Titles Act 2001 (ACT), ss 34–​37; Unit Titles Schemes Act (NT), s 50. [13.285]  655

PART 4 Divided Ownership of Land

land contained In another’s unit too greatly interfered with the possession of the burdened owner. The majority not only upheld the easement (they considered that it did not infringe the requirement that the easement not unduly interfere with the servient owner’s use), but decided that such a right could be imposed by a by-​law made by the corporation. [13.290]  A strata plan must set out the unit entitlement of each unit.150 The significance of this

figure is that it determines the proportion of liability for common maintenance and repairs. In Western Australia and the Northern Territory the allocation of unit entitlements is controlled by the legislation. In those States the unit entitlements must represent the proportionate value of each unit compared to all units and the plan must be accompanied by a certificate from a licenced valuer to the effect that the requirement has been met.151 In Queensland application may be made by a lot owner to the District Court to adjust any lot entitlement schedule deemed to be inequitable.152 That review finally led to the decision of the Court of Appeal of the Queensland Supreme Court in Fischer v Body Corporate for Centrepoint Community Title Scheme 7779 [2004] QCA 214. The court pointed out that, in a basic scheme, if all lots are residential but varying in size, the contributions would be equal. However, the position would change if some units had other advantages such as a swimming pool. The court held that variation from equality should be based on the extent to which some lots give rise to expenditure which other lots do not. [13.295] A feature of the strata scheme (except for Queensland) is that, unit holders are

given a registered title to their unit and hold an equitable interest as tenants in common of the common property for which legal title is vested in the strata corporation. These proprietary rights are, therefore, prima facie freely alienable or may be used as security for the loan of money. Furthermore, the rights of enjoyment may be transferred to others by way of lease or contractual licence. The unit holders are bound by the articles of association of the strata corporation of which unit holdings create membership. However, the controlling statute provides that the articles cannot prevent or restrict the alienation of a unit by a unit holder or the leasing or granting of rights of occupation in respect of a unit by a unit holder.153 [13.300] A title to a strata unit is dealt with by transfer or mortgage or lease in the same

manner as any other land subject to Torrens title. Often this right to transfer is reinforced by the strata legislation. Some jurisdictions and some strata plans may have some restrictions on leasing. Recently disputes have arisen as to the impact of provisions in plans upon grants of short-​term leasing. In Byrne v The Owners of Ceresa River Apartments Strata Plan [2017] WASCA 104, a strata company took proceedings against a resident on the basis that the offering of short-​stay accommodation breached the by-​law of the strata scheme. The Full

150

151 152 153

Strata Schemes Development Act 2015 (NSW), Sch 2; Subdivision Act 1988 (Vic), s 24; Land Title Act 1994 (Qld), s 44; Community Titles Act 1996 (SA), s 20; Strata Titles Act 1985 (WA), s 14(1); Strata Titles Act 1998 (Tas), s 16; Unit Titles Act 2001 (ACT), s 8; Unit Titles Schemes Act (NT), s 18. Strata Titles Act 1985 (WA), s 14(2); Unit Titles Act (NT), s 11. Land Title Act 1994 (Qld), s 46; see also Strata Schemes Development Act 2015 (NSW), s 90; Strata Titles Act 1985 (WA), ss 15,16. Strata Schemes Management Act 1996 (NSW), s 49; Owners Corporation Act 2006 (Vic), s 140; Body Corporate and Community Management Act 1997 (Qld), s 37; Community Titles Act 1996 (SA), s 37; Strata Titles Act 1985 (WA), s 42(3); Strata Titles Act 1998 (Tas), s 91; Unit Titles Act 2001 (ACT), s 128; Unit Titles Schemes Act (NT), s 19.

656 [13.290]

Management Where Ownership Is Divided  Chapter  13

Court of the Western Australian Supreme Court held that the relevant by-​law was only a restraint on use and thus did not infringe the legislative prohibition on restrictions on dealing in a lot. However, the by-​law the lot owner and any occupier from using the lot other than as a settled or usual abode. Extensive disclosure requirements have been imposed on the seller of a strata unit. In particular in Queensland, Western Australia and the Northern Territory,154 sellers of strata units have to provide detailed statements and buyers are given rights to set aside contracts of sale where inaccurate information is provided. Obligations to provide information on sale have led to much litigation and adherence to the statutory obligations has been fairly strictly enforced. Courts have emphasised the consumer protection dimension of the legislative policy and thus the desire for a broad interpretation to protect buyers. At the same time they have recognised that the legislation affects property dealings and have resisted arguments to expand the interpretation of the language beyond its fair limits. The cases have been largely concerned with disclosure in relation to lots sold prior to the certification of a strata plan and the registration of the title to individual units. [13.305]  The content of the disclosure statement was in issue in Celik Developments Pty Ltd

v Mayes [2005] QSC 224. The buyer sought to avoid the contract and reclaim the deposit on the basis of deficiencies in the in the disclosure statement and an inaccuracy in the first management statement as disclosed. The buyer complained that an information sheet had not, as required, been placed immediately beneath the warning statement that must be attached as the first or top sheet of the contract. With respect to matters of form, the court pointed out that the buyer is given a right to terminate even for quite technical contraventions and whether or not the buyer has suffered any material disadvantage. In the case, another form was inserted between the warning statement and the information sheet; the court held that immediately meant without anything intervening. Consequently the lack of proper order entitled termination. The buyer also complained that the statement indicated that unit owners would be entitled to the services of the resident caretaker as a letting agent. Later the buyer learnt that the services were only available to buyers of a particular homeware and furniture package which cost $41,900. Despite a lack of specific evidence as to the buyer’s circumstances, the court held that the obligation to pay $41,900 involved a considerable sum and exclusion from the letting pool was a material disadvantage. Disclosure includes considerable information about the activities of the body corporate. Unit owners can only disclose what the body corporate has actually done and not what it ought to have done. In Menniti v Winn [2008] QCA 66 (on appeal from Menniti v Chan [2007] QSC 190), the buyer complained that the disclosure statement gave the response “not applicable” to questions such as the identity of the body corporate manager and explanation for any inequality of unit entitlements. The statement added that the body corporate was not being formally operated as all units were owned by the sellers. The court held that the disclosure was an accurate statement of what was happening even though the happenings were in breach of the legislation. Furthermore the body corporate was a separate legal entity even though as owners of all units the sellers had total control of the body corporate.

154

Body Corporate and Community Management Act 1997 (Qld), s 206; Strata Titles Act 1985 (WA), ss 69, 69A, 69B, 69C, 69D; Unit Titles Schemes Act (NT), s 45. [13.305]  657

PART 4 Divided Ownership of Land

Disclosure of the concomitant obligation under, s 22 of the Land Sales Act 1984 (Qld) was the cause of complaint in Hudpac Pty Ltd v Voros Investments Pty Ltd [2009] QSC 275. In that case the seller did not provide the s 22 statement but did provide statements under the Body Corporate and Community Management Act 1997 (Qld) which covered very similar ground. The seller sought completion of the contract and sought to terminate for failure to complete. The buyer sought the return of the deposit. The court upheld the buyer’s claim on the basis that although the obligations of the two pieces of legislation were similar, the s 22 obligation conferred an entitlement to delay completion until 30  days after delivery of the statement. Those 30 days enabled the buyer to carry out standard searches of title. Settlement could not be demanded until delivery of the statement and the passage of 30  days. The management legislation allowed termination for any material prejudice from any inaccuracy in the information. Purchase may not only be prior to registration of the plan but also construction of buildings containing the units. Some protection is given against delay. Under the Western Australian legislation, a buyer is entitled to avoid the contract and recover any money paid if registration of the plan does not occur within the period prescribed by the contract or in the absence of agreement within six months. In Moore v Stockland South Beach Pty Ltd (No 2) [2012] WASC 468, the contract specified a registration date but added that the seller could extend the registration date on one or more occasions if the development was delayed for any one of listed reasons. Notices of extension were given but the buyer exercised a right to avoid on the basis that six months had expired. The court upheld this action on the basis that the contract had not specified a period within which registration could occur. The requirement of a nominated period entailed an end date that must be fixed and known to the buyer at the time the sale contract is made. The seller is required to update the buyer of changes affecting the disclosure and first community management statement. The legislation requires that full particulars of any variation must be provided. In Bankmist Holdings Pty Ltd v Azina Holdings Pty Ltd [2009] WASC 230, after notice of variations the buyer sought to avoid and referred changes and a reduction in the unit entitlement. The court held that the buyer was not confined to the grounds in the notice of avoidance. However the buyer’s argument was that the seller had not provided full particulars of the variation in that although factual details were provided the seller had not explained the significance of those details. The court rejected the argument and stated that it should not extend the language requiring full particulars. The court quoted the view expressed by Wilson J in Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd (1983) 155 CLR 129 at 164: “but the pursuit of that purpose [of consumer protection] does not require that a prospective purchaser be cosseted like a spoilt child and protected against his own blindness”. Whilst some rights of avoidance are provided for non-​compliance with the duties imposed on the seller, in respect of changes set out in a notice of variation the right of avoidance flows from material prejudice by those changes. In Harvey Fields Private Estates Pty Ltd v 33 Malcolm Street Pty Ltd [2012] WASC 218, the buyer relied on a change in unit entitlements, an increase in floor area and the intrusion of a solid wall blocking a panoramic view over the Swan river. The court followed observations by members of the High Court in Deming No 456 Pty Ltd v Brisbane Unit Development Corporation Pty Ltd (1983) 155 CLR 129. The High Court indicated that minor changes or adjustments do not entitle a buyer to avoid but changes that are not insignificant and have the effect of changing what was contracted for, do entitle avoidance. Although the test is objective, the buyer can establish 658 [13.305]

Management Where Ownership Is Divided  Chapter  13

material prejudice by reference to the buyer’s particular circumstances. The court concluded that reductions in unit entitlements greater than 5% were significant. With respect to the solid wall, the plans had shown a division in the relevant space and although the division was not specified as a solid structure, the variations required to be notified related to cubic space and not aesthetic qualities. Finally, with respect to the increase in floor area, no notification had been given. The court held that in the absence of notice of a material particular, avoidance was justified without the need to establish material prejudice.

Property management [13.310]  The physical property within a strata scheme is commonly brought into existence by

a developer who in turn employs builders and contractors. The developer then proceeds to the creation of the strata scheme and the creation of individual lots and common property. The relationship between the developer and the owners of individual lots and the body corporate which owns the common property can quickly become distant. However, as strata schemes often involve buildings on many levels, structural problems may emerge that do not lie within the control of any individual nor within any individual contractual relationship. In New South Wales, in 2018, the Strata Schemes Management Amendment (Building Defects Scheme) Act 2018 (NSW) added Sch.1 to the Strata Schemes Management Act 2015 (NSW). Under s 194 of the principal Act, a developer must appoint a building inspector.155 The developer must provide the inspector with a document identifying any building defects and any other prescribed documents.156 A bond must be lodged before an occupation certificate is issued.157 The building inspector must lodge a final report covering any building defects.158 An authorised officer appointed by the Department of Finance, Services and Innovation may investigate, monitor and enforce compliance with these requirements.159 In Queensland, greater control over building standards has been sought through the Queensland Building and Construction Commission Regulation 2018 (Qld). Detailed classes of licences for building work are prescribed.160 A statutory insurance scheme is established including assistance with incomplete work and for defective work.161 [13.312]  An equitable share in the common property vests in each unit holder in proportion

to the unit entitlement of the unit; in Queensland legal title to the common property vests in the unit holders. This beneficial or legal ownership cannot be alienated or dealt with separately from the unit.162 As the unit holders are co-​owners of the common property, they are all entitled to enjoy each and every part of it and cannot exclude any other co-​owner from such

155 156 157 158 159 160 161 162

An inspector may also be appointed by the Department of Finance, Services and Innovation: Strata Schemes Management Act 2015 (NSW), s 196. Strata Schemes Management Act 2015 (NSW), s 198A. Strata Schemes Management Act 2015 (NSW), s 207. Strata Schemes Management Act 2015 (NSW), s 201. Strata Schemes Management Act 2015 (NSW), s 211B. Queensland Building and Construction Commission Regulation 2018 (Qld), Sch 2. Queensland Building and Construction Commission Regulation 2018 (Qld), Sch. 6. Strata Schemes Development Act 2015 (NSW), s 23; Owners Corporation Act 2006 (Vic), s 31A; Body Corporate and Community Management Act 1997 (Qld), ss 132–​140; Community Titles Act 1996 (SA), s 28(6); Strata Titles Act 1985 (WA), s 19; Strata Titles Act 1998 (Tas), s 12; Unit Titles Act 2001 (ACT), s 47; Unit Titles Act (NT), s 43. [13.312]  659

PART 4 Divided Ownership of Land

enjoyment. But again private use of a particular parking site or a clothes line might be desired. A unit holder may be granted an exclusive right to occupy part of the common property for a specified period, but only by a unanimous resolution of the corporation.163 [13.315]  The common property vests beneficially in the unit holders and cannot be dealt with

separately from the units. Use of the common property is governed by the by-​laws or articles of the corporation. The statutory by-​laws or articles commonly forbid the obstruction of any lawful use of the common property and any use of the common property that unreasonably interferes with the use and enjoyment of the common property by other members of the strata community and their customers, clients or visitors. Common property is for the benefit of all unit holders. The community or strata corporation has power to provide for the use of the common property, but may not act to the significant disadvantage of an individual unit holder. Platt v Ciriello [1998] Qd R 417 involved a commercial scheme constituting a shopping centre. The dispute related to display stands, freestanding advertising signs and tables and chairs on the common property. The Queensland Supreme Court held that such use would be restrained if it interfered unreasonably with access by unit holders. In Young v Owners of Strata Plan 3529 [2001] NSWCA 1135 a corporation purported to remove the rights of minority unit holders (whose units were in fact parking lots) to access common property which included a swimming pool. The court held that such a rule required the consent of the persons affected. [13.320]  Because units often comprise part of a building, definition of the boundary of that

unit confronts units alongside or on top of one another. What is not within a unit is part of the common property. The common property is not confined to the land surrounding the buildings, but includes all space not within a unit and all pipes, cables, wires, ducts or drains not for the exclusive use of a unit. In New South Wales, South Australia, Western Australia and the Northern Territory, subject to any contrary statement in the strata plan, where a wall, fence, floor, ceiling or roof forms a boundary, the boundary is the inner surface of that wall, fence, floor, ceiling or roof.164 Since the substance of the structure is not within the unit, it is part of the common property. In Victoria, Queensland, Tasmania and the Australian Capital Territory, subject to any contrary statement in the strata plan, the boundary is the centre of the structure.165 [13.325] One of the functions of the strata corporation is to administer and maintain

the common property for the benefit of the unit holders and other members of the strata community. Because of the definitions, this function extends to the grounds, common stairs and passages, common drains and similar inlets and outlets and, in New South Wales, South Australia, Western Australia and the Northern Territory, the exterior of buildings. The inner

163

164 165

Strata Schemes Development Act 2015 (NSW), s 28; Owners Corporation Act 2006 (Vic), s 14; Body Corporate and Community Management Act 1997 (Qld), s 30(7); Community Titles Act 1996 (SA), s 101; Strata Titles Act 1985 (WA), s 42(8); Unit Titles Act 2001 (ACT), s 49; Unit Titles Schemes Act (NT), s 34. There is nothing explicit on this matter in the Tasmanian legislation. Strata Schemes Management Act 1996 (NSW), s 5(2); Community Titles Act 1996 (SA), s 19; Strata Titles Act 1985 (WA), s 3(2)(a) 3A, 3AB; Unit Titles Schemes Act (NT), s 32. Owners Corporation Act 2006 (Vic), s 24; Qld, Registrar of Titles Directions for Preparation of Plans, 9.17; Strata Titles Act 1998 (Tas), s 9; Unit Titles Act 2001 (ACT), ss 14, 15.

660 [13.315]

Management Where Ownership Is Divided  Chapter  13

surface rule means that some matters that seem to be in the control of the unit holder are the responsibility of the corporation. Even in Victoria, Queensland, Tasmania and the Australian Capital Territory, many matters of repair relate to the outer surface of walls or roofs.166 Building structures may cause difficulties in determining boundaries. In Owners of Strata Plan 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272 a dispute concerned a terrace area. Under the New South Wales legislation, boundaries have to be defined by reference to a wall, fence, ceiling or roof. No such object formed the upper part of the terrace, but the upper boundary was expressly defined by reference to such an object. No such express definition of the lower boundary existed so the statutory inner surface rule applied. That inner surface comprised the tiles on the floor and so the corporation was responsible for their sealing and any damage caused by the lack of sealing. [13.330] The corporation’s responsibilities for property management are related to the

definition of boundaries and responsibility for outer surfaces may lead to responsibility of the strata corporation for maintaining structures as waterproof. In Allen v Proprietors of Strata Plan No 2110 [1970] 3 NSWR 339 a dampness problem became evident in a ground floor unit in a home unit building. Damage was caused to carpeting, furnishings, a wall and flooring. Street J concluded that the dampness was caused by the blocking of weepholes in the external skin of the walls, which precluded the water from escaping. Since the problem related to the outer surface and was thus part of the common property, responsibility for ensuring the escape of water rested with the strata corporation. Water penetration was the problem in Proprietors of Strata Plan No 6522 v Furney [1976] 1 NSWLR 412. Needham J concluded that water was entering a unit because of the lack of proper flashings and similar items in the process of construction. Again these items should have been part of the exterior surface. The duty to repair included not just restoration, but a making good. The result in both cases would be maintained in all States as the exterior surface is clearly part of the common property. In Simons v Body Corporate of Strata Plan No 5181 [1980] VR 103 defective construction of a wall allowed the entry of water and damp into a unit. However, in this case it was the construction of the wall as a whole which was defective and Lush J could not apportion the problem between the outer and inner half. In that case the boundary was the median of the wall. The wall therefore was the joint property of the unit holder and the strata corporation. Lush J concluded that there was a joint responsibility to repair the wall and thus share the costs. In New South Wales, South Australia and Western Australia, the wall would be totally owned by the strata corporation and responsibility for repair would fall on the corporation. [13.335] The responsibilities of the corporation relate not only to repair, but also to

maintenance. Maintenance has been held to include cleaning. In Oceana on Broadbeach Community Title Scheme 24163 v Searle [2003] QCA 325 the court held that the duty to clean windows entitled an agent of the corporation to enter the unit to carry out the cleaning. In Chee Min Thoo v Owners of Strata Plan 50276 [2011] NSWSC 657, an exhaust system was available but the unit owner refused to connect to it because it did not provide sufficient ventilation to enable the use of the unit as a take-​away food shop. The court held that the duty to maintain the common property included a duty to provide a reasonable exhaust ventilation capacity. A  body corporate’s failure to maintain common property may lead to liability

166

Simons v Body Corporate of Strata Plan 5181 [1980] VR 103. [13.335]  661

PART 4 Divided Ownership of Land

towards a unit owner for losses. That liability may include property losses and damages for personal injury. In Rogers v Body Corporate for Waterloo Crest CTS 25235 [2007] QSC 369 the applicant fell down stairs where she claimed that the lighting had not been properly maintained. Her ability to make such a claim was accepted but was dismissed for lack of evidence as to inadequate maintenance. [13.340]  The use of any unit is governed by the articles of the strata corporation. The range

of permissible uses may well be restricted in accordance with the purpose for which the strata units are established. A building divided into strata units may be constructed for any of the range of residential, commercial or industrial purposes pursued in our society and often the general type of use will be prescribed by planning controls. The statutory articles commonly provide only that a unit may not be used for any unlawful purpose and that the display of any sign or similar object requires the consent of the corporation. The articles or by-​laws of the corporation impose a duty on the unit owner to maintain his or her unit in good repair.167 The fulfilment of the duty to care for the individual unit commonly affects other unit owners. Consequently the duty may be enforced by the strata corporation. The corporation may serve notice on a unit holder requiring the holder to carry out specified work.168 If the notice is not complied with, the corporation may authorise persons to carry out the work and such persons are entitled to enter the unit for the purpose. Any cost reasonably incurred in carrying out the work may be recovered from the unit holder.169 [13.345]  The holder of a unit is entitled to the exclusive enjoyment of part of a building and

to share the use of the common property. The use of part of the building may be supplemented by other exclusive rights. These supplementary entitlements are specifically described in the New South Wales, South Australian and Australian Capital Territory legislation as utility lots or unit subsidiaries.170 These lots or subsidiaries must be for the separate use of the occupier of a unit and appurtenant to the unit. Since the unit subsidiary is included within the unit, dealings with it are subject to the controls on dealings with part of a unit. The use of this separate area may be subject to restrictions.

Financial obligations [13.350]  Enforcement of obligations to contribute a share of costs of upkeep of premises

and grounds was a significant factor in the adoption of corporate forms of pre-​legislative arrangements. The common law does not provide for compulsory contributions between co-​owners and does not allow the enforcement of positive covenants beyond contracting parties except in the terms of a lease. On the other hand, the level of maintenance costs

167

168

169

170

Strata Schemes Management Act 2015 (NSW), Sch 1; Owners Corporation Act 2006 (Vic), s 129; Community Titles Act 1996 (SA), s 101; Strata Titles Act 1985 (WA), Sch 1, Pt 1, cl 1(1); Strata Titles Act 1998 (Tas), Sch 1, cl 1; Unit Titles (Management) Act 2011 (ACT), s 106; Unit Titles Act (NT), s 95. Strata Schemes Management Act 2015 (NSW), s 122; Owners Corporation Act 2006 (Vic), s 155; Community Titles Act 1996 (SA), s 91(1); Strata Titles Act 1985 (WA), s 38; Strata Titles Act 1998 (Tas), s 95; Unit Titles (Management) Act 2011 (ACT), s 109; Unit Titles Schemes Act (NT), s 96. Strata Schemes Management Act 2015 (NSW), s 120; Community Titles Act 1996 (SA), s 91(2); Owners Corporation Act 2006 (Vic), s 156; Strata Titles Act 1985 (WA), s 38 (4); Strata Titles Act 1998 (Tas), s 131; Unit Titles (Management) Act 2011 (ACT), s 110; Unit Titles Schemes Act (NT), s 96. Strata Schemes Management Act 1996 (NSW), s 44; Community Titles Act 1996 (SA), s 19; Unit Titles Act 2001 (ACT), s 12.

662 [13.340]

Management Where Ownership Is Divided  Chapter  13

is of central concern to owners within a strata scheme. Complexities of management may induce a strata corporation to employ a professional manager and managers naturally tend to employ properly trained persons to undertake tasks in situations where needs of economy might incline an individual owner constrained only by statutory controls and possible tortious liability to undertake a task in person. Therefore, although strata titles allow ownership of more compact housing and thus commonly cheaper housing, the more compact form and management complexities often involve higher ongoing costs. [13.355]  A strata corporation is entitled to raise such funds as it thinks necessary and these

funds may include reserves for future capital expenditure.171 The decision as to what optional work, as opposed to necessary maintenance, is to be done rests with the strata corporation. Funds may come from levies on all strata owners. Contributions must be proportional to unit entitlements. The level of contributions may be fixed by an ordinary resolution of the corporation. Contributions owed by a unit holder may be recoverable as a debt by the strata corporation and may be recovered from any successor in title to the unit holder. In some jurisdictions, specific provision is made for a sinking fund as distinct from general maintenance funds. A sinking fund is usually a fund set aside to provide for future repairs and maintenance and replacement of plant and equipment and buildings on common property. Similarly, the body corporate may wish to provide for long-​term projects or possible exigencies. Such a find is required in some jurisdictions. In other jurisdictions, in the absence of legislative provision, sinking funds or reserves are set up using different methods. [13.360]  Repair work will not uncommonly relate more to some unit holders than to others.

Thus, in Proprietors of Strata Plan No 159 v Blake (unreported, NSWSC, No 110264, 1986), the property involved was a shopping and office arcade on three floors of which only the ground floor was air conditioned. Repairs were needed to the air conditioning system, which was part of the common property. Yeldham J held that the strata corporation was under a duty to maintain the common property and, in the absence of any statutory qualifications, contributions were to be levied according to unit entitlement and not subject to any comparative benefit calculation. Consequently the upper floor unit holders would be contributing to work which was of no benefit to them. This principle has been reversed in Victoria and South Australia.172 In those States the contrary principle has been established. The words of the original Victorian regulation perhaps state the idea most clearly:  “the unit which benefits more pays more”.173 This statement indicates that even among a group of units which are specially benefited, contributions may be adjusted to reflect the degree of benefit. In this respect the Victorian rule seems to go further than that in South Australia. In South Australia the position seems to be that costs of work which wholly or substantially benefits one unit or a group of units may be recovered from the owners of those units, but where more than one unit is specially benefited as between the benefited units, liability between the benefited units is apportioned according to unit entitlement. 171

172 173

Strata Schemes Management Act 1996 (NSW), s 59; Owners Corporation Act 2006 (Vic), s 25; Body Corporate and Community Management (Standard Module) Regulation 1997 (Qld), reg 95; Community Titles Act 1996 (SA), s 114; Strata Titles Act 1985 (WA), s 36; Strata Titles Act 1998 (Tas), ss 82, 83; Unit Titles (Management) Act 2011 (ACT), ss 73, 74; Unit Titles Schemes Act (NT), s 94. Owners Corporation Act 2006 (Vic), s 49(3); Community Titles Act 1996 (SA), s 103(10). Subdivision (Body Corporate) Regulations 1989, reg 401(g). [13.360]  663

PART 4 Divided Ownership of Land

As well as special items of repair, the strata corporation is under a duty to carry out regular maintenance of common property.174 Again some units may impose greater ongoing demands on common property than others, but no qualification exists to the principle that contributions are to be levied according to unit entitlement. In Jacklin v Proprietors of Strata Plan No 2975 [1975] 1 NSWLR 15 the strata property consisted of one single storey block and a tower block. The tower block required greater maintenance costs because of some items, such as the lifts. Holland J ruled that the common property could not be divided in two classes –​that relating to the tower block and that relating to the single storey block. All common property was to be treated alike. The current Victorian Act does allow for more than one body corporate for a strata plan and that scheme would allow the division attempted in Jacklin’s case.

Community rules [13.365]  Responsibilities for neighbourliness between individual landowners take legal form

from the law of nuisance, supplemented by duties of care in negligence and public duties largely imposed by by-​laws of local councils. The indeterminate nature of these branches of private law and the court procedures needed for their enforcement inhibit their utility in dealing with day-​to-​day matters, such as barking dogs and overhanging and underground spreading of trees. Thus local government regulations are often relied upon to resolve what are essentially private disputes. More recently, informal neighbourhood dispute resolution centres have been established to bring neighbours to the conference table. Residents of buildings subject to a strata scheme are typically in much closer contact with one another. The articles of the strata corporation impose rules of behaviour for the use of units and common property. In all jurisdictions except Victoria, these rules are expressed to be binding upon the strata corporation and unit holders and, in so far as they affect the use of units or the common property, occupiers of units who are not unit holders. Unit holders and occupiers must take reasonable steps to ensure that any occupiers who are not unit holders comply with the articles.175 A strata or community corporation has those articles or by-​laws which are set out in a schedule or similar list in the legislation. The corporation may adopt different articles or by-​ laws and amend its articles or by-​laws. There are, however, restrictions on the variations which the corporation may make and these are extensive in New South Wales.176 Procedurally, the

174

175

176

Strata Schemes Management Act 1996 (NSW), s 62; Owners Corporation Act 2006 (Vic), s 46; Body Corporate and Community Management Act 1997 (Qld), ss 87–​114; Community Titles Act 1996 (SA), s 75(1); Strata Titles Act 1985 (WA), s 35; Strata Titles Act 1998 (Tas), s 81; Unit Titles (Management) Act 2011 (ACT), ss 19, 24; Unit Titles Schemes Act (NT), s 34. Strata Schemes Management Act 1996 (NSW), s 44; Owners Corporation Act 2006 (Vic), s 141; Community Titles Act 1996 (SA), s 43; Strata Titles Act 1998 (Tas), s 93; Strata Titles Act 1985 (WA), s 42(6); Unit Titles (Management) Act 2011 (ACT), s 107; Unit Titles Schemes Act (NT), s 95. Strata Schemes Management Act 1996 (NSW), s 47; restrictions on by-​laws are set out in s 49; Owners Corporation Act 2006 (Vic), s 140; no rule may be inconsistent with any law or unfairly discriminate against any lot owner; Community Titles Act 1996 (SA), s 39(a); no amendment may prevent or restrict alienation by a unit holder, or the lease or grant of rights of occupation by a unit holder, or the keeping of a guide-​dog by a person who is blind or deaf, s 19(4); Strata Titles Act 1985 (WA), s 42(1); by-​laws in Sch 1 Pt 1 can be amended only by unanimous resolution; Strata Titles Act 1998 (Tas), s 72; limitations on by-​law making powers are set out in s 91; Unit Titles (Management) Act 2011 (ACT), s 106; general powers to amend the rules are given to the owner’s corporation to amend the rules; Unit Titles Act (NT), s 94; alterations are a matter for the management module.

664 [13.365]

Management Where Ownership Is Divided  Chapter  13

adoption or amendment of substitute articles or by-​laws must be made by a special resolution of the corporation. Special resolutions may be defined in each jurisdiction; in some cases they require more than a simple majority and in the various jurisdictions involves a number from two-​thirds to unanimity.177 Furthermore, as a matter of general principle, the making of rules and the exercise of powers under the statutes and rules must not be done so as to harm minority interests.178 By-​laws must be for the benefit of the strata or community scheme as a whole. Restrictions on the use of any individual unit must produce overall benefit. In Sydney Diagnostic Services Pty Ltd v Hemlena Pty Ltd (1990) 5 BPR 11,436 by-​laws relating to land containing a medical practice confined the conduct of pathology to two units. That by-​law was upheld as beneficial to the balance of medical services. In White v Betalli [2007] NSWCA 243 a right of exclusive use of one unit holder’s property by another unit holder to store a boat was upheld by a majority on the basis that the special nature of the strata land as two waterfront units made the use appropriate. [13.370]  The sharing of buildings and common areas requires restraint in consideration of the

enjoyment of others. The strata or community corporation is responsible for the management of the common property are discussed (see [13.260]). Duties in relation to others are imposed by the statutory by-​laws or articles. In all jurisdictions these by-​laws or articles are not only binding on unit holders but, in so far as they affect the use of units or common property, are binding upon occupiers of units.179 The by-​laws or articles do not directly require observance by the persons not bound by them but require persons bound to control their customers, clients and visitors. The by-​ laws or articles essentially impose obligations of good neighbourliness.180 Consequently, unit holders are required to refrain from undue noise and to refrain from interference with others in the enjoyment of their rights in relation to units or common property. Furthermore, a person must not keep an animal in, or in the vicinity of, a unit without the consent of the strata corporation. This restriction does not operate so as to prevent the keeping of a guide dog at a unit by an occupier who is blind or deaf, or so as to restrict the uses of a guide dog by such a person. New South Wales has perhaps the most demanding by-​ laws in that washing should not be hung to be visible from other units or common property and windows must be kept clean.

Building decline [13.385]  Many strata schemes have now been in force for 40 years, so either the physical

conditions require some action such as redesign of the strata structures or more extreme steps

177

Strata Schemes Management Act 1996 (NSW), s 5; Owners Corporation Act 2006 (Vic), s 138; Community Titles Act 1996 (SA), s 39 (a unanimous resolution); Strata Titles Act 1985 (WA), s 3(1); Strata Titles Act 1998 (Tas), s 76. 178 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46; Wilson v Meudon Pty Ltd [2004] NSWSC 1183; see [15.65]. 179 Strata Schemes Management Act 1996 (NSW), Sch 1; Owners Corporation Act 2006 (Vic), s 138; Body Corporate and Community Management Act 1997 (Qld), s 129; Community Titles Act 1996 (SA), s 34; Strata Titles Act 1985 (WA), s 42(6); Strata Titles Act 1998 (Tas), s 90; Unit Titles (Management) Act 2001 (ACT), s 106; Unit Titles Schemes Act (NT), s 95. 180 The potential scope of the by-​laws or articles is illustrated by the detailed list of available subject matter set out in the Victorian legislation in Sch 1 of the Owners Corporation Act 2006 (Vic). [13.385]  665

PART 4 Divided Ownership of Land

such as demolition or changed conditions mean some other form of use is appropriate. On damage to or destruction of a unit, there is provision in each jurisdiction for variation of a plan of strata subdivision.181 If a unit is damaged or destroyed, it may be desired to exclude that unit from the subdivision. Each jurisdiction makes different provision for variations to a plan. Some powers of variation extend beyond situations of damage or destruction. Variation for damage or destruction is a procedure distinct from a decision to bring the scheme to an end. In New South Wales, detailed procedures are provided for a strata renewal proposal.182 A general meeting of the corporation must be held to consider a strata renewal proposal.183 That meeting must decide whether the proposal warrants consideration by a strata renewal committee. The committee must decide whether to prepare a strata renewal plan. Any proposed plan must then be considered by a general meeting of the strata corporation. If adopted, Tribunal approval is required.184 [13.390]  There is provision in each jurisdiction for cancellation of a plan of strata subdivision

by application to a tribunal.185 Cancellation of a plan of strata subdivision is usually by order of the tribunal, but in some jurisdictions on registration by the Registrar of Title. Cancellation usually follows a unanimous resolution, or an application by every registered owner, mortgagee and lessee. As a result, the property vests in the unit owners of that plan as tenants in common in accordance with unit entitlement or as the court orders. The owners remain liable for any outstanding liabilities of the body corporate.

Dispute resolution and winding up [13.395]  The unit holders, as members of the strata corporation, are entitled to put forward

their point of view at meetings of the corporation. There are rules as to the way in which decisions may be made by a meeting of the body corporate. The purchase of additional real estate normally requires a unanimous resolution of the corporation. A  decision to undertake improvements on the property could be made by a resolution of the corporation. The maintenance of the common property is a function of the corporation. Insurance of all buildings at their replacement value and public liability insurance must be taken out by the corporation. The maintenance of each unit is a duty imposed on each unit holder by the statutory articles. Duties of neighbourliness are imposed on unit holders and occupiers by the articles. The enforcement of the articles is a function of the corporation. Consequently the corporation has some discretion as to what it will do. In many instances the corporation is entrusted with making a decision or carrying out a responsibility. The

181

182 183 184 185

Strata Schemes Development Act 2015 (NSW), s 130; Subdivision Act 1988 (Vic), ss 32AG, 32AI; Body Corporate and Community Management Act 1997 (Qld), s 78; Community Titles Act 1996 (SA), s 64; Strata Titles Act 1985 (WA), s 28; Strata Titles Act 1998 (Tas), ss 26, 27; Unit Titles (Management) Act 2011 (ACT), ss 161, 161A; Unit Titles Schemes Act (NT), ss 14, 15. Strata Schemes Development Act 2015 (NSW), s 153. Strata Schemes Development Act 2015 (NSW), Sch 7. Strata Schemes Development Act 2015 (NSW), s 178. Strata Schemes Development Act 2015 (NSW), s 135; Subdivision Act 1988 (Vic), ss 32, 38; Body Corporate and Community Management Act 1997 (Qld), ss 72, 73; Community Titles Act 1996 (SA), s 52; Strata Titles Act 1985 (WA), ss 30, 30A, 31; Strata Titles Act 1998 (Tas), s 32; Unit Titles (Management) Act 2011 (ACT), s 152; Unit Titles Schemes Act (NT), ss 14, 15.

666 [13.390]

Management Where Ownership Is Divided  Chapter  13

responsibilities include the enforcement of obligations owed by unit holders. A unit holder may seek to compel the corporation to carry out the corporation’s duties or to compel the corporation to enforce other unit holders’ responsibilities. A unit holder on the other hand may feel that a decision of the corporation is oppressive to that unit holder or that the corporation is behaving oppressively in compelling the unit holder to do something. [13.400] There is considerable diversity as to the remedies by way of action available to

a strata corporation or a unit owner. In all jurisdictions, appeals now lie to the Civil and Administrative Tribunal or in Western Australia the State Administrative Tribunal. In general the Tribunal may make such orders as it considers appropriate to resolve a dispute. In some jurisdictions there are procedures prior to an application to the Tribunal. In New South Wales the Director-​General of the Department of Fair Trading may give advice on available remedies and may endeavour to bring parties to an agreement to settle any dispute.186 In Victoria complaints may be made to the Director of Fair Trading, who may refer the matter for conciliation or mediation.187 In Queensland the legislation creates the office of Commissioner for Body Corporate and Community Management188 whose responsibilities include the maintenance of dispute resolution service 189 and is empowered to appoint dispute resolution officers.190

186 187 188 189 190

Strata Schemes Management Act 1996 (NSW), s 28QH. Owners Corporation Act 2006 (Vic), ss 152, 172. Body Corporate and Community Management Act 1997 (Qld), s 231. Body Corporate and Community Management Act 1997 (Qld), s 232. Body Corporate and Community Management Act 1997 (Qld), s 236. [13.400]  667

CHAPTER 14

Leases [14.05] [14.25]

[14.55]

[14.105]

[14.165] [14.190]

[14.210]

LEASES AS A PROPRIETARY INTEREST........................................................................... 670 [14.05] Scope of the general law............................................................................... 670 [14.20] Terminology................................................................................................. 672 CHARACTERISTICS OF A LEASE.................................................................................... 673 [14.25] Certainty of duration.................................................................................... 673 [14.30] Exclusive possession...................................................................................... 674 [14.45] Commencement of the lease......................................................................... 676 [14.50] Specification of details................................................................................... 677 TYPES OF LEASES......................................................................................................... 677 [14.55] Fixed-​term leases.......................................................................................... 677 [14.60] Periodic leases.............................................................................................. 678 [14.70] Tenancy at will............................................................................................. 681 [14.75] Tenancy at sufferance................................................................................... 682 [14.80] Tenancy by estoppel..................................................................................... 682 [14.85] Concurrent leases......................................................................................... 683 [14.90] Retail tenancies............................................................................................ 684 CREATION AND ENFORCEABILITY OF LEASES.............................................................. 685 [14.105] Legal and equitable leases............................................................................. 685 [14.120] Leases and the Torrens system....................................................................... 691 [14.120] The registration of leases.................................................................... 691 [14.125] The registration of subleases............................................................... 692 [14.130] Leases as a statutory exception to indefeasibility of title............................. 693 [14.160] Leases falling outside the statutory exception to indefeasibility of title............... 695 RENT AND BONDS...................................................................................................... 696 [14.165] Covenant by tenant to pay rent, rates and taxes............................................ 696 [14.170] The landlord’s right of re-​entry for non-​payment of rent.................................. 696 CONDITION OF PREMISES.......................................................................................... 697 [14.190] The obligation of the landlord as to fitness of habitation................................. 697 [14.195] Covenant by tenant to repair........................................................................ 698 [14.200] Implied duty by the tenant not to commit waste............................................. 699 [14.205] The landlord’s right of entry for inspection...................................................... 700 THE RIGHTS AND DUTIES OF LANDLORDS AND TENANTS......................................... 701 [14.210] Express terms............................................................................................... 701 [14.215] Implied terms............................................................................................... 702 [14.215] General approach............................................................................. 702 [14.220] Duties of respect............................................................................... 704 [14.225] Implied covenant by the landlord of quiet enjoyment................................ 706 [14.230] The landlord’s right of re-​entry for breach of covenants other than the covenant to pay rent.................................................................... 708 [14.235] The tenant’s duty to yield up possession to the landlord at the end of the lease..................................................................................... 709

[14.245] ASSIGNMENTS AND SUBLEASES................................................................................. 709 [14.245] Nature of assignments and subleases............................................................. 709 [14.250] Covenants prohibiting assignments and subleases.......................................... 710 [14.260] Consent to assignments and subleases........................................................... 714 [14.270] THE ENFORCEABILITY OF COVENANTS BY AND AGAINST ASSIGNEES OR SUBTENANTS........................................................................................................ 716 [14.270] Relationships after assignment or sub-​letting.................................................. 716  

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[14.310]

[14.360]

[14.395]

[14.445]

[14.275] The covenant must touch and concern the demised land................................. 717 [14.280] Ability to sue and liability to be sued.............................................................. 720 [14.280] General.......................................................................................... 720 [14.285] Assignees from the tenant.................................................................. 720 [14.290] Assignees from the landlord................................................................ 721 [14.295] Lack of formalities............................................................................. 723 [14.305] Indemnity by assignees...................................................................... 724 DETERMINATION OF LEASES BY FORFEITURE.............................................................. 725 [14.310] The nature of the right of forfeiture................................................................ 725 [14.320] Waiver........................................................................................... 727 [14.330] Forfeiture for breach of the covenant to pay rent...................................... 730 [14.340] Forfeiture for breach of covenants other than the covenant to pay rent......... 734 [14.355] Protection of subtenants and mortgagees............................................... 740 DETERMINATION OTHER THAN BY FORFEITURE......................................................... 741 [14.360] Natural expiration of the term....................................................................... 741 [14.365] Notice to quit............................................................................................... 742 [14.375] Denial of title................................................................................... 743 [14.380] Surrender..................................................................................................... 743 [14.385] Merger......................................................................................................... 746 [14.390] Frustration................................................................................................... 747 LANDLORD’S REMEDIES OTHER THAN DETERMINATION............................................ 748 [14.395] Damages and/​or injunction........................................................................... 748 [14.400] Action for arrears of rent............................................................................... 749 [14.405] Repudiation and damages for prospective loss................................................ 749 [14.425] Distress for rent................................................................................ 752 [14.430] Action for use and occupation.............................................................. 753 [14.435] Actions for double rent and double value against overholding tenants.......... 754 TENANT’S REMEDIES................................................................................................... 756 [14.445] Overview..................................................................................................... 756 [14.450] The right of set-​off........................................................................................ 756

LEASES AS A PROPRIETARY INTEREST Scope of the general law [14.05]  Leases allow for one person to occupy land without the capital investment normally

required for ownership. A lease involves the grant of possession by the owner to another in consideration for a payment known as rent. Commonly rent is paid on a periodic basis  –​ weekly, fortnightly or monthly. Land may be leased for any of its potential uses –​industrial, agricultural, commercial and residential. Whilst historically landlords leased land held as part of a family estate, such holdings were not as common in Australia as in England, and over the past 50 years professional landlords have developed an expertise in the ownership and management of shopping centres, for example. Leases of residential premises have been made by small investors who have acquired one or more individual houses as a portfolio. In Australia, much of the rural land has been granted by State and Territory governments by way of Crown leases, a landholding unknown to the common law (see [6.35]ff). With respect to residential land, particularly from the 1930s, State and Territory governments have established government agencies who have provided accommodation with an emphasis on social welfare; for the past 40 years the grants have been by residential tenancies (see [15.25]ff). [14.10]  In England, laws with respect to grants of possession of land and the recognition

of those grants as creating proprietary interests occurred through much of the period from 670 [14.05]

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1100 to the end of the 20th century.1 During the 12th to the 16th centuries (the period of formulation of principles upon which the present landlord-​tenant law is based), the tenant’s interest began as a “status”, later became contractual and ultimately became regarded as a property interest. The 12th-​century counterpart of the modern tenant was the villein. According to Pollock and Maitland, “villeinage” was considered a status as well as a tenure.2 Very little legal protection was available to the villein over his interest in the land allotted him by the lord of the manor: he was regarded as a tenant at will and his tenure was not protected in the king’s courts.3 However, following manorial custom, the manor courts improved the status of the villein by regarding him as holding a permanent and frequently inheritable interest. A tenant was first offered legal protection by the common law during the 13th century. However, leases did not fall within the system of feudal tenure and estates and were regarded as merely personal property. The effect of this was that the only remedy available to a tenant was an action for damages based on trespass. The possessory remedy available to freeholders, the assize of novel disseisin, was not granted to tenants for a term of years;4 accordingly, a tenant who was dispossessed was unable to recover possession and merely had an action against his landlord based on breach of contract. The courts were slow to rectify the obvious deficiencies in the tenant’s legal position. In 1235 the action quare ejecit infra terminum was formulated which allowed the tenant to recover possession of rented premises from which he had been dispossessed, but this could only be used against the landlord or his successors-​in-​title and had no application where the tenant was dispossessed by a third party. It was not until the late 15th century that the action of trespass de ejectione firmae became available to tenants, which granted tenants a universal remedy to recover possession.5 By the late 15th century, therefore, the tenant became regarded as the holder of an interest in land, rather than merely the holder of a contractual interest. However, leases were still regarded as personal, rather than real, property because the old real actions were inapplicable. Leasehold estates were described as “chattels real” to indicate their classification as personal property and also to recognise their close practical link to real property. For many centuries the effect of the common law classification of leases was that whereas freehold land passed on death to the eldest son, under the feudal principle of primogeniture, leases passed on intestacy to all the children of the deceased equally as next of kin. During the 19th century State legislation in Australia intervened to apply the rules concerning the intestate succession of

1

2 3 4 5

Thus, rules relating to intestate succession occurred as late as the 19th century. For a general discussion of the historical development of landlord-​tenant law, see Pollock and Maitland, History of English Law before the Time of Edward 1 (2nd ed, Cambridge University Press, Cambridge, 1968), Vol I, pp 356–​362, Vol II, pp 35–​38, 106–​117; Plucknett, A Concise History of the Common Law (5th ed, Butterworths, London, 1956), pp 373–​374, 570–​574. Pollock and Maitland, History of English Law before the Time of Edward 1 (2nd ed, Cambridge University Press, Cambridge, 1968), Vol I, p 358. Pollock and Maitland, History of English Law before the Time of Edward 1 (2nd ed, Cambridge University Press, Cambridge, 1968), Vol I, p 360. Pollock and Maitland, History of English Law before the Time of Edward 1 (2nd ed, Cambridge University Press, Cambridge, 1968), Vol I, p 36. Plucknett, A Concise History of the Common Law (5th ed, Butterworths, London, 1956), p 373.

[14.10]  671

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personal property to real property.6 Since that time the common law classification of leasehold estates as personal property has had no practical significance. [14.15]  In Australia, the innovation of Crown leases of rural land has already been mentioned

(see [14.05] and analysis at [6.35]ff). Otherwise the common law of leases operated with minor piecemeal statutory amendments.7 For a considerable period special provisions for farm tenancies have existed in New South Wales, Queensland and the Northern Territory.8 Rent control and security of tenure provisions were introduced originally during World War II as part of the national control of the economy; these controls lingered on particularly in New South Wales and Victoria affecting limited classes of residential premises and giving bonuses to sitting tenants.9 From the 1970s more significant innovations have been introduced in respect of residential tenancies and then for retirement villages, residential parks and rooming houses. Whilst residential tenancies law built on that for landlord and tenants the law extended to what would have been non-​proprietary arrangements10 (see [15.25]ff). The growth of large shopping centres has been accompanied by a power imbalance in the area of commercial tenancies and in some jurisdictions, the law in respect of certain types of retail shop leases is also now codified with protections for retail tenants.11 This chapter examines the general law of landlord and tenant which applies to all premises, together with the specific legislation relating to retail shop leases.

Terminology [14.20] A preliminary discussion of terminology peculiar to landlord and tenant law is

warranted in light of potential confusion caused by misleading and overlapping terms. The person granting a leasehold interest is referred to as the “lessor” or the “landlord”, while the grantee of the interest may be described as the “lessee” or the “tenant”. According to some sources, “lessor” and “lessee” should be used to describe the original contracting parties, while the parties who are in the de facto position of landlord and tenant should be described by the latter terms.12 This view is not held universally and is frequently not followed. At law, “lessor” and “landlord” are synonymous, as are “lessee” and “tenant”. The agreement entered into by a landlord and a tenant may be variously described as a “demise”, “lease”, “tenancy” or “tenancy agreement”. “Lease” and “demise” were more

6 7

8 9 10

11

12

See, for example, Real Estate of Intestates Distribution Act 1862 (NSW); Probate Act 1890 (NSW). The major current legislation is the Landlord and Tenant Act 1899 (NSW); Conveyancing Act 1919 (NSW), ss  116–​141; Landlord and Tenant Act 1958 (Vic); Supreme Court Act 1986 (Vic), ss 79–​85; Property Law Act 1974 (Qld); Landlord and Tenant Act 1936 (SA); Property Law Act 1969 (WA); Landlord and Tenant Act 1935 (Tas); Conveyancing and Law of Property Act 1884 (Tas), ss 10–​12, 15–​16; Law of Property Act (NT), ss  114–​152. Agricultural Tenancies Act 1990 (NSW); Property Law Act 1974 (Qld), ss 153–​167; Pastoral Land Act (NT). Landlord and Tenant (Amendment) Act 1948 (NSW); Landlord and Tenant Act 1958 (Vic), Pt V. Residential Tenancies Act 2010 (NSW); Residential Tenancies Act 1997 (Vic); Residential Tenancies and Rooming Accommodation Act 2008 (Qld); Residential Tenancies Act 1995 (SA); Residential Tenancies Act 1987 (WA); Residential Tenancy Act 1997 (Tas); Residential Tenancies Act 1997 (ACT); Residential Tenancies Act (NT). Retail Leases Act 1994 (NSW); Retail Leases Act 2003 (Vic); Retail Shop Leases Act 1994 (Qld); Retail and Commercial Leases Act 1995 (SA); Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA); Leases (Commercial and Retail) Act 2001 (ACT); Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (Tas). See R v Tottenham & District Rent Tribunal; Ex parte Northfield (Highgate) Ltd [1957] 1 QB 103.

672 [14.15]

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commonly used historically. In modern practice “demise” is seldom encountered, long-​term agreements are frequently referred to as “leases”, while the terms “tenancy” and “tenancy agreement” are usually found in respect of short-​ term leases, especially of residential 13 property. Most modern statutes tend to favour the expression “tenancy agreement”. At law, there is no distinction between the terms. A landlord is usually said to “let” or “demise” the rented premises when creating a lease. Once again, these terms are synonymous and interchangeable. Sometimes the term “lease” is used to describe the document by which the interest is granted but the term is equally applicable to a purely oral agreement; consequently the statement “I do not have a lease” may mean that the speaker does not have a written agreement.

CHARACTERISTICS OF A LEASE Certainty of duration [14.25]  An essential feature of a lease is that its duration must be certain or fixed in calendar

terms. The rule is not one of contractual certainty so that it is not enough that the expressed duration has certainty of meaning. Leases may be of any length, provided that, at the time the agreement is entered into, the exact date of termination is either known or ascertainable by the parties. This principle is known as the rule in Lace v Chantler [1944] KB 368 (CA),14 where a purported fixed-​term lease entered into in 1940 for the duration of the war was held to be invalid on the ground that at that time the length of the war was unknown in 1940. The fact that the termination date of the war was later ascertained was held to be irrelevant. Similarly, in Pemberton v Dimitrijevic [2001] NSWSC 54 a lease “until the property may be released for development” was held to be void for lack of certainty of duration on the basis that the registration of the plan of subdivision was dependent on the advice or consent of the Minister and a subsequent approval by the local Council; these dates were unascertainable and uncertain at the time of the agreement. On the other hand, a lease made “until Easter Sunday 2020” would be valid, as the calendar date on which Easter Sunday falls in that year is ascertainable at any time even if, at the time of signing the agreement, the parties are unaware of the date. The purported leases were described as invalid or void but it is unclear why they could not have constituted valid licences and been enforceable between the original contracting parties. It is not essential that the fixed term be one continuous period; for example, it was held in Smallwood v Sheppards [1895] 2 QB 627 that a lease for three successive public holidays is valid. It is not inconsistent with the nature of a fixed-​term lease to provide for its possible determination prior to the effluxion of the term. Thus, for example, a fixed-​term lease for three years could validly be made subject to the proviso that it could be determined on six months’ notice given by either party.15 Similarly, a lease was held to be valid as a fixed-​term

13 14

15

For a recent definition of “demised premises”, see Alamdo Holdings Pty Ltd v Australian Window Furnishings (NSW) Pty Ltd [2004] NSWSC 487. See also Bishop v Taylor (1968) 118 CLR 518; Anthony v Stanton [1943] VLR 179; Prudential Assurance Co Ltd v London Residuary Body [1992] 3 All ER 504 (HL). In the last-​mentioned case, the House of Lords criticised the rule and suggested that it be examined by the Law Commission. See, for example, Porter v Williams (1914) 14 SR (NSW) 83. [14.25]  673

PART 4 Divided Ownership of Land

lease for two years even though the tenant had an option to determine the lease before the expiration of the two-​year period.16 The registration of a lease under the Torrens legislation does not save a lease which is otherwise void for uncertainty of the term.17

Exclusive possession [14.30] The second essential characteristic of a lease is that of exclusive possession. At

common law, the test of exclusive possession is used to distinguish between leases and licences. The applicable legal propositions can be stated quite simply:  first, the grant of a right of exclusive possession automatically creates a lease;18 and, secondly, no lease can exist unless the tenant is granted the right of exclusive possession.19 The major Australian authority in this context is Radaich v Smith (1959) 101 CLR 209. This case concerned a deed entitled a “licence”, which stated that “the Licensors hereby grant to the Licensee for a term of five years … the sole and exclusive License [sic] and privilege to supply refreshments to the public admitted to” a certain shop and to carry on the business of a milk bar therein. The High Court unanimously agreed that despite the fact that the document was referred to as a licence, the court should examine the substance of the document rather than its form. The court unanimously held that a lease had been created but apart from Dixon CJ, who agreed with the reasons prepared by the other members of the court, each judge issued a separate judgment. In subsequent cases reliance has been firmly placed on the judgment of Windeyer J.  He stated: “Whether when one man is allowed to enter upon the land of another person pursuant to a contract he does so as licensee or as tenant must”, it has been said, “be in the last resort a question of intention”, per Lord Greene MR in Booker v Palmer [1942] 2 All ER 674 at 676. But intention to do what? –​Not to give the transaction one label rather than another. –​Not to escape the legal consequences of one relationship by professing that it is another. Whether the transaction creates a lease or a licence depends upon intention, only in the sense that it depends upon the nature of the right which the parties intend the person entering upon the land shall have in relation to the land … And how is it to be ascertained whether such an interest in land has been given? By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or for a life or lives. If he was, he is a tenant. And he cannot be other than a tenant, because a legal right of exclusive possession is a tenancy and the creation of such a right is a demise. To say that a man who has, by agreement with a landlord, a right of exclusive possession of land for a term is not a tenant is simply to contradict the first proposition by the second.20

Subsequently Australian courts have followed Radaich v Smith and have done so by adopting the reasoning of Windeyer J who placed primacy upon the exclusive possession test and indicated that the question of intention is merely a subsidiary aspect of the exclusive 16 17 18 19 20

Quinlan v Avis (1933) 149 LT 214; Blackler v Felpure Pty Ltd (2000) NSW ConvR 57,275. Re Lehrer and the Real Property Act (1960) 61 SR (NSW) 365; Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at [52]; Pemberton v Dimitrijevic [2001] NSWSC 54 at [33]. Glenwood Lumber Co v Phillips [1904] AC 405 at 408 (PC); Landale v Menzies (1909) 9 CLR 89 at 100–​101 per Griffith CJ, at 111 per Barton J; Radio Theatres Pty Ltd v City of Coburg [1948] VLR 84 at 86 (FC). Francis Longmore & Co v Stedman [1948] VLR 322 at 323; Robert John Pty Ltd v Fostar’s Shoes Pty Ltd [1963] NSWR 419 (FC); Commonwealth v K N Harris Pty Ltd [1965] NSWR 63. Radaich v Smith (1959) 101 CLR 209 at 221–​222.

674 [14.30]

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possession test. The first judge to adopt this approach was Maguire J in Metcalfe and Morris Pty Ltd v Reekie [1963] NSWR 459 at 463. The importance of exclusive possession has been emphasised in all the later Australian cases.21 [14.35] The law in Australia is today in line with that in England represented by the

unanimous decision of the House of Lords in Street v Mountford [1985] AC 809.22 In this case the occupant was granted exclusive possession of a furnished room under a written licence stating, inter alia, that the occupant had a duty to pay a “licence fee” of £37 per week, and that the licence “does not and is not intended to give [the licensee] a tenancy protected under the Rent Acts”. The court held that a lease exists whenever there is a grant of exclusive possession for a fixed or periodic term at an agreed rent. The stated intention contained in the written agreement, that only a licence was to be created and that the Rent Acts should not apply, was held to be irrelevant. Lord Templeman stated (at 826):23 “The only intention which is relevant is the intention demonstrated by the agreement to grant exclusive possession for a term at a rent”. In England, Street v Mountford has been applied in many subsequent cases.24 [14.40] The issue of exclusive possession is a question of fact. The court will look to see

whether the grantor remains in general control of the property.25 The mere fact that the parties declare the document to be a “lease” or a “licence”, or that the document declares the occupant to have “exclusive possession”, is not conclusive, as the court will look to the substance rather than the form.26 However, the language that the parties use is not totally irrelevant. Mahoney JA stated in Lewis v Bell (1985) 1 NSWLR 731 at 73727 that if exclusive possession depends upon implication, an express contrary statement by the parties of their intention may operate to prevent such an implication. However, “once the nature of the rights can be seen to be those of exclusive possession, expressions of intention may be seen to be meaningless and irrelevant. In such a case, the parties cannot escape the legal consequences of one relationship by professing that it is another”. 21

22

23

24 25 26 27

Cases include Lewis v Bell (1985) 1 NSWLR 731; Chaka Holdings Pty Ltd v Sunsim Pty Ltd (1987) NSW ConvR 55-​367; National Outdoor Advertising Ltd v Wavon Pty Ltd (1988) 4 BPR 9732; Federal Airports v Makucha Developments Pty Ltd (1993) 115 ALR 679. Discussed in(1987) 14 UQLJ 167; [1987] Conv 137; [1986] Conv 344; [1986] Conv 39; [1985] CLJ 351. The House of Lords rejected a separate intention test which was largely the work of Denning LJ. A series of judgments in favour of the intention test was delivered in Marcroft Wagons Ltd v Smith [1951] 2 KB 496 (CA); Cobb v Lane [1952] 1 All ER 1199 (CA); Errington v Errington and Woods [1952] 1 KB 290 (CA); Facchini v Bryson [1952] 1 TLR 1386 (CA); the best-​known English case supporting the intention test is Somma v Hazelhurst [1978] 2 All ER 1011; [1978] 1 WLR 1014 (CA). These decisions have an appearance of an attempt by the courts to avoid the application of legislation protecting tenants and caused much difficulty in the drafting of Australian legislation for residential tenancies. The principle that there is no separate intention test has not been expressly adopted in Australia in relation to commercial tenancies but given the general strength of adherence to Radaich v Smith (1959) 101 CLR 209, there is no reason to doubt the primacy of the exclusive possession test in this area. English cases show some tendencies towards a separate intention test: Dresden Estates Ltd v Collinson (1987) 281 EG 1321 (CA); Brooker Settled Estates Ltd v Ayers (1987) 282 EG 325 (CA); Smith v Northside Developments Ltd (1987) 283 EG 1211 (CA). See, for example, Bruton v London & Quadrant Housing Trust [2000] 1 AC 406 (HL); Clear Channel UK Ltd v Manchester City Council [2005] 2 P & CR 2; Gray v Taylor [1998] 1 WLR 1093 (CA). Hamilton Island Enterprises Ltd v Croycom Pty Ltd (1998) Q ConvR 60,102. See, for example, Wik Peoples v Queensland (1996) 187 CLR 1 at 152; KJRR Pty Ltd v Although the Commissioner of State Revenue (Vic) (1999) 99 ATC 4335 at 4337 (VCA), discussed in (April 1999) LIJ 66. See also Radaich v Smith (1959) 101 CLR 209 at 222; Hamilton Island Enterprises Ltd v Croycom Pty Ltd (1998) Q ConvR 60,102. [14.40]  675

PART 4 Divided Ownership of Land

The intention test has recently been applied in a modern illustration of short-​term residential arrangements. Owners and tenants are making their premises available for what are described as “Air BnB Guests”. Availability is commonly advertised on-​line and guests occupy already furnished premises for periods extending from days to weeks. In Swan v Uecker [2016] VSC 313, this action was alleged by a landlord of a residential tenant to be in breach of the term prohibiting assignment or subletting without the landlord’s consent. The tenant contended that only a licence had been granted and likened the guest’s occupation to that of a short-​ term hotel guest. The court rejected these arguments and held that what was important was whether the guest had exclusive possession. Here the head tenant neither remained on the premises nor provided services on the premises. Although the guest was unlikely to sue a third party who wrongfully entered the premises, that was a matter of practicality and the legal capacity to do so flowed from the status as a tenant.

Commencement of the lease [14.45] A lease may be expressed to commence from a past date,28 although more

commonly it will take effect from the present or a future date. Where the lease does not specify a commencement date, in the absence of evidence to the contrary it will be presumed to commence on the date the lease is executed or the oral lease is agreed to.29 The date of commencement must be certain when the lease is agreed to or, if not, it must become certain before the lease comes into effect.30 This latter rule allows for conditional leases to be entered into. An illustration of this would be a lease beginning on the admission of the tenant as a student of the University of Queensland or when the construction of a building is completed.31 Once such an event occurs, the lease is binding.32 A lease taking effect in the future is referred to at common law as a “reversionary lease”. At common law, the lease could take effect at any time in the future, however distant.33 However, legislation in New South Wales, Victoria, Queensland, Western Australia and the Northern Territory now provides that a lease stated to take effect more than 21 years from the date of the instrument purporting to create it shall be void and any contract to create such a term shall likewise be void.34 It has been held that the 21-​year period refers to the date of the lease rather than the contract. Thus, a 35-​year lease containing an option to renew for a further 35 years on giving 12 months’ notice is valid; the fact that at the date of the initial lease it is more than 21 years until the option is exercised is irrelevant.35

28

29 30 31 32 3 3 34 35

See James v Lock (1978) 264 EG 395; Bradshaw v Pawley [1980] 1 WLR 10. In these circumstances a lease will not have a retrospective effect: a lease executed today for two years effective six months ago will be construed as a fixed-​term lease for 18 months. Compare Sandill v Franklin (1875) LR 10 CP 377. Harvey v Pratt [1965] 2 All ER 786 (CA); Picwoods Pty Ltd v Panagopoulos [2004] NSWSC 978; Competitive Funerals Pty Ltd v Gurmit Singh Rai [2005] NSWSC 1171. Perry v Saunders (1961) 104 CLR 149. See also Brilliant v Michaels [1945] 1 All ER 121; Whitlock v Brew (1968) 118 CLR 445. See Brilliant v Michaels [1945] 1 All ER 121; Terry v Tindale (1882) 3 LR (NSW) 444; Swift v Macbean [1942] 1 KB 375. See, for example, Mann, Crossman and Paulin Ltd v Registrar of the Land Registry [1918] 1 Ch 202. Conveyancing Act 1919 (NSW), s 120A(3); Property Law Act 1958 (Vic), s 149(3); Property Law Act 1974 (Qld), s 102(3); Property Law Act 1969 (WA), s 74(3); Law of Property Act (NT), s 115(3). See Re Strand and Savoy Properties Ltd [1960] Ch 582; see also Weg Motors Ltd v Hales [1962] 1 Ch 49 (CA).

676 [14.45]

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Specification of details [14.50] A lease must fulfil the normal contractual requirement that its terms be certain in

the sense of certainty of meaning. The names of the contracting parties and the identity of the demised premises must be clear if the lease is to be valid.36 These matters are seldom contentious, but disputes have occasionally arisen concerning the latter point. Mason J held in Goldsworthy Mining Ltd v Federal Commissioner of Taxation (1973) 128 CLR 199 that a lease of part of the sea bed is valid where the boundary is described by reference to the surface, and where the boundary may occasionally move.37 It thus appears sufficient that provided the description enables the boundaries to be defined, the identity of the demised premises will be established. In addition the term of the lease must be established even if the period is on a recurring basis such as a weekly or monthly tenancy. In Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23, a seven-​year lease had been agreed and subsequently the interest of the landlord had been assigned; the tenant was either a tenant at will or a weekly tenant. The assignee however sent accounts for rent owing. The language was however consistent with references to the old lease. No discussion took place between the parties as to the length of the term of any new lease and no material existed as to any agreement as to any such term. No lease existed. Contrary to popular belief, rent is not an essential feature of a lease.38 For this reason, for example, a tenancy at will may arise in circumstances where no rent has been paid. However, except where the lease is in deed form, under normal contractual rules some consideration must be provided by the tenant in return for the grant of a lease.39 Although rent is usually payable in money, this is not necessarily the case. Rent may be in kind40 or may be paid by the provision of services41 (as in the case of a caretaker of a building who lives in part of it). Rent, where it is reserved, need not be specified as a precise figure provided that the relevant clause contains a means of quantification of the amount: for example, rent may be calculated by reference either to a percentage of the gross receipts of a business42 or to variations in the consumer price index.43

TYPES OF LEASES Fixed-​term  leases [14.55]  Fixed-​term leases, or leases for a term of years, may only be created expressly. Unlike

periodic leases, they are never implied by operation of law. Fixed-​term leases may be of any

36 37 38 39 40 41 42 43

Di Biase v Rezek [1971] 1 NSWLR 735 (CA); Competitive Funerals Pty Ltd v Gurmit Singh Rai [2005] NSWSC 1171. See also Equuscorp Pty Ltd v Antonopoulos [2008] VSCA 179. Hayes v Seymour-​Johns (1981) 2 BPR 9366 (NSWSC); Francis Longmore & Co Ltd v Stedman [1948] VLR 322; Bagust v Rose (1963) 80 WN (NSW) 604; Knight’s Case (1588) 5 Co Rep 54b; 77 ER 137 (KB). Whitlock v Brew (1968) 118 CLR 445; Competitive Funerals Pty Ltd v Gurmit Singh Rai [2005] NSWSC 1171 at [136]. Pitcher v Tovey (1692) 4 Mod 71; 87 ER 268 (KB); Lanyon v Carne (1669) 2 Wms Saund 161; 85 ER 910 (KB). Montagu v Browning [1954] 1 WLR 1039 (CA); Duke of Marlborough v Osborn (1864) 5 B & S 67; 122 ER 758 (KB). Aarons v Lewis (1877) 3 VLR (E) 234. Tanner v Stocks & Realty (Premises) Pty Ltd [1972] 2 NSWLR 722 (CA). See also Daniel v Gracie (1844) 6 QB 145; 115 ER 56; United Scientific Holdings Ltd v Burnley BC [1978] AC 904 (HL). [14.55]  677

PART 4 Divided Ownership of Land

length, provided that, at the time the agreement is entered into, the exact date of termination is either known or ascertainable by the parties. A lease will commonly be granted for a year or a number of years. Where such a grant occurs, a “fixed-​term” lease or lease for a “term of years” is said to arise. The latter term is found more commonly, although the former term is beginning to gain sway. “Term of years” may be easily confused, as the expression may refer to a fixed-​term lease of any duration, even for a period of less than a year. Statutory provisions exist in New South Wales, Victoria and Tasmania permitting the residue of long fixed-​term leases to be enlarged into fee simple estates by an established procedure.44 The legislation states that fixed-​term leases of at least 300 years’ duration may be enlarged into fee simple estates by declaration in deed form where the unexpired residue of the term is at least 200 years. The application of this provision in Australia is extremely rare.

Periodic leases [14.60]  A periodic lease is a common law leasehold estate which may arise in any one of five

situations: 1.

It may be created by express agreement between the parties in deed form.

2.

It may be created orally at the commencement of the agreement. This latter situation arises very commonly in practice. A typical illustration would be an oral arrangement whereby the tenant is allowed to enter into possession on agreeing to pay the rent weekly, fortnightly or monthly on specified dates.

3.

Where the tenant enters into possession of the rented premises and pays rent45 pursuant to a fixed-​term lease which is invalid at common law or for any other reason.46 Such a tenant may also hold a fixed-​term agreement at equity (under the rule in Walsh v Lonsdale (1882) LR 21 Ch D 9 (CA)) and a periodic tenancy at law;47 in this case, the rules of equity will prevail.

4.

Where the tenant enters into possession of premises prior to the signing of a formal lease. However, where the terms of a lease are subject to negotiation and the negotiations break down, no lease will be created even if the prospective tenant has paid rent under the agreement.48

5.

Where a fixed-​term lease expires and the tenant remains in possession of the premises with the consent of the landlord and pays rent in respect of the overholding period.49

A periodic lease might appear to infringe the basic rule as to the distinction between freehold and leasehold estates, namely that the maximum duration of the lease must be specified or be ascertainable at the commencement of the agreement. This is not the case, however, as a periodic 44

5 4 46 47 48 49

Conveyancing Act 1919 (NSW), s 134; Property Law Act 1958 (Vic), s 153; Conveyancing and Law of Property Act 1884 (Tas), s 83. See (1962) 35 ALJ 408. This legislation may be used in the context of freehold covenants to avoid the rule in Austerberry v Oldham Corporation (1885) 29 Ch D 750 (CA) that the burden of a covenant will not run at common law: see [18.310]. Prior to paying rent, the person would be classified as a tenant at will: see [14.60]. See Atler Pty Ltd v CDFC Australia Ltd (1982) 103 LSJS 70; Prudential Assurance Co Ltd v London Residuary Body [1992] 3 All ER 504. Moore v Dimond (1929) 43 CLR 105. Kellow-​Falkiners Motors Pty Ltd v Nimorakiotakis (2000) V ConvR 64,434; Javad v Aqil [1991] 1 All ER 243. Kellow-​Falkiners Motors Pty Ltd v Nimorakiotakis (2000) V ConvR 64,434; Javid v Aqil [1991] 1 All ER 243.

678 [14.60]

Leases  Chapter  14

lease is treated at common law as a succession of terms, which in retrospect are deemed under a fiction to have been part of the original term. Thus, for example, a monthly periodic lease which has continued in effect for 10 years will be treated in retrospect as a 10-​year term.50 Periodic leases may be subclassified into yearly periodic leases (or leases from year to year), monthly and weekly periodic leases.51 These are the most commonly encountered types of periodic leases, although it is possible to have a daily52 or fortnightly53 periodic lease or a lease for any designated period.54 The issue of the type of periodic lease created is one of fact and the court will make its decision on the basis of the intention of the parties.55 Where there is no direct evidence of the parties’ intention, the courts may infer the type of periodic lease from the manner in which the rent is paid. For example, if the rent is paid weekly, the court will infer a weekly periodic lease,56 and if it is paid monthly, the court will infer a monthly periodic lease.57 The method of payment of the rent is not legally conclusive of the issue and is only evidential, but, according to Dixon  J in Turner v York Motors Pty Ltd (1951) 85 CLR 55 at 66, depending on the circumstances any other conclusion may be held to be unreasonable. Occasionally the parties may calculate the rent on a different basis from the manner in which the rent is payable. For example, instead of demanding a monthly rental of $300, the landlord may require the tenant to pay rent of $3,600 per annum payable at the rate of $300 per month. In both cases the quantum of rent is identical, but the calculation of the rental by reference to an annual sum may suggest that a yearly, rather than a monthly, periodic lease is intended. In this situation the courts have opted for a periodic lease commensurate with the length of the period of calculation, rather than the period of payment.58 [14.65] The problem of determining the type of periodic lease also arises when the tenant

holds over at the end of a fixed-​term lease and pays rent in respect of the overholding period.59 In this situation, different rules appear to apply. Frequently the expired lease will stipulate the nature of the tenancy which is to arise in the event of the tenant remaining in possession. Where this occurs, the courts will follow the terms of the lease. In other cases, however, the courts look to other means to determine the presumed intention of the parties. The major Australian authority on this issue is Moore v Dimond (1929) 43 CLR 105.60 In this case, the

50 1 5 52 53 54 55 56 57 58 59

60

See, for example, Lin v State Rail Authority of NSW [2004] FCAFC 219; Cattley v Arnold (1859) 1 J & H 651; 70 ER 905 (V-​C); Oxley v James (1844) 13 M & W 209; 153 ER 87 (Exch). Yearly periodic leases no longer exist in the Northern Territory: Law of Property Act (NT), s 144(1). Butcher v Bowen [1964] NSWR 36. Foenander v Dabscheck [1954] VLR 38; Munro v Dare [1934] St R Qd 332 (FC). A periodic lease of periods of 364 days was held to exist in Land Settlement Association Ltd v Carr [1944] 1 KB 657 (CA). Fitzgerald v Button (1891) 17 VLR 52 at 53. Burnham v Carroll Musgrove Theatres Ltd (1928) 41 CLR 540. Precious v Reedie [1924] 2 KB 149. See, for example, Ladies’ Hosiery & Underwear Ltd v Parker [1930] 1 Ch 304 (CA). Prior to paying rent, the tenant will be a tenant at will if the tenant receives the landlord’s consent to remain in the rented premises, and a tenant at sufferance if the tenant remains without the consent or dissent of the landlord: see [14.70] and [14.75]. See also Clambake Pty Ltd v Tipperary Projects Pty Ltd (No 3) [2009] WASC 52; Wykes v Samilk Pty Ltd (No 2) [1998] NSW ConvR 56,821; Atler Pty Ltd v CDFC Australia Ltd (1982) 103 LSJS 70. These cases were distinguished in Swanville Investment Pty Ltd v Riana Pty Ltd [2003] WASCA 121. [14.65]  679

PART 4 Divided Ownership of Land

tenant remained in possession at the end of a fixed-​term lease of five years and eight months at a weekly rental and negotiated for the grant of a further five-​year lease. The negotiations later broke down and the landlord claimed one year’s rent on the basis, inter alia, of an alleged yearly periodic tenancy which was argued to exist between the parties. The High Court held that in the case of overholding tenancies, a presumption arises that a yearly periodic lease is created once rent has been paid. The presumption is rebuttable, but is nevertheless very strong. The contention that the type of periodic lease should be determined by reference to the method of payment of the rent under the expired fixed-​term lease was held to be irrelevant. Knox CJ, Rich and Dixon JJ stated at 117:61 When the parties agree for a five years’ holding with weekly payments of the compensatory rent, their intention is not that each week’s rent shall represent a distinct and therefore terminable holding of a week. The weekly rent is part of the compensation for the entire period. Where the intention of the parties is to hold for a greater duration than a yearly tenancy would give them, and this intention fails because of its want of appropriate expression or of formal demise, the presumption or assumption that a general holding is from year to year supplies the term.

The presumption of a yearly periodic lease on overholding clearly applies where the term of the original fixed-​term lease exceeded one year. However, some doubt exists as to whether it applies where the fixed term is one year or less and where a weekly rent is reserved. In Bank of Victoria v M’Hutchison (1881) 7 VLR (L)  452 and Box v Attfield (1886) 12 VLR 574 (FC) a yearly periodic lease was presumed where the original leases were for one year and six months (respectively). However in Beattie v Fine [1925] VLR 363 at 374 Cussen J suggested that a yearly lease will only be presumed where the original lease is of one year’s duration or more. In addition, there are several authorities to the effect that the rent must be paid by reference to a year before a yearly periodic lease will be presumed. An illustration of this approach is Adler v Blackman [1953] 1 QB 146 (CA),62 where the English Court of Appeal refused to infer a yearly lease where the rent was calculated and payable on a weekly basis rather than calculated on a yearly basis and payable on a weekly basis. In New South Wales, Queensland, Western Australia and the Northern Territory the common law rules discussed above concerning the creation of periodic leases have been modified by the following legislation:63 No tenancy from year to year shall, after the commencement of this Act, be implied by payment of rent; if there is a tenancy, and no agreement as to its duration, then such tenancy shall be deemed to be a tenancy determinable at the will of either of the parties by one month’s notice in writing expiring at any time.

This section has been held to be applicable only where a yearly periodic lease would have applied at common law, and has no application where the payment of rent would have led to

61 62 63

Isaacs J stated (at 119) that a yearly periodic lease will not be presumed to arise unless the rent paid has a yearly character. See also Ball and Huntley v Laffin (1876) 10 SALR 6; Solomon v Bray (1873) 7 SALR 128. Compare Edwards v Horrigan; Ex parte Horrigan [1923] St R Qd 8 (FC); Bank of Victoria v M’Hutchison (1881) 7 VLR (L) 452. Conveyancing Act 1919 (NSW), s 127(1); Property Law Act 1974 (Qld), s 129(1); Property Law Act 1969 (WA), ss 71–​72; Law of Property Act (NT), s 144. The exact wording of the provision differs between the jurisdictions.

680 [14.65]

Leases  Chapter  14

the implication of a weekly, monthly or other periodic lease.64 Where the section applies, the court will imply into the monthly periodic lease such terms as are applicable under general law to such a lease.65 In the case of all periodic leases, in the absence of express agreement between the parties the courts will imply such terms into the agreement as are necessary to give business efficacy to the lease and which are consistent with the nature of the lease created.66 In the case of overholding tenancies, the courts will apply all the terms of the expired lease or agreement for a lease provided that they are not inconsistent with the nature of the yearly (or other) periodic lease implied by law67 and provided that they are appropriate to the basis on which the tenant is holding over.68 The classification of periodic leases has significance largely by virtue of the common law rules as to the termination of periodic leases (see [14.365]).

Tenancy at will [14.70] A tenancy at will may occasionally arise by express agreement,69 although more

commonly it will be implied at law.70 A  tenancy at will arises whenever the tenant enters or remains in possession of property with the consent of the landlord without paying rent, subject to the understanding that either party may determine the lease at any time.71 Thus, it may rise when the tenant enters into possession while the parties are still negotiating the terms of a lease.72 A tenancy at will also arises when a tenant under a formally invalid lease enters into possession or when a fixed-​term lease expires and the tenant remains in possession with the express permission of the landlord.73 In both cases the payment of rent by the tenant and its acceptance by the landlord will convert the tenancy at will into a periodic lease.74 Note, however, that the reservation of rent does not prevent there being a tenancy at will,75 and that the giving and receiving of rent does not of itself necessarily import the existence of a tenancy:76 all will depend on the terms of the agreement.

64 65 66 67 68 9 6 70 71 72 73 74 75 76

Burnham v Carroll Musgrove Theatres Ltd (1928) 41 CLR 540; Willshire v Dalton (1948) 65 WN (NSW) 54 (SC in banco); Rowston v Sydney CC (1954) 92 CLR 605. Dockrill v Cavanagh (1944) 45 SR (NSW) 78 (SC in banco); Wykes v Samilk Pty Ltd (No 2) [1998] NSW ConvR 56,821. Moore v Dimond (1929) 43 CLR 105; White v Cariste [2004] NSWCA 460. Lee v Smith (1854) 9 Exch 662; 156 ER 284; Felnex Central Properties Ltd v Montague Burton Properties Ltd (1981) 260 EG 705. Compare Bradbury v Grimble & Co [1920] 2 Ch 548. Ell t/​as GNP Printing v Cisera [2001] NSWSC 242. See, for example, Hagee (London) Ltd v A B Erikson and Larson [1976] QB 209 (CA); Manfield & Sons Ltd v Botchin [1970] 2 QB 612. Wheeler v Mercer [1957] AC 416 (HL). Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23 at [4]‌. Javad v Aqil [1991] 1 WLR 1007. See, for example, Banjo v Brent London Borough Council [2005] 1 WLR 2520 (CA); Meye v Electric Transmission Ltd [1942] Ch 290; Pemberton v Dimitrijevic [2001] NSWSC 54. Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23 at [5]‌. Cardiothoracic Institute v Shrewdcrest Ltd [1986] 3 All ER 633. Clarke v Grant [1950] 1 KB 104; Cardiothoracic Institute v Shrewdcrest Ltd [1986] 3 All ER 633. [14.70]  681

PART 4 Divided Ownership of Land

A tenancy at will may more accurately be described as a type of licence than a “tenancy”.77 Such a tenant may not be sued for trespass until the tenancy is revoked. A tenant at will has been held to have the right to emblements.78 This type of tenancy may be determined without notice on demand at any time by either party.79 No formal notice to quit is required.80 Where the demand is given by the landlord, the tenant is allowed a reasonable time to remove his or her goods from the property and the tenant may re-​enter the property for this purpose. The tenancy will also terminate automatically when either party dies81 or does an act incompatible with the nature of the tenancy. This may arise, for example, where the landlord enters the property and uses it for his or her own purposes82 or where the tenant commits voluntary waste.83

Tenancy at sufferance [14.75]  A tenancy at sufferance lacks the essential features of all tenancies. It arises whenever

a tenant overholds after the expiration of a fixed-​term lease without the express consent or dissent of the landlord and does not pay rent.84 If the landlord later gives consent, a tenancy at will arises and payment of rent will lead to the implication of a periodic lease: see [14.70]. A tenant at sufferance differs from a trespasser in that his or her original entry into the property was lawful. The very nature of the estate dictates that it cannot be created by express grant. In the case of a tenancy at sufferance, a landlord can sue for possession at any time without giving notice.85 A tenant at sufferance cannot be sued for rent, although the tenant is liable to an action for use and occupation of the property.86 Unlike a tenant at will, there is no right to emblements.87 Because of the lack of consent of the landlord, by virtue of the State limitation of actions legislation, if the tenant remains in possession for 12 years (15 years in Victoria and South Australia) without the consent of the landlord and without paying rent, the landlord’s right to recover possession of the land will be extinguished.88

Tenancy by estoppel [14.80]  The principle of estoppel is one applicable to contracts and dealings in land generally. The place of the principle in Australian law was established by the decision of the High Court in

77

78 79 80 81 82 83 84

85 86 87 88

See Dougal v McCarthy [1893] 1 QB 736 (CA). However the limitation of actions legislation draws a clear distinction between a licence and a tenancy at will by making special provision for the latter: see Limitation Act 1969 (NSW), s 34(2); Limitation of Actions Act 1958 (Vic), s 13; Limitation of Actions Act 1974 (Qld), s 18; Limitation of Actions Act 1936 (SA), ss 15, 16; Limitation Act 2005 (WA), s 72; Limitation Act 1974 (Tas), s 15. Litt, 68. Emblements are the common law right of a tenant to harvest the annual crop produced by cultivation on agricultural land. Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47 at 49 (SC in banco). Martin v Taylor (1999) 17 ACLC 1,563 at 1,569 (ACTSC); Coatsworth v Johnson (1885) 55 LJQB 220. James v Dean (1805) 11 Ves Jun 383; 32 ER 1135 (Ch) at 391 (Ves Jun), 1138 (ER). Turner v Doe d Bennett (1842) 9 M & W 643; 152 ER 271 (Exch). Countess of Shrewsbury’s Case (1600) 5 Co Rep 13b; 77 ER 68 (KB). Wheeler v Mercer [1957] AC 416 (HL); Anderson v Bowles (1951) 84 CLR 310; Clambake Pty Ltd v Tipperary Projects Pty Ltd (No 3) [2009] WASC 52 at [74]. See also Maher v Commonwealth Banking Corporation [2002] FCAFC 104. Natural Gas & Oil Corporation Ltd (in liq) v Byrne and Boyle (1951) 68 WN (NSW) 207. Bayley v Bradley (1848) 5 CB 396; 136 ER 932 (CP) at 406 (CB); Leigh v Dickeson (1884) 15 QBD 60 (CA). Doe d Bennett v Turner (1840) 7 M & W 226; 151 ER 749 (Exch). The relevant State legislation is set out at [3.40].

682 [14.75]

Leases  Chapter  14

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. The requirements to establish an estoppel have been discussed in relation to dispositions at [8.195]ff. A tenancy by estoppel is a misnomer as no legal or equitable interest is passed to the tenant. Under the principle of estoppel, each party is prevented from denying each other’s title.89 Thus, if after entering into a lease a tenant discovers that the landlord’s title is deficient or non-​existent, the tenant cannot use the lack of title as an excuse for not paying the rent or not complying with any of the other covenants contained in the lease. Similarly, the landlord is unable to evict a tenant by virtue of the landlord’s lack of title. The principle of estoppel has been held to bind the successors-​in-​title to both parties,90 but has no effect on a person who is not a party to the agreement.91 After earlier doubts,92 the English Court of Appeal held in Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580 that the principle even applies once the tenant has given up possession and extends to the whole period during which the tenant was in possession. The only exception to this rule arises where a tenant is evicted by title paramount, which applies where a third party asserts a superior title to the property.93 A tenancy by estoppel arises most commonly in relation to land dealings where a purchaser of a fee simple interest leases the property to a tenant and subsequently the purchaser fully completes the acquisition of legal or equitable title to the land. Where a landlord later acquires the legal fee simple estate, the tenant will automatically acquire a legal tenancy by operation of law under the principle of “feeding the estoppel”.94 It appears that the courts are hesitant about finding leases based on acts of estoppel. The representation relied on must be in relation to an existing fact, not a promise or representation as to future conduct.95 The courts have emphasised the principle that for a representation to be effective in founding an estoppel it must ordinarily be clear and unambiguous: Kellow-​Falkiners Motors Pty Ltd v Nimorakiotakis (2000) V ConvR 64,434; [2000] VSCA 1.

Concurrent leases [14.85]  Concurrent leases96 will arise where a landlord lets rented premises to one tenant

and then later leases the same premises to a second tenant either for the same term or for a shorter term. In this situation the second lease does not grant a possessory interest, but instead amounts to a lease of the landlord’s reversionary interest.97 The effect of this is to create a

89 90 91 2 9 93 94 95 96 97

This is sometimes referred to as the “doctrine of disclaimer of title”. For an illustration, see W G Clark (Properties) Ltd v Dupre Properties Ltd [1992] Ch 297. Cuthbertson v Irving (1859) 4 H & N 742; 157 ER 1034 (Exch). Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 253; Vella v Wah Lai Investment (Australia) [2004] NSWSC 748 at [158]. See, for example, Harrison v Wells [1967] 1 QB 263 (CA). Wilson v Anderson (1830) 1 B & Ad 450; 109 ER 855 (KB). See, for example, Bucknell v Mann (1862) 2 SCR (NSW) 1. For other circumstances where estoppel may arise, see Noyes v Klein (1985) 3 BPR 9216 (NSWSC). Legione v Hateley (1983) 152 CLR 406 at 432; Wykes v Samilk Pty Ltd (No 2) [1998] NSW ConvR 56,821. See generally Klineberg, “Concurrent Leases in Commercial Transactions” (2004) 10 APLJ 222. See Waterhouse v Waugh [2003] NSWCA 139; Land v Clyne (1968) 92 WN (NSW) 134; Kerdamec Ocean Fresh Restaurant Ltd v Viaduct Quay Ltd [2001] ANZ ConvR 509. [14.85]  683

PART 4 Divided Ownership of Land

landlord-​tenant relationship between the first and the second tenants, the latter as landlord and the former as tenant.98 Any covenants entered into by the tenant in the first lease may be enforced by and against the second tenant in his or her capacity as lessee of the reversion.99 If the term of the second lease was for a longer period than the first lease, the second tenant will be entitled to possession of the rented premises on the expiration of the first lease. If, however, the term of the second lease is the same or shorter than the first lease, possession in these circumstances will vest in the landlord.100 In New South Wales, Victoria, Queensland, Western Australia and the Northern Territory the common law rule in relation to concurrent leases is partially affirmed by legislation, which reads:101 “Nothing in this Part shall affect the rule of law that a legal term, whether or not being a mortgage term, may be created to take effect in reversion expectant on a longer term, which rule is hereby confirmed”.

Retail tenancies [14.90] Leases of shops, service outlets or other commercial premises were subject to the

general law of leases. Often each outlet was contracted on an individual basis. However from the second half of the 20th century, large shopping centres emerged throughout Australia and landlords operating these centres were very powerful. To redress the balance between landlord and tenant of commercial tenancies, legislation is now in force in all jurisdictions except Tasmania.102 The current legislation is contained in the Retail Leases Act 1994 (NSW), the Retail Leases Act 2003 (Vic), the Retail Shop Leases Act 1994 (Qld),103 the Retail and Commercial Leases Act 1995 (SA), the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), the Business Tenancies (Fair Dealings) Act (NT) and the Leases (Commercial and Retail) Act 2001 (ACT).104 In Tasmania, the Fair Trading (Code of Practice for Retail Tenancies) Regulations 1998 (Tas) offer similar regulation to that of the legislation in the other jurisdictions. In none of the Australian jurisdictions does the retail tenancies legislation constitutes a code. For this reason, there is still significant scope for the application of common law principles and general property law legislation to retail tenancies. Thus, for example, common law and existing general property law legislation continues to apply to retail tenancies in respect of

98

Buckby v Speed [1959] Qd R 30 (FC); Birch v Wright (1786) 1 TR 378 at 384; Waterhouse v Waugh [2003] NSWCA 139. 99 Horn v Beard [1912] 3 KB 181; Cole v Kelly [1920] 2 KB 106 (CA); Noone v Traynor (1952) 69 WN (NSW) 33 (SC in banco). 100 See Re Moore and Hulm’s Contract [1912] 2 Ch 105; Neale v Mackenzie (1836) 1 M & W 747; 150 ER 635 (Exch Ch). 101 Conveyancing Act 1919 (NSW), s 120A(5); Property Law Act 1958 (Vic), s 149(5); Property Law Act 1974 (Qld), s 102(5); Property Law Act 1969 (WA), s 74(5); Law of Property Act (NT), s 115(7). 102 The legislation is analysed in depth in Bradbrook, Croft and Hay, Commercial Tenancy Law in Australia (3rd ed, Butterworths, Sydney, 2009). 03 The Retail Shop Leases Act 1994 (Qld) is discussed in Harris, “Retail Shop Easling –​A Bridge Too Far?” (2008) 1 29 Qd Lawyer 92. 104 See generally Crosby, “Australian and UK Small Business Leases –​What Can We Learn From Each Other?” (2007) 14 Australian Property L J 297; Webb, “The Productivity Commission Inquiry Report: The Market for Retail Tenancy Leases in Australia” (2009) 16 Australian Property LJ 219. 684 [14.90]

Leases  Chapter  14

repairs, cleanliness and quiet enjoyment in the absence of any express provisions relating to these issues in the retail tenancies legislation. In addition, the scope of the legislation is very limited.105 The most significant restrictions on the scope of the legislation are the statutory exclusion of premises that have a floor area exceeding 1,000 square metres (except in Victoria and South Australia) and the exclusion of premises where the lease is held as a tenant by a corporation or a subsidiary of a corporation which would not be eligible under the corporations legislation to be incorporated as a proprietary company.106 Both limitations were inserted in order to exclude national retail chains of stores from the application of the Act, and can be justified on the basis that the owners of larger stores possess sufficient bargaining power and negotiating skills to conduct their legal relationship with their landlords on an equal footing, and do not require the statutory forms of protection required by small business tenants. As a result of the limitations, numerous retail tenancies are excluded from the scope of the legislation. Interestingly, however, the Acts are not restricted to leases of premises in shopping centres, even though most of the arguments in favour of legal reform resulted from the nature of shopping centre standard form leases and various restrictions placed on the individual retailers by the owners or developers of the centres. The Acts are worded to apply to all retail situations, regardless of the nature of the land development. Except in South Australia, the Acts are also stated to apply to the Crown in all its capacities.

CREATION AND ENFORCEABILITY OF LEASES Legal and equitable leases [14.105]  Under the Torrens system legislation in each jurisdiction, a lease in common with

any other land dealing must be registered before it can constitute legal interest.107 Leases for terms specified in the legislation are protected, at least in so far as they are not defeated by a subsequent registered proprietor, see [14.145]. Beyond the Torrens system legislation further formalities apply to creation of leases. Legislation in each jurisdiction108 states that all conveyances of land or any interest in land are 105

See the definition of “retail premises” or “retail shop” in Retail Leases Act 1994 (NSW), s 3; Retail Shop Leases Act 1994 (Qld), s 5A; Retail and Commercial Leases Act 1995 (SA), s 3(1); Retail Leases Act 2003 (Vic), s 4; Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 3(1); Leases (Commercial and Retail) Act 2001 (ACT), s 7(2); Business Tenancies (Fair Dealings) Act (NT), s 5(1). 106 Retail Leases Act 1994 (NSW), s 5; Retail Shop Leases Act 1994 (Qld), s 5; Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 3(1); Business Tenancies (Fair Dealings) Act (NT), s 6; Leases (Commercial and Retail) Act 2001 (ACT), s 12. In South Australia premises are excluded where the annual rental exceeds $250,000: Retail and Commercial Leases Act 1995 (SA), s 4(2)(a). In Victoria premises are excluded where the occupancy costs (ie, the rent payable and the outgoings to which the tenant is required to contribute under the lease) exceed $1,000,000: Retail Leases Act 2003 (Vic), s 4; Retail Leases Regulations 2003, reg 6. For a consideration of the calculation of the “floor area”, see Nime Pty Ltd v Seventh Storey Pty Ltd [1993] V ConvR 54-​491; Joad Pty Ltd v Ospies Hotel Pty Ltd [1994] V ConvR 54-​505. For a discussion of the scope and application of the New South Wales legislation, see Moweno Pty Ltd v Stratis Promotions Pty Ltd [2003] NSWCA 376. 107 Real Property Act 1900 (NSW), s 41; Transfer of Land Act 1958 (Vic), s 40(1); Land Title Act 1994 (Qld), s 181; Real Property Act 1886 (SA), s 67; Transfer of Land Act 1893 (WA), s 58; Land Titles Act 1980 (Tas), s 49(1); Land Titles Act 1925 (ACT), s 57; Land Title Act (NT), s 184; see also Zisti v Ryde Joinery Pty Ltd (1997) NSW ConvR 56,372. 108 The legislation derives from the Statute of Frauds 1677 (Eng). [14.105]  685

PART 4 Divided Ownership of Land

void for the purpose of conveying or creating a legal estate unless made by deed.109 However, in every jurisdiction an exception to this rule applies.110 The legislation, which is in similar, although not identical, terms throughout Australia, states: Nothing in the foregoing provisions of this Division shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine.111

The effect of this exception is that oral leases for a fixed term of three years or less may exist at law. The exception also applies to all types of periodic leases created orally. However, that based on the construction of the legislation, the exception does not apply to assignments of a leasehold interest. These must be in writing and in the form of a deed before the legal estate will pass.112 The only effective qualification to the enforceability of short oral leases is the legislative requirement that they must “take effect in possession”. Historically, it was considered that this phrase merely required that the tenant took possession of the property. As such, the phrase would have little practical significance. However, in Haselhurst v Elliot [1945] VLR 153 Herring CJ held that the phrase should be construed literally to exclude all leases taking effect at some date in the future. Thus, unless the lease commences the same day as the agreement to create it, it must be in deed form to be enforceable at law. A lease designed to commence “next Monday” or “on the first of the next month” will not fall within the statutory exception in favour of leases for three years or less. This restriction can be argued to be unnecessary and contrary to the intention of Parliament,113 but at the present time Haselhurst v Elliot appears to represent the accepted good law, at least in Victoria. If a lease fails to satisfy the statutory requirements cited above and so is unenforceable at law, it may nevertheless be enforceable at equity. Based on the maxim that equity deems as done that which ought to have been done, a lease that is not in deed form or fails to take effect in possession will in certain circumstances be enforceable at equity. This rule is sometimes referred to as the rule in Walsh v Lonsdale (1882) LR 21 Ch D 9 (CA).114 In this case there

109

Conveyancing Act 1919 (NSW), s 23B(1); Property Law Act 1958 (Vic), s 52(1); Property Law Act 1974 (Qld), s 10(1); Law of Property Act 1936 (SA), s 28(1); Property Law Act 1969 (WA), s 33(1); Conveyancing and Law of Property Act 1884 (Tas), s 60(1); Civil Law (Property) Act 2006 (ACT), s 201. In Queensland the requirement of a deed has been replaced by the rule that there must be merely a written document signed by the person making an “assurance of land”. In the Northern Territory a deed in writing signed by the person making the conveyance will suffice: Law of Property Act (NT), s 9(1). Note that, except in Tasmania, a deed need not be sealed: Conveyancing Act 1919 (NSW), s 38(3); Property Law Act 1958 (Vic), s 73A; Property Law Act 1974 (Qld), ss 45(2), 47; Law of Property Act 1936 (SA), s 41(3)–​(5); Property Law Act 1969 (WA), s 9(2), (4); Law of Property Act (NT), s 47(2). 110 Conveyancing Act 1919 (NSW), s 23D(2); Property Law Act 1958 (Vic), s 54(2); Property Law Act 1974 (Qld), s 12(2); Law of Property Act 1936 (SA), s 30(2); Property Law Act 1969 (WA), s 35(2); Conveyancing and Law of Property Act 1884 (Tas), s 60(4); Civil Law (Property) Act 2006 (ACT), s 203; Law of Property Act (NT), s 11(2). 111 For a recent application of this provision, see Laserbem Pty Ltd v Gainsville Investments Pty Ltd [2004] VSC 62. 112 Crago v Julian [1992] 1 All ER 744 (CA). 113 See the criticism in Harrison, Cases on Land Law (Law Book Co, Sydney, 1958), pp 165–​166. 14 For more recent applications of the rule, see Azkanaad Pty Ltd v Galanos Bros Pty Ltd (No 2) [2008] NSWSC 1 476; upheld in [2008] NSWCA 185; Fiver Trading Pty Ltd v Spajack Pty Ltd [2005] NSWSC 532; Swanville Investment Pty Ltd v Riana Pty Ltd [2003] WASCA 121; Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580 (CA); Tottenham Hotspur Football & Athletic Co Ltd v Princegrove Publishers Ltd [1974] 1 WLR 113; Noyes v Klein (1985) 3 BPR 9216 (NSWSC). 686 [14.105]

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was an agreement to grant a future seven-​year lease over a weaving shed and certain other buildings and machinery. The agreement stated that the formal lease, when drafted, would contain a covenant that on any given day the landlord could demand that the tenant pay one year’s rent in advance. No formal lease was ever drafted. The tenant went into possession, paying rent quarterly in arrears. Eighteen months later the landlord demanded a year’s rent in advance and, when it was not paid, exercised his common law right of distress. The tenant sued for damages for illegal distress and for an injunction to restrain the distress. His argument was that the seven-​year agreement was unenforceable at law and that at common law he was merely a yearly periodic tenant holding the property on such terms as were consistent with a yearly tenancy. As the payment of a year’s rent in advance is clearly inconsistent with a yearly tenancy, distress was illegal. The English Court of Appeal rejected this argument, holding that as the parties had entered into a binding contract to grant a lease, that contract will be enforced at equity according to its terms in all respects, even though no formal lease was ever executed. Thus, as the remedy of distress would have applied at law if the lease had been executed, it would be applied at equity on the facts at bar. An owner may make more than one informal agreement for a lease. In that case, two or more equitable leases may be created and it is possible that some of the obligations are in conflict. In that case, priority depends upon the time when the obligation became enforceable in equity subject to postponement if the later party can establish the prior party’s want or comparative lack of merit. In Woolworths Ltd v About Life Pty Ltd [2017] NSWLR 1117, Woolworths had been granted a right of refusal with respect to a lease of premises. About Life later entered a sale agreement with respect to the premises. Woolworths had the prior claim and was not guilty of any postponing conduct. It was therefore entitled to be offered lease of the premises though About Life had an equitable interest enforceable if Woolworths declined the offer. [14.110]  A contract for a lease enforceable under the rule in Walsh v Lonsdale (1882) LR

21 Ch D 9 (CA) is usually referred to as an “agreement for a lease”. The rule will not apply unless the agreement is specifically enforceable at equity and constitutes a binding contract under normal common law principles.115 Thus, the parties must have reached final agreement on the essential details of the lease, viz the property to be leased, the rent payable, the names of the parties and the commencement and maximum duration of the term.116 The other terms of the agreement do not have to be specified in detail and where necessary will be implied by the courts.117 The major difficulty confronting the court is to determine whether the contract is intended to be final.118 Before the contract will be enforced as an agreement for a lease, the court must

115

Insearch Ltd v Kin Hing Pty Ltd [2003] NSWSC 875; Inglis v Clarence Holdings Ltd [1997] 1 NZLR 268 at 272; Euston Centre Properties Ltd v H & J Wilson Ltd (1982) 262 EG 1079 at 1081; Brownsea v National Trustees Executors & Agency Co of Australasia Ltd [1959] VR 243 at 244; Walpole v Orford (1797) 3 Ves Jun 402; 30 ER 1076 (Ch) at 420 (Ves Jun), 1085 (ER). 116 Equuscorp Pty Ltd v Antonopoulos [2008] VSCA 179; Long v Piper [2001] NSWCA 342; Harvey v Pratt [1965] 2 All ER 786 (CA); Bishop v Taylor (1968) 118 CLR 518; Beattie v Fine [1925] VLR 363; Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396. 117 See, for example, Liverpool CC v Irwin [1977] AC 239 (HL); Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381. 18 See, for example, Geftakis v Maritime Services Board of New South Wales [1988] ANZ ConvR 36; ACN 006 530 1 132 (in liq) v Freeman [1999] VSC 441. [14.110]  687

PART 4 Divided Ownership of Land

be of the opinion that the execution of the future lease contemplated by the contract will merely formally embody the terms of the contract already agreed upon.119 If the court forms the opinion that certain essential features of the agreement are still open to negotiation prior to the signing of the lease, the contract for a lease will be held to be unenforceable at both law and equity. An agreement for a lease expressed to be “subject to contract” has been held to be unenforceable on the ground that such a term indicated the parties’ intention to hold further negotiations on the contents of the lease.120 The issue is one of construction for the courts in each case; the intention of the parties must be ascertained on an objective basis.121 In Chipperfield v Carter (1895) 72 LT 487 the clause in the contract for a lease, “lease to be approved in the customary way by my solicitor”, was held not to preclude the enforceability of the contract as an agreement for a lease. This case can be neatly contrasted with Lockett v Norman-​Wright [1925] Ch 56,122 where the clause “subject to suitable arrangements being arranged between your solicitors and mine” was held to vitiate the contract. The argument, based on the sale of land analogy that no binding agreement should be found in the absence of an exchange of counterparts of an agreement for lease, has not found judicial approval.123 Parties may be unclear as to whether they intend to create a lease or merely to make an agreement for a lease. In Masters v Cameron (1954) 91 CLR 353 at 360 the High Court summarised the law on this point as follows: Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.124

In L & T (Sales) Pty Ltd v Chief Commissioner of State Revenue [2007] NSWSC 1061 the parties made an agreement which was properly registered. The plaintiff was to construct a commercial building but the building was not to commence until notice to the owner. In the period until notice, the owner would be granted care, control and management of the land.

119 120

121 122 123 124

South Coast Oils (Qld & NSW) Pty Ltd v Look Enterprises Pty Ltd [1988] 1 Qd R 680; Long v Piper [2001] NSWCA 342. Insearch Ltd v Kin Hing Pty Ltd [2003] NSWSC 875; D’Silva v Lister House Development Ltd [1971] 1 Ch 17; Masters v Cameron (1954) 91 CLR 353; Rowlands Quarries (Katherine) Pty Ltd v E A Witte Pty Ltd (1992) 109 FLR 38. Encino Plaza Pty Ltd v Wilson International Pty Ltd (1988) V ConvR 63,908; Brunswick Developments Pty Ltd v Shock Records Pty Ltd [1996] 1024 FCA 1. See also Ratto v Trifid Pty Ltd [1987] WAR 237. Encino Plaza Pty Ltd v Wilson (1988) V ConvR 63,908 at 63,915; Brunswick Developments Pty Ltd v Shock Records Pty Ltd [1996] 1024 FCA 1. Applied in Hali Retail Stores Pty Ltd v Hafaz [2007] NSWSC 412; Competitive Funerals Pty Ltd v Gurmit Singh Rai [2005] NSWSC 1171; Azkanaad Pty Ltd v Galanos Bros Pty Ltd (No 2) [2008] NSWSC 476 (upheld in [2008] NSWCA 185).

688 [14.110]

Leases  Chapter  14

The court held that effect should be given to the language of the agreement and that it created a lease with a licence back to the owner. In addition to proof of a binding contract, before the rule in Walsh v Lonsdale will apply, the parties must comply with legislation similar in all jurisdictions to that in New South Wales. The legislation applies to both general law and Torrens system land. The New South Wales provision reads:125 No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged. [14.115] The equitable doctrine of part performance is an exception to the rule requiring a written memorandum or note of the contract for a lease. This doctrine arises wherever an unenforceable agreement at law is susceptible to a decree of specific performance and has been partly performed. Its justification is that part performance makes it unconscionable for the defendant to plead the State legislation deriving from the Statute of Frauds 1677 as a bar to the plaintiff’s claim.126 In Lighting By Design (Aust) Pty Ltd v Carrington Nominees Pty Ltd [2008] WASC 23 Buss JA (in dissent but not on this point) held that the acts of part performance relied on must unequivocally and in their own nature be referable to some such agreement as that alleged.127 What constitutes a sufficient act of part performance in the leasehold context? The most obvious illustration is where the tenant enters into possession of the premises and pays rent.128 Alternatively, the handing over of keys or the payment of a security deposit will usually suffice,129 or the giving and taking of possession.130 In Kaufman v Michael (1892) 18 VLR 375131 the alleged contract for a five-​year fixed-​term lease provided, inter alia, that the tenant would make certain alterations to the premises including re-​wallpapering. After carrying out the alterations the tenant sought to escape from the agreement and argued that it was unenforceable at equity. It was held that the making of the alterations constituted a sufficient act of part performance inasmuch as it tended to suggest that a binding contract for a lease had been entered into. This conclusion was reached despite the fact that the tenant had not entered into possession or paid rent.

125

126 127

128 129 130 131

Conveyancing Act 1919 (NSW), s 54A(1); Instruments Act 1958 (Vic), s 126; Property Law Act 1974 (Qld), s 59; Law of Property Act 1936 (SA), s 26(1); Conveyancing and Law of Property Act 1884 (Tas), s 36(1); Civil Law (Property) Act 2006 (ACT), s 201; Law of Property Act (NT), s 62. In Western Australia, s 4 of the Statute of Frauds 1677 remains in effect, subject to the Law Reform (Statute of Frauds) Act 1962 (WA). For recent applications of this provision, see Powercell Pty Ltd v Cuzeno Pty Ltd [2004] NSWCA 51; Kelrit Investments Pty Ltd v Transform Composites Holdings Pty Ltd [2003] FCA 662; Baloglow v Konstanidis [2001] NSWCA 451. Van Schaik Organic Soils & Bark Supplies Pty Ltd v Woakwine Industries Pty Ltd [2001] SASC 297 at [41]. See also Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 432; Maddison v Alderson (1883) 8 App Cas 467 at 477 (HL); McMahon v Ambrose [1987] VR 817; Geftakis v Maritime Services Board of NSW [1988] ANZ ConvR 36; Khouri v Khoury [2004] NSWSC 770; Competitive Funerals Pty Ltd v Gurmit Singh Rai [2005] NSWSC 1171; Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23. Brough v Nettleton [1921] 2 Ch 25; Colman v Golder [1957] VR 196. Note that the payment of rent under these circumstances will lead to an inference at common law of a periodic lease: see [14.60]. McMahon v Ambrose [1987] VR 817. Regent v Millett (1976) 133 CLR 679 at 683. See also Darcy v Ryan (1882) 8 VLR (Eq) 36. [14.115]  689

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If a contract is construed as an agreement for a lease, it will have the same legal status as other equitable interests in land. It is sometimes said that an agreement for a lease is as good as a lease.132 This is incorrect, however, as there are five fundamental differences between the effect of a legal and an equitable lease, which are: 1.

A tenant under an agreement for a lease must rely on the remedy of specific performance which, like all equitable remedies, is discretionary.133 Based on the “clean hands” doctrine,134 the courts have declined to enforce an agreement for a lease specifically where the agreement required the tenant to carry out repairs before the formal lease was signed and the tenant had failed to do so,135 and where the tenant, who was seeking specific performance, was himself in breach of his duty to keep the premises in repair.136

2.

The holder of an agreement for a lease will always lose in a dispute concerning priority of interests to a purchaser for valuable consideration who obtains a legal estate at the time of his or her purchase without notice of the existence of the prior equitable agreement.137

3.

Different rules apply in a priority dispute between the holder of an agreement for a lease and the purchaser of a prior or subsequent equitable interest such as an equitable mortgagee or the holder of an equitable fee simple under an estate contract; the result is competing equitable interests subject to the rule in Rice v Rice (1853) 2 Drew 73; 61 ER 646.

4.

An easement cannot be implied in favour of a tenant under an agreement for a lease on the basis of the uniform State legislation copied from s 62 of the Law of Property Act 1925 (UK), which was designed to shorten conveyances by enacting that a conveyance of land shall be deemed to include certain specified rights.138 This legislation is cited in full: see [18.215]. The conclusion in this paragraph results from the fact that the State legislation only applies to create implied easements on a “conveyance” of land.139 An agreement for lease does not constitute a conveyance.

32 See, for example, Re Maughan (1885) 14 QBD 956 at 958. 1 133 Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1993] BCLC 442. 134 For a discussion of the equitable maxim, “He whom comes into Equity must come with ‘Clean Hands’ ”, see Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2002) at [3.090]–​[3.120] 135 Cornish v Brook Green Laundry Ltd [1959] 1 QB 394 (CA). 136 Swain v Ayres (1888) 21 QBD 289 (CA); cf Baxton v Kara [1982] 1 NSWLR 604. 137 Pilcher v Rawlins (1872) 7 Ch App 259. See Powell v Cleland [1948] 1 KB 262 (CA) for a discussion of the meaning of “purchaser”. For cases on the meaning of “notice”, see Smith v Jones [1954] 2 All ER 823; Hunt v Luck [1902] 1 Ch 428 (CA); Caunce v Caunce [1969] 1 All ER 722; Hodgson v Marks [1971] Ch 892; Williams and Glyn’s Bank Ltd v Boland [1981] AC 487 (HL). See also the Conveyancing Act 1919 (NSW), s 164; Property Law Act 1958 (Vic), s 199; Conveyancing and Law of Property Act 1884 (Tas), s 5. 138 Conveyancing Act 1919 (NSW), s 67; Property Law Act 1958 (Vic), s 62; Property Law Act 1974 (Qld), s 239; Law of Property Act 1936 (SA), s 36; Property Law Act 1969 (WA), s 41; Conveyancing and Law of Property Act 1884 (Tas), s 6. 139 “Conveyance” is statutorily defined in the Conveyancing Act 1919 (NSW), s 7(1); Property Law Act 1958 (Vic), s 18(1); Property Law Act 1974 (Qld), s 3; Law of Property Act 1936 (SA), s 7; Conveyancing and Law of Property Act 1884 (Tas), s 2; Property Law Act 1969 (WA), s 7; Civil Law (Property) Act 2006 (ACT), Dictionary; Law of Property Act (NT), s 4. The definitions have slight differences. The Victorian and South Australian provisions read: “ ‘Conveyance’ includes a mortgage, charge, lease, assent, vesting declaration, disclaimer, release, surrender, extinguishment and every other assurance of property or an interest therein by any instrument, except a will”. 690 [14.115]

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5.

An equitable tenancy agreement does not create privity of estate. The significance of this relates to the enforceability of covenants on an assignment of the term by the tenant or on an assignment of the reversion by the landlord. This matter is discussed at [14.270]ff.

Despite some earlier doubts,140 it is now recognised that the doctrine in Walsh v Lonsdale (1882) LR 21 Ch D 9 (CA) applies equally to Torrens land as to general law land.141 Parties to a lease may often enter into an agreement standing side-​by-​side with the lease. If however the agreement is not independent but collateral to the lease it must not be inconsistent with the lease. In Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2013] VSC 614 the tenant alleged that the landlord made promises for renewal more generous than in the lease. The court held that the promises were inconsistent and unenforceable. Further the tenant’s assumptions as to what was offered were not a reasonable understanding of the landlord’s statements and so no estoppels were created.

Leases and the Torrens system The registration of leases [14.120]  In most jurisdictions the Torrens legislation specifically authorises leases for any term

exceeding three years to be created in the approved form and registered. In South Australia a one-​year period is specified. No minimum length for a lease to be registered is specified in the legislation in Queensland, the Australian Capital Territory and the Northern Territory, where it appears that all fixed-​term leases are registrable.142 In all cases, upon registration a legal leasehold interest will be created in the tenant. In order to fall within the three-​year or one-​ year designated period, the lease must be for a fixed period; thus, periodic leases are excluded. A lease exceeding the designated period, but determinable within that period, is covered by the section,143 but a lease less than the designated period containing an option to renew which taken together with the original period would exceed the designated period is excluded from the section.144 A more controversial issue is whether it is possible to register a lease for a term of less than the period of three years or one year specified in the legislation. The position appears to vary from jurisdiction to jurisdiction. The South Australian legislation145 expressly permits such leases to be registered, while the Tasmanian legislation states the opposite.146 Elsewhere the legislation is silent on this issue. In New South Wales the Supreme Court has held that leases for a term less than three years may be registered.147 In Victoria the practice of the Registrar of Titles is not to

140 Macky v The Café Monico Ltd (in liq) (1905) 25 NZLR 689 at 706 (SC in banco). 141 See, for example, Ahern v L A Wilkinson (Northern) Ltd [1929] St R Qd 66; De Luxe Confectionery Ltd v Waddington [1958] NZLR 272 (CA); Miller v Jenner [1921] NZLR 841. 142 Real Property Act 1900 (NSW), s 53(1); Transfer of Land Act 1958 (Vic), s 66(1); Land Title Act 1994 (Qld), s 64; Real Property Act 1886 (SA), s 116; Land Titles Act 1980 (Tas), s 64(1); Transfer of Land Act 1893 (WA), s 91; Land Titles Act 1925 (ACT), s 82(1); Land Title Act (NT), s 65. 143 Kushner v Law Society [1952] 1 All ER 404. 144 195 Crown Street Pty Ltd v Hoare [1969] 1 NSWR 193; G & M Dawson Pty Ltd v Cripps [2003] NSWADT 274; Roberts v Birkley (1888) 14 VLR 819. 145 Real Property Act 1886 (SA), s 116. 146 Land Titles Act 1980 (Tas), s 64(2). 147 Parkinson v Braham (1961) 62 SR (NSW) 663 (SC in banco). [14.120]  691

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register such leases.148 In Western Australia the issue appears to be unresolved. In jurisdictions where the registration of short-​term leases is permitted, upon registration, full legal protection is afforded the tenant against subsequent dealings by the landlord with the property. Once a lease is registered, it does not follow automatically that all the covenants contained in the lease are protected by the principle of indefeasibility. In Mercantile Credits Ltd v Shell Co (Aust) Ltd (1976) 136 CLR 326149 the issue arose whether a covenant to renew a lease, which had been registered, prevailed over the title of the mortgagee. The argument advanced by the mortgagee was that although the lease was entitled to priority over the mortgage based on prior registration, the right of renewal was not an integral part of the lease, and was not registrable, and that priority was given by the Torrens statute only to the term of the lease and not to the right of renewal or to any extended term resulting from the exercise of that right. The Full High Court, although deciding in favour of the lessee, held that the registration of a lease does not in all cases give priority or the quality of indefeasibility to every right which the lease creates. Gibbs J drew a distinction between collateral covenants, not affecting the estate in land granted by the lease, which would not obtain priority, and covenants so intimately connected with the term granted to the tenant that they should be regarded as part of the estate obtained by the tenant under the lease. Stephen J based his decision on the specific enforceability of the right of renewal, if exercised. Following this High Court decision, a number of contradictory cases have arisen due to the uncertainty as to the indefeasibility of certain rights contained within a lease upon registration. This is particularly true in the case of options to renew the lease. In Amber (Eastern Suburbs) Pty Ltd v Herman (1986) 5 BPR 97-​355 Young  J of the Supreme Court of New South Wales stated that a lease arising from the exercise of an option to renew contained within a registered lease may not be indefeasible. On the other hand, the Full Court of the Supreme Court of Queensland held in Re Eastdoro Pty Ltd (No  2) [1990] 1 Qd R 424 that various options to renew contained within a registered lease were enforceable against a registered proprietor who obtained registration after the lease was registered, notwithstanding the fact that the original lease had expired and the lease created by the exercise of the option to renew had not been registered. Re Eastdoro has been applied in a number of recent decisions.150 In Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1 the Full High Court held that a covenant which was illegal when made obtained no validity or protection from the registration of the instrument in which it was found because its illegality denied the possibility of its specific performance. The registration of subleases [14.125] In Victoria, Western Australia, Tasmania, the Australian Capital Territory and

the Northern Territory the Torrens legislation expressly permits the landlord to create and register a sublease.151 Where such registration occurs, the provisions in the legislation affecting landlords and tenants are stated to apply equally to sublessors and subtenants. The issue

148 149 150 151

Robinson, Transfer of Land in Victoria (Law Book Co, Sydney, 1979), p 269. See also Tessari v Bais Pty Ltd (1993) 60 SASR 59 (FC). Tenstat Pty Ltd v Permanent Trustee Aust Ltd (1992) 28 NSWLR 625; Re Malsons Pty Ltd [1991] 2 Qd R 61; Tessari v Bais Pty Ltd (1993) 60 SASR 59 (FC). Transfer of Land Act 1958 (Vic), s 71; Transfer of Land Act 1893 (WA), ss 99–​100; Land Titles Act 1980 (Tas), ss 64, 69(1); Land Titles Act 1925 (ACT), s 88; Land Title Act (NT), ss 4, 65.

692 [14.125]

Leases  Chapter  14

whether subleases may be registered in the remaining jurisdictions is unresolved by the legislation. Whalan152 appears to be correct in his analysis that registration is permitted in these jurisdictions on the basis that the provisions relating to leases apply whenever “land” is intended to be leased, and “land” is defined in each jurisdiction (except Queensland) as including all tenements and hereditaments corporeal and incorporeal of every kind and every estate or interest therein.153 Registration of subleases is likely to be permitted in Queensland on the basis that, under general legal principles, a sublease constitutes a lease in its own right and leases are clearly registrable: see [14.120]. Leases as a statutory exception to indefeasibility of title

General [14.130]  In certain situations leases may be unregistrable. Moreover, a tenant who is entitled

to register his or her lease may fail to do so. Is a tenant holding under an unregistrable or registrable but unregistered lease protected against any subsequent dealings by the landlord with the title to the property? Despite the principle of indefeasibility of title, an exception to indefeasibility exists in all jurisdictions in favour of leases in certain circumstances. As the scope of the statutory exception to indefeasibility differs in each Torrens statute, it is necessary to consider the legal protection afforded to tenants under an unregistered lease separately in each jurisdiction.

Victoria [14.135]  In Victoria the scope of the statutory exception in favour of the interest is the widest

of any jurisdiction. Section 42(2)(e) of the Transfer of Land Act 1958 (Vic) reads that the title of a registered proprietor is subject to: “the interest (but excluding any option to purchase) of a tenant in possession of the land”. The word “tenant” is wide enough to include a tenant holding under an agreement for a lease,154 a life tenant155 and a purchaser of land under a contract of sale.156 In Downie v Lockwood [1965] VR 257 Smith J held that s 42(2)(e) is not limited to the actual interest of the tenant but extends to the tenant’s equity of rectification arising from the lease.157 Thus a lease as rectified will bind any successor-​in-​title of the landlord. The only effective limitation is that the tenant’s interest must be “in possession” before the statutory exception will apply. Because of the wide scope of the exception, there is little incentive for any tenant to register a lease in Victoria.

Western Australia [14.140]  Section 68 of the Transfer of Land Act 1893 (WA) excepts from indefeasibility of

title, inter alia, “any prior unregistered lease or agreement for lease or for letting for a term not exceeding five years to a tenant in actual possession”.

152 153 154 155 156 157

Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 191. Real Property Act 1900 (NSW), ss 3, 53(1); Real Property Act 1886 (SA), ss 3, 116. National Trustees, Executors & Agency Co of Australasia Ltd v Boyd (1926) 39 CLR 72. Black v Poole (1895) 16 ALT 155. Sandhurst Mutual Permanent Investment Building Society v Gissing (1889) 15 VLR 329 (FC). It may extend also to other interests held by the tenant (eg, an option to renew the lease). [14.140]  693

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The interpretation and scope of s  68 were considered by the High Court in Leros Pty Ltd v Terara Pty Ltd (1992) 174 CLR 407; 106 ALR 595. The central issue in this case was whether an option to renew contained in a lease of business premises was enforceable against a successor-​in-​title to the original landlord in circumstances where the lease had not been registered and the tenant had not sought to protect the option by caveat until after two intervening transfers of the freehold estate had been registered. The High Court (at 605–​606) held by a 3-​2 majority that the option was not enforceable. The majority stated that s 68 must be construed strictly. Their Honours added that, although the unregistered interest of a tenant for five years or less is protected without registration where the tenant is in actual possession, s 68 does not protect an option for renewal contained in that lease unless the lease itself was registered or made the subject of a caveat.

New South Wales [14.145] In New South Wales the statutory exception in favour of leases is much more

restricted than in Victoria or Western Australia. Section  42(1)(d) of the Real Property Act 1900 (NSW) couches the exception in the following terms: [A]‌tenancy whereunder the tenant is in possession or entitled to immediate possession, and an agreement or option for the acquisition by such a tenant of a further term to commence at the expiration of such a tenancy, of which in either case the registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected: Provided that;

(i) The term for which the tenancy was created does not exceed three years, and



(ii) in the case of such an agreement or option, the additional term for which it provides would not, when added to the original term, exceed three years.

A tenant’s interest under an unregistered lease only applies to leases for a fixed term of three years or less. Moreover, the landlord’s successor-​in-​title as registered proprietor is only bound by the lease if, prior to registration, the successor had notice of the tenant’s interest. “Notice” has been held to include constructive notice as well as actual notice.158 The relevant time for considering “notice” was determined by the New South Wales Court of Appeal in United Starr-​Bowkett Co-​operative Building Society v Clyne [1968] 1 NSWR 134. In that case the court referred to IAC (Finance) Pty Ltd v Courtenay (1963) 110 CLR 550 at 584, where the High Court stated that “notice” in s 42(1)(d) should be read in the light of s 43A of the same Act, and held that: notwithstanding registration, the purchaser holds subject to a tenancy for a term not exceeding three years created by a previous registered proprietor … if he had notice of that tenancy before he obtained a registered instrument, or one which when appropriately signed by him or on his behalf would be registrable, that is, before completion of his purchase.159

Queensland, Tasmania, the Australian Capital Territory and the Northern Territory [14.150]  The most common exceptions relate to leases for terms not exceeding three years

but without some of the New South Wales details. Section 185(1)(b) of the Land Title Act 1994 (Qld), ) and s 189(1)(b) of the Land Title Act (NT) except from indefeasibility of title the interest of a tenant under a short lease. Section 4 in each Act defines “short lease” as a lease 158 159

Clyne v Lowe (1968) 69 SR (NSW) 433 (CA). United Starr-​Bowkett Co-​operative Building Society v Clyne [1968] 1 NSWR 134 at 142 per Sugerman JA.

694 [14.145]

Leases  Chapter  14

for a term of three years or less, or “from year to year or a shorter period”. Section 58(d) of the Land Titles Act 1925 (ACT) excepts from indefeasibility of title “any prior tenancy for a term not exceeding three years”. The Tasmanian exception is stated at more length; pursuant to s 40(3) of the Land Titles Act 1980 (Tas), the title of a registered proprietor of land is not indefeasible,

(d) so far as regards the interest of a tenant under–​



(i) a periodic tenancy;



(ii) a lease taking effect in possession for a term not exceeding 3 years (whether or not the lessee is given power to extend the term) at the best rent that can be reasonably obtained without taking a fine; and



(iii) a lease capable of taking effect in equity only, except as against a bona fide purchaser for value without notice of the lease who has lodged a transfer for registration.

South Australia [14.155]  South Australia has the most restrictive exception. The relevant statutory exception

to indefeasibility is restricted to leases “where at the time when the purchaser becomes registered a tenant shall be in actual possession of the land under an unregistered lease or an agreement for a lease or for letting for a term not exceeding one year”.160 This section is complemented by a further section reading: “Every registered dealing with land shall be subject to any prior unregistered lease or any agreement for lease or for letting for a term not exceeding one year to a tenant in actual possession thereunder”.161 The latter provision appears to add nothing to the earlier section.

Leases falling outside the statutory exception to indefeasibility of title [14.160]  An unregistered lease will fall outside the exception to indefeasibility where it

is for a period longer than that specified in the relevant legislation or where the tenant is not in actual possession of the property. In this situation the requirement for registration may mean that the lease cannot constitute a legal interest,162 but is still capable of existing as an equitable interest.163 Based on the rule in Walsh v Lonsdale (1882) LR 21 Ch D 9 (CA), an equitable periodic or fixed-​term lease will exist in these circumstances. Thus, an unregistered lease which is outside the statutory exception to indefeasibility is still enforceable between the contracting parties, although it cannot be enforced by the tenant against a subsequent registered proprietor.164 In those jurisdictions where short-​term leases are unregistrable (Victoria, Tasmania and (possibly) Western Australia:  see [14.120]), a tenant may protect the tenant’s interest against subsequent dealings with the landlord by lodging a caveat.165

160 161 162

163 164 165

Real Property Act 1886 (SA), s 69(h). Real Property Act 1886 (SA), s 119. Real Property Act 1900 (NSW), s 41; Transfer of Land Act 1958 (Vic), s 40(1); Real Property Act 1886 (SA), s 67; Transfer of Land Act 1893 (WA), s 58; Land Titles Act 1980 (Tas), s 49(1); Land Titles Act 1925 (ACT), s 57; Land Title Act (NT), s 184. Barry v Heider (1914) 19 CLR 197. See R M Hosking Properties Pty Ltd v Barnes [1971] SASR 100. Land Titles Act 1980 (Tas), s 133; Transfer of Land Act 1958 (Vic), s 89; Transfer of Land Act 1893 (WA), s 137. [14.160]  695

PART 4 Divided Ownership of Land

RENT AND BONDS Covenant by tenant to pay rent, rates and taxes [14.165]  In all jurisdictions legislation implies a covenant by the tenant that the tenant will

pay the rent reserved by the lease at the times therein mentioned and all rates and taxes payable in respect of the rented premises. Those charges payable exclusively by the landlord under any State or local government legislation are excepted. A further exception applies in New South Wales, Queensland, the Australian Capital Territory and the Northern Territory where the premises are destroyed by fire, flood, lightning, storm, tempest or war damage. In these circumstances the rent is abated.166 The State and Territory legislation does not alter the common law rule that in the absence of an express covenant to the contrary, rent is not payable in advance but rather in arrears at the end of each period specified for payment.167 Other common law rules also remain in effect. It is the duty of the tenant to seek out the landlord to pay rent to him or her.168 Even if a third party pays any arrears of rent pursuant to a guarantee contract, the rent remains payable by the tenant and may justify the forfeiture of the lease.169 If the tenant wrongfully abandons the rented premises, the landlord is not under a duty to mitigate his or her losses; instead, the landlord may elect to leave the premises vacant rather than to re-​let them and may sue the tenant for rent as it falls due.170 Generally the duty to pay rent is independent of any breach of the landlord’s obligations. However, where the rented premises are requisitioned by government authority171 or where the tenant is evicted by title paramount,172 the duty to pay rent ceases if the tenant is evicted by the landlord or anyone claiming under her or him from any part of the rented premises. A tenant may be granted a right to claim compensation for work on the premises but the claim must be included in the lease or will not give a right to set-​off against the rent: McDonalds Australia Ltd v Bendigo and Adelaide Bank Ltd [2013] VSC 639. Finally, pursuant to State and Territory limitation of actions legislation a maximum of six years’ rent may be sued for by the landlord in Victoria, Queensland and Tasmania, 12 years’ rent in New South Wales, Western Australia, the Australian Capital Territory and the Northern Territory and 15 years’ rent in South Australia.173

The landlord’s right of re-​entry for non-​payment of rent [14.170]  In the absence of an express covenant to the contrary, at common law the landlord

is unable to determine a lease for non-​payment of rent. This common law rule has been 166

Conveyancing Act 1919 (NSW), s 84(1)(a); Transfer of Land Act 1958 (Vic), s 67(1)(a); Property Law Act 1974 (Qld), s 105(1)(a); Real Property Act 1886 (SA), s 124(1); Transfer of Land Act 1893 (WA), s 92(i); Land Titles Act 1980 (Tas), s 66; Land Titles Act 1925 (ACT), s 119(a); Law of Property Act (NT), s 117(1). 167 Coomber v Howard (1845) 1 CB 440; 135 ER 611 (CP); Collett v Curling (1847) 10 QB 785; 116 ER 298. 168 Harrison v Petkovic [1975] VR 79. 169 London & County (A & D) Ltd v Wilfred Sportsman Ltd [1971] Ch 764 (CA). 170 Maridakis v Kouvaris (1975) 5 ALR 197; Boyer v Warbey [1953] 1 QB 234 (CA). 171 Commissioners of Crown Lands v Page [1960] 2 QB 274 (CA). 172 Neale v Mackenzie (1836) 1 M & W 747; 150 ER 635 (Exch Ch). 173 Section 27(2) of the Limitation Act 1969 (NSW) and definition of “land” in s 11(1); Limitation of Actions Act 1958 (Vic), s 19; Limitation of Actions Act 1974 (Qld), s 25; Limitation Act 1974 (Tas), s 22; Limitation of Actions Act 1936 (SA), s 4; Limitation Act 2005 (WA), s 18; Limitation Act 1985 (ACT), s 13; Limitation Act (NT), s 14. 696 [14.165]

Leases  Chapter  14

superseded by State and Territory legislation granting a statutory right of re-​entry for the landlord in these circumstances.174 A  right of re-​entry is allowed by the landlord where the rent is at least three months in arrears in South Australia and Tasmania, but in the remaining jurisdictions such a right can be exercised as soon as the rent is one month in arrears.

CONDITION OF PREMISES The obligation of the landlord as to fitness of habitation [14.190]  Many leases contain express clauses as to the state of the premises and an obligation

on the landlord to provide the premises in that state. In Harrem Pty Ltd v Toyo Rubber Australia Ltd [2008] NSWSC 776, premises were let for warehousing, storage and distribution and contained a warranty that they were fit for loading and unloading of containers. At common law, the landlord had no general duty towards the tenant to do repairs during the term of the lease or to put the premises into repair at the commencement of the lease, however poor the condition of the premises might be.175 The prevailing principle was that of caveat emptor. There are two exceptions: first, a warranty of fitness is implied where a lease is executed prior to the completion of the erection of the building;176 and, secondly, there is an implied condition, established in Smith v Marrable (1843) 11 M & W 5; 152 ER 693 (Exch), that in the case of furnished premises the premises are fit for habitation at the commencement of the lease.177 Smith v Marrable involved a lease of a furnished summer house to Sir Thomas Marrable for six weeks. After only one week’s occupation, Sir Thomas vacated the premises on the ground that they were infested by bugs and refused to pay the balance of the rent owing. Parke B held that authority existed for the proposition that although slight grounds would not suffice, serious reasons might exist that would justify a tenant’s quitting the rented premises at any time. Hart v Windsor (1843) 12 M & W 68; 152 ER 1114 (Exch), a case involving a similar situation, arose the following year. In this case Parke B stated that he was now satisfied that the two cases he relied upon in reaching his decision in Smith v Marrable could not be supported. However, instead of holding that Smith v Marrable was wrongly decided, he distinguished it (at 86–​87; 1122) on the ground that that case involved furnished premises while the premises in the case at bar were unfurnished.178 Later cases further limited the application of Smith v

174

Conveyancing Act 1919 (NSW), s 85(1)(d); Transfer of Land Act 1958 (Vic), s 67(1)(d); Property Law Act 1974 (Qld), s 107(d); Real Property Act 1886 (SA), s 125(c); Transfer of Land Act 1893 (WA), s 93(2); Land Titles Act 1980 (Tas), s 67(b); Land Titles Act 1925 (ACT), s 120(1)(d); Law of Property Act (NT), s 119(1)(d)(i). 175 Harrem Pty Ltd v Toyo Tyre Rubber Australia Ltd [2008] NSWSC 776 at [426]; Carrathool Hotel Pty Ltd v Scutti [2005] NSWSC 401 at [40]; Duke of Westminster v Guild [1985] 1 QB 688 at 697; Carbure Pty Ltd v Brile Pty Ltd [2002] VSC 272; Adami v Lincoln Grange Management Ltd [1997] EWCA 4760 (CA); Collins v Winter (1924) 43 NZLR 449 (SC in banco); Wilchick v Marks and Silverstone [1934] 2 KB 56. 176 Miller v Cannon Hill Estates Ltd [1931] 2 KB 113. 177 The meaning of “fit for habitation” was considered by McCardie J in Collins v Hopkins [1923] 2 KB 617 at 620–​621. 78 Collins v Hopkins [1923] 2 KB 617 and Wilson v Finch Hatton (1877) 2 Ex D 336 held that the rule in Smith 1 v Marrable (1843) 11 M & W 5; 152 ER 693 (Exch) still applies to furnished premises. Cruse v Carr [1933] Ch 278 and Penn v Gatenex Co Ltd [1958] 2 QB 210 (CA) held that the rule does not extend to unfurnished premises. [14.190]  697

PART 4 Divided Ownership of Land

Marrable to situations where the defect existed at the commencement of the lease,179 and have refused to apply the rule in the case of defective furniture or appliances.180

Covenant by tenant to repair [14.195] Except in Queensland, the legislation in all jurisdictions uniformly states that

there is an implied term in every instrument of lease that the tenant will keep and yield up the leased property in good and tenantable repair, accidents and damage from storm and tempest and reasonable wear and tear excepted.181 In Queensland a similar covenant exists but is restricted to fixed-​term leases exceeding three years.182 In respect of fixed-​term leases of three years or less and in respect of all periodic leases, two statutory terms are implied in Queensland:  a covenant by the landlord to provide and maintain the premises in good repair, and a covenant by the tenant to care for the premises in the manner of a reasonable tenant and to repair damage caused by any person coming onto the premises with her or his permission.183 “Good tenantable repair” was defined by Lopes LJ in Proudfoot v Hart (1890) 25 QBD 42 (CA) as184 “such repair as, having regard to the age, character, and locality of the house, would make it reasonably fit for the occupation of a reasonably minded tenant of the class who would be likely to take it”. The following common law propositions would appear to be relevant to the interpretation of the scope of the tenant’s statutory duty to repair: 1.

Before the tenant is in breach of the duty to repair, the damage must be of a substantial character, as distinguished from a mere fanciful injury.185

2.

In order to comply with the duty to maintain the premises, the tenant may be obliged to carry out repair work in anticipation of likely defects rather than wait for the defects to occur.186

3.

The tenant must maintain the premises in repair at all times during the lease. If the premises are at any time out of repair, the tenant will be in breach of the legislation.187

4.

Cases at common law concerning the interpretation of a covenant by either party to “keep” the premises in repair have held that this includes the requirement of putting the

179 180 181

Penn v Gatenex Co Ltd [1958] 2 QB 210; Sarson v Roberts [1895] 2 QB 395 (CA). Pampris v Thanos [1968] 1 NSWR 56 (CA). Conveyancing Act 1919 (NSW), s 84(1)(b); Transfer of Land Act 1958 (Vic), s 67(1)(b); Property Law Act 1974 (Qld), ss 105(1)(b), 106(1); Real Property Act 1886 (SA), s 124(b); Transfer of Land Act 1893 (WA), s 92(ii); Land Titles Act 1980 (Tas), s 66(b); Land Titles Act 1925 (ACT), s 119(b); Law of Property Act (NT), s 117(1) (c), (2). Property Law Act 1974 (Qld), s 105(1)(b). Property Law Act 1974 (Qld), s 106(1)(a), (b). See also Chandos Developments Pty Ltd v Mulkearns [2008] NSWCA 62 at [85]; Lurcott v Wakely and Wheeler [1911] 1 KB 905 at 923ff (CA); Wincant v South Australia (1997) 69 SASR 126 at 135 (FC); Payne v Haine (1847) 16 M & W 541; 153 ER 1304 (Exch). Julian v McMurray (1924) 24 SR (NSW) 402. Day v Harland and Wolff Ltd [1953] 2 All ER 387 at 388 (CA); London & North-​Eastern Rly Co v Berriman [1946] AC 278 at 307 (HL). Luxmoore v Robson (1818) 1 Barn & Ald 584; 106 ER 215 (KB).

182 183 184

185 186 187

698 [14.195]

Leases  Chapter  14

premises into repair at the commencement of a lease.188 It is submitted that these cases can be used by analogy to support the conclusion that the tenant’s duty to repair the premises includes the duty to put them into repair initially. 5.

The court will measure the extent of the duty to repair according to the age, locality and character of the premises.189

6.

The obligation to repair does not involve an obligation to renew or improve the premises, although replacement of the structure from time to time may be necessary depending on the facts of the case.190 It appears to be a question of degree whether the amount of work required can properly be described as repair.191

7.

The repair of buildings with inherent structural or design defects has caused the courts difficulty. The English Court of Appeal has held that disrepair connotes a deterioration from a former better position.192 Thus, if a tenant leases a building erected with an inherent defect, the tenant is not required to remedy that defect.193 However, if a defective building deteriorates in some way, this will constitute disrepair.194 In this latter situation the duty to repair may include the duty to improve the property to eliminate the original inherent defect if there is no other way of remedying the problem.195

8.

The duty to repair binds the tenant to rebuild the premises if they are destroyed. This duty arises in all cases, regardless of the cause of the destruction.196

Implied duty by the tenant not to commit waste [14.200]  Waste is a tortious rather than a contractual doctrine. It was originally devised

to regulate the respective rights of a life tenant and the remainderman concerning the use which the life tenant can legitimately make of property. Its application in that context and the various categories of waste are discussed in detail at [13.45]ff. The doctrine of waste also applies to leasehold estates, although it is seldom invoked today in light of

188 189

190 191

192 193 194 195 196

Chatfield v Elmstone Resthouse Ltd [1975] 2 NZLR 269 at 272; Beaumont v Whitcombe and Tombs (1897) 16 NZLR 133 at 136 (SC in banco); Lurcott v Wakely and Wheeler [1911] 1 KB 905 at 919. Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd [2002] WASC 54; Anstruther-​Gough-​Calthorpe v McOscar [1924] 1 KB 716 (CA); Proudfoot v Hart (1890) 25 QBD 42; Bailey v J Paynter (Mayfield) Pty Ltd [1966] 1 NSWR 596; Alcatel Australia Ltd v Scarcella (1998) NSW ConvR 56,495 (CA); Wincant Pty Ltd v South Australia (1997) 69 SASR 126 (FC). Eyre v McCracken (2000) 80 P & CR 220 (CA); Reilly v Liangis Investments Pty Ltd [2000] NSWSC 47. Chandos Developments Pty Ltd v Mulkearns [2008] NSWCA 62 at [87]; Eyre v McCracken (2000) 80 P & CR 220; Minja Properties Ltd v Cussins Property Group PLC [1998] 2 EGLR 52; Eyre v McCracken (2000) 80 P & CR 220 (CA); Graham v Market Hotels Ltd (1943) 67 CLR 567 at 579; Smedley v Chumley and Hawke Ltd (1982) 126 SJ 33 (CA); Elite Investments Ltd v T I Bainbridge Silencers Ltd (1986) 280 EG 1001; Clowes v Bentley Pty Ltd [1970] WAR 24. See also Wilkinson, “Major Structural Repairs” (1982) 132 NLJ 677. Post Office v Aquarius Properties Ltd (1986) 281 EG 798 (CA); discussed in (1987) 281 EG 1207; (1987) 61 ALJ 250; [1987] Conv 224. Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd [2002] WASC 54. Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd [2002] WASC 54. Elmcroft Developments Ltd v Tankersley-​Sawyer (1984) 270 EG 140 (CA); Stent v Monmouth DC (1987) 282 EG 705 (CA). Paradine v Jane (1647) Aleyn 26; 82 ER 897 (KB); Redmond v Dainton [1920] 2 KB 256; Matthey v Curling [1922] 2 AC 180 (HL). On the tenant’s duty to repair in general, see Hood, “The Extent of the Modern Covenant to Repair” (1997) 5 APLJ 53. [14.200]  699

PART 4 Divided Ownership of Land

the statutory and common law duties established under landlord-​tenant law in respect of repairs. The liability of a tenant for waste turns on the particular classification of leasehold estate into which the tenant happens to fall. Although all tenants are liable under voluntary waste if they commit a positive act causing injury to the land,197 their liability under permissive waste if they fail to keep the property in a satisfactory state of repair depends on whether they are tenants for a term of years or periodic tenants, and within this latter category whether they fall under the subcategory of weekly, monthly or yearly tenants. Tenants for a term of years appear to be liable for permissive waste.198 It is unclear from the authorities whether a tenant for a term of years or a tenant from year to year is liable for permissive waste, but it is settled that monthly or weekly periodic tenants are not liable under that heading.199 The doctrine of waste is not excluded by any express or implied repair clauses contained in a lease.200

The landlord’s right of entry for inspection [14.205]  In all jurisdictions the landlord is allowed the right to enter the rented premises to

view its state of repair.201 The terms of the legislation differ markedly, however. In Victoria and Western Australia the landlord may enter the premises once a year at a reasonable time of the day; there is no requirement for notice to be given.202 In New South Wales and the Australian Capital Territory the landlord may enter twice a year on two days’ notice.203 In Queensland and the Northern Territory the landlord may enter at any time on two days’

197 In respect of fixed-​term leases, the Statute of Marleberge (1267) applies except in New South Wales. The Statute stipulates that a tenant for a fixed term of years is liable for voluntary waste. In New South Wales the position is similar: see Imperial Acts Application Act 1969 (NSW), s 32(1). Marsden v Edward Heyes Ltd [1927] 2 KB 1 (CA) held that a tenant from year to year is liable for voluntary waste. Regis Property Co Ltd v Dudley [1959] AC 370 (HL) and Warren v Keen [1954] 1 QB 15 at 20 (CA) held that tenants from month to month and week to week, respectively, are also liable for voluntary waste. 198 Lord Coke considered that a tenant for a term of years was liable for permissive waste (2 Co Inst 145) and the same view was expressed in Dayani v Bromley London Borough Council [1999] EGLR 144; Davies v Davies (1888) 38 Ch D 499; Reihana Terekuku v Kidd (1885) NZLR 4 SC 140. Compare Re Cartwright; Avis v Newman (1889) 42 Ch D 532; Brian Stevens Pty Ltd v Clarke (1965) 83 WN (Pt 1) (NSW) 32. The editors of Halsbury’s Laws of England have accepted that this seems to be the better opinion: (4th ed), Vol 27(1) at [348]. Bradbrook, Croft and Hay also accept that the better view is that a tenant for a term of years is liable for permissive waste: Bradbrook, Croft and Hay, Commercial Tenancy Law in Australia (3rd ed, Butterworths, Sydney, 2009) at [10.03]. 199 Regis Property Co Ltd v Dudley [1959] AC 370 (HL); Warren v Keen [1954] 1 QB 15; Gallo v St Cyr (1983) 144 DLR (3d) 146. 200 BP Oil New Zealand Ltd v Ports of Auckland Ltd (2003) BCL 657 (NZ Sup Ct). 201 This statutory covenant, where it applies, appears to impliedly repeal the common law implied covenant by a tenant to allow the landlord to inspect the property wherever the landlord is under a duty to repair: Mint v Good [1951] 1 KB 517 (CA). This common law implied covenant presumably continues to apply to general law land in Victoria, South Australia, Western Australia and Tasmania. In New South Wales (Conveyancing Act 1919 (NSW), s 85(1)(c)), Queensland (Property Law Act 1974 (Qld), s 107(c)), the Australian Capital Territory (Land Titles Act 1925 (ACT), s 120(1)(c)) and the Northern Territory (Law of Property Act (NT), s 119(1)(c)(i)), there is also an implied statutory covenant that the landlord may enter the rented premises in order to carry out any repair work ordered to be undertaken by public authorities. 202 Transfer of Land Act 1958 (Vic), s 67(1)(c); Transfer of Land Act 1893 (WA), s 93(1). 203 Conveyancing Act 1919 (NSW), s 85(1)(a); Land Titles Act 1925 (ACT), s 120(1)(a). 700 [14.205]

Leases  Chapter  14

notice,204 while in South Australia and Tasmania the landlord may enter at all reasonable times.205

THE RIGHTS AND DUTIES OF LANDLORDS AND TENANTS Express terms [14.210] Based on the principle of freedom of contract,206 the parties may incorporate as

many terms into a lease as they mutually agree upon. These terms may be phrased as covenants or conditions. If they are phrased as covenants, the remedy for a breach will be an action for damages and/​or an injunction, whereas if they are phrased as conditions, a right of rescission exists at common law in favour of the injured party.207 It should be noted, however, that even if the terms are expressed as covenants, the majority of leases expressly permit the landlord to determine the lease in the event of a breach committed by the tenant. Such a clause is commonly referred to as a “forfeiture clause”. The terms of a lease will vary from lease to lease. However, a lease will almost invariably contain the following covenants: • a covenant by the tenant to pay rent; • a covenant by either the tenant or the landlord to repair the premises; • a covenant by the tenant not to assign or sublet the premises without the prior consent of the landlord; • a covenant as to the user of the premises. The courts will resolve any dispute as to the meaning of any of the terms of a lease in accordance with the normal common law rules concerning the construction of documents. First, in the event of a forfeiture resulting from a breach of covenant, any ambiguity will be resolved in favour of the tenant.208 Secondly, any term of the lease will be interpreted in light of the contents of the whole lease,209 and the court may also have regard to surrounding circumstances.210 Finally, as a last resort, in the event of ambiguity, a covenant will be construed against the covenantor in favour of the covenantee.211 Occasionally, the lease may expressly state that the performance by one party of one or more of the covenants is conditional upon the performance by the other party of one or more of his or her covenants. The terms of such an agreement are enforceable at common law. However, in the absence of such an express agreement, the courts will treat each covenant as independent of the others212 and will not apply the doctrine of mutuality of 204 205 206

Property Law Act 1974 (Qld), s 107(a); Law of Property Act (NT), s 119(1)(a). Real Property Act 1886 (SA), s 125(b); Land Titles Act 1980 (Tas), s 67(a). Terms are now imposed by statute with respect to residential tenants, rooming house residents and caravan park residents, see generally, Chapter 15. 207 Modern cases refer to the distinction between essential and non-​ essential terms of contract: see, for example, Associated Newspapers Ltd v Bancks (1951) 83 CLR 322. 08 Downie v Lockwood [1965] VR 257. 2 09 Iggulden v May (1806) 7 East 237; 103 ER 91 (KB). 2 10 Downie v Lockwood [1965] VR 257. 2 11 New South Wales Sports Club Ltd v Solomon (1914) 14 SR (NSW) 340 (FC); Webb v Plummer (1819) 2 B & Ad 2 746; 106 ER 537 (KB) at 751 (B & Ad), 539 (ER). 212 There is no presumption of mutuality of covenants: Bishop v Moy [1963] NSWR 468. [14.210]  701

PART 4 Divided Ownership of Land

covenants.213 Thus, for example, if the landlord breaches the covenant of quiet enjoyment, the tenant is not entitled to withhold rent in order to bring pressure to bear on the landlord but must sue for damages for breach of covenant.214 The parties occasionally may state in a lease that the lease is subject to the “usual covenants”. The question thus arises as to the meaning of this term. The same issue may arise in other contexts by virtue of the rule that an agreement for a lease is subject to the usual covenants where the parties do not state which terms are to be included in the formal lease.215 Based on Hampshire v Wickens (1878) LR 7 Ch D 555,216 the following covenants are said to be “usual covenants”: • a covenant by the landlord for quiet enjoyment; • covenants by the tenant; • • • •

to pay the rent; to pay rates and taxes, except for those expressly the duty of the landlord; to keep and deliver up the premises in good and tenantable repair; to permit the landlord to enter the rented premises to inspect its condition.

Also, a right of re-​entry for breach of the covenant to pay rent (but not for other covenants) will be a “usual” term.217 In addition to these covenants, other covenants may be held to be “usual” depending on the facts of the case.218 Proof may be led as to whether a particular covenant is commonly found in leases of similar premises in similar areas; if so, a covenant will be held to be “usual”. As this is a question of fact, the issue as to whether a covenant is “usual” may vary between commercial, residential and agricultural leases, and may differ from one location to another.219

Implied terms General approach [14.215]  If an agreement for a lease is silent as to the terms of the formal lease, it is implied

that the lease will be subject to the “usual” covenants.220 If covenants are not included in a lease, or if the terms of the express covenants are inadequate in light of the nature of the lease and the surrounding circumstances, as many covenants will be implied at common law as are necessary to give “business efficacy” to the contract. The major authority on this issue is Liverpool CC v Irwin [1977] AC 239 (HL).221 In

13 2 214 215 216 217 218

219 220 221

Sometimes referred to as the doctrine of interdependence of covenants. See, for example, Chatfield v Elmstone Resthouse Ltd [1975] 2 NZLR 269; Taylor v Webb [1937] 2 KB 283 (CA). See, for example, Propert v Parker (1832) 3 My & K 280; 40 ER 107 (Ch). See also Sharp v Milligan (No 2) (1857) 23 Beav 419; 53 ER 165 (Rolls Ct); Charalambous v Ktori [1972] 1 WLR 951. Hodgkinson v Crowe (1875) LR 10 Ch App 622; Re Lander and Bagley’s Contract [1892] 3 Ch 41. The issue was held to be a question of fact in, for example, Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 (CA); Blake v Lane (1876) 2 VLR (L) 54 (FC); Chester v Buckingham Travel Ltd [1981] 1 All ER 386. See especially Flexman v Corbett [1930] 1 Ch 672 at 677ff per Maugham J. Propert v Parker (1832) 3 My & K 280; 40 ER 107 (Ch). See also Chorley Borough Council v Ribble Motor Services Ltd (1996) 72 P & CR D32; Bournemouth & Boscombe Athletic Football Club Co Ltd v Manchester United Football Club Ltd, The Times, 22 May 1980; Western Electric

702 [14.215]

Leases  Chapter  14

this case the tenants of a high-​rise block of flats owned by the Council withheld their rent in protest against the conditions in the building, and in an action for possession counter-​claimed that the Council had breached an implied covenant to maintain the common parts of the building, including lifts, staircases and rubbish chutes. These common facilities had been in constant disrepair for many years. The House of Lords held that the Council was under an implied covenant to keep the common parts of the building in repair and that on the facts the Council had been in breach of that duty. Their Lordships stated that the decision must not be construed too widely and emphasised that courts do not have the power to imply terms into leases merely because it seems reasonable to do so.222 A similar Australian authority is Karaggianis v Malltown Pty Ltd (1979) 21 SASR 381.223 In this case a tenant of commercial premises leased part of the sixth floor of a high-​rise building. Access to the premises was provided by four lifts and two escalators. One year after the commencement of the lease the landlord ceased operating the escalators and reduced the lift services. The tenant applied for a declaration that the landlord had breached an implied covenant in the lease to maintain and operate the lifts and escalators, and for a mandatory injunction to compel him to restore the services. Wells J held that a covenant should be implied in the lease that the landlord would maintain and operate the lifts and escalators in the same condition and to the same effect as at the commencement of the lease. He based his decision on the ground, inter alia, that the covenant was necessary to give business efficacy to the transaction between the parties.224 A recent formulation of the principle occurred in Kazas & Associates Pty Ltd v Multiplex Pty Ltd (2002) 11 BPR 20,353; [2002] NSWSC 840 at [59], where the court specified the relevant test as follows: In the light of the relevant factual circumstances at the time of the grant of the lease –​ • Is the alleged term reasonable and equitable; • Is the term necessary to give business efficacy to the lease …; • Is the term so obvious that it goes without saying; • Is it capable of clear expression; and • Does it contradict any express term of the lease.225

In Australia terms have also been implied that the tenant is entitled to use a lift for the carriage of such goods and passengers as is reasonably necessary for the conduct of his or her business,226 that a positive obligation in a lease to use premises for a particular purpose may mean that a term is implied that the landlord, insofar as it is within his or her power to do so, put the premises in a state that would enable that use,227 that the tenant can have access

222 223 224 225 226 227

Ltd v Welsh Development Agency [1983] 2 All ER 629 (CA); Duke of Westminster v Guild [1984] 3 WLR 630 (CA), discussed in [1985] Conv 66; Barrett v Lounova (1982) Ltd [1989] 1 All ER 351 (CA). Liverpool CC v Irwin [1977] AC 239 at 262 (HL). See also Alcatel Australia Ltd v Scarcella (1998) NSW ConvR 56,495 (CA); Harrem Pty Ltd v Toyo Tyre Rubber Australia Ltd [2008] NSWSC 776. In Chorley Borough Council v Ribble Motor Services Ltd (1996) 72 P & CR D32 (CA) Millet LJ referred to the officious bystander test as separate from that of business efficacy. Based on general contract rules expounded by the High Court in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 at 26. Dikstein v Kanevsky [1947] VLR 216; cf Harrem Pty Ltd v Toyo Tyre Rubber Australia Ltd [2008] NSWSC 776. R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 310. [14.215]  703

PART 4 Divided Ownership of Land

through premises retained by the landlord to the only lavatory on the property,228 that the tenant can have a sufficient supply of refrigerant to enable it to use the rented premises for the purpose of blast freezing and cold storage,229 and that the rented premises should be supplied with electricity.230 Conversely, the Federal Court has refused to imply a term that the floor of the rented premises is of a sufficient standard and quality that it is able to withstand industrial use associated with the business of a printer,231 and the New South Wales Supreme Court has refused to imply a term that in the event of damage by fire to the demised premises, the landlord would use the proceeds of the insurance policy to reduce or extinguish the tenant’s liability under an express covenant to repair.232 Duties of respect [14.220]  The courts impose duties which involve responsible dealing with one another. These

duties are those of good faith, co-​operation and non-​derogation from the grant. They are often implied to amplify express terms of the lease and may be contrasted with an insistence on strict application of the express terms of the lease. The New South Wales Court of Appeal held in Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; NSW ConvR 55-​866 that a duty of good faith may be implied on both parties in performing obligations and exercising rights. In this case, the court held on the facts that any such duty of good faith was not broken by a party who took steps to press the local council for more stringent requirements for fire safety, even though by so doing the compliance expenses ensuing to the other party were increased. In Dogrow Pty Ltd v Teakdale Pty Ltd [2013] NSWSC 1380, a landlord was held to be required by the duty of co-​operation to assist an application for a liquor licence by the tenant where the lease required the holding of that licence. In Specialist Diagnostic Services Pty Ltd v Healthscope Pty Ltd [2012] VSC 175, the duty of non-​derogation from the grant lead to a restriction on a landlord’s use of remaining parts of the premises. The tenant leased premises for a pathology laboratory. The landlord sought to alter remaining parts of the building but was forbidden on the basis of non-​derogation from allowing any business similar to that of the laboratory. There is a general principle of real property law that a grantor must not derogate from her or his grant. This principle is variously referred to as a maxim, a presumption of law, an implied obligation, an implied contract and an implied covenant.233 The application of this principle in the landlord-​tenant context is merely one illustration of its operation.234 The meaning of the principle has been explained in various ways. Bowen  LJ stated in Birmingham, Dudley & District Banking Co v Ross (1888) LR 38 Ch D 295 at 313 (CA)235 that “a grantor having given a thing with one hand is not to take away the means of enjoying

228 229 230 231 232 233

Dillon v Nash [1950] VLR 293. Homebush Abattoir Corporation v Bermria Pty Ltd (1991) 22 NSWLR 605 (CA). Jenkins v Levinson (1929) 29 SR (NSW) 151 (FC). Bradford House Pty Ltd v Leroy Fashion Group Ltd [1983] ATPR 44,162. Linden v Staybond Pty Ltd [1986] NSW ConvR 55-​308. See, for example, Myers v Catterson (1889) 43 Ch D 470 at 482–​484; Project Blue Moon Pty Ltd v Fairway Trading Pty Ltd [2000] FCA 127. 234 Another illustration is the law of easements, where the principle of non-​derogation from grant is one method of creating an implied easement: see Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [4.37]ff. See also Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268 at [95]ff. 35 See also Project Blue Moon Pty Ltd v Fairway Trading Pty Ltd [2000] FCA 127. 2

704 [14.220]

Leases  Chapter  14

it with the other”, while Stirling J stated in Aldin v Latimer, Clark, Muirhead & Co [1894] 2 Ch 437 at 444 that:236 Where a landlord demises part of his property for carrying on a particular business, he is bound to abstain from doing anything on the remaining portion which would render the demised premises unfit for carrying on such business in the way in which it is ordinarily carried on.

According to Elias  J in Nordern v Blueport Enterprises Ltd [1996] 3 NZLR 450,237 the doctrine “merely embodies in a legal maxim a rule of common honesty”. The doctrine can best be understood by way of illustrations. In Lend Lease Development Pty Ltd v Zemlicka (1985) 3 NSWLR 207 (CA) the New South Wales Court of Appeal held that a reduction in security for a tenant caused by demolition work undertaken by the landlord around the demised premises may constitute a breach of the implied covenant. In Cable v Bryant [1908] 1 Ch 259, where the landlord had granted a lease of a stable, it was held that he could not derogate from his grant by erecting hoardings which adversely affected the supply of ventilation to the stable. Similarly in Aldin v Latimer, Clark, Muirhead & Co it was held to be a derogation from grant where the landlord had leased property to the tenant for the purpose of carrying on a timber business and the landlord’s successors-​in-​title erected equipment on adjoining land for the purpose of supplying electricity to neighbouring districts which interfered with the access of air to the drying sheds used in the timber business. Derogation from grant was also found to exist in Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1; [1997] Q ConvR 54-​485, where the plaintiff’s business, the manufacture and sale of new and repaired canvas goods, was disrupted by a later tenant of adjoining premises, which used the premises for making timber staircases, involving the use of power saws, sanders and spindle planers. The derogation from grant was based on the court’s finding that significant quantities of sawdust entered the plaintiff’s premises and the plaintiff’s employees were constantly subjected to considerable noise, leading to increased absences from work due to headaches and respiratory illnesses. Conversely, in Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150 the court rejected the claim for non-​derogation of grant where the lessor of a shopping centre changed the tenant mix and types of products sold at the centre during the course of the lease to the financial detriment of the tenant. In Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200 (CA) the landlord leased certain premises to a tenant for the purposes of an explosive magazine. Pursuant to legislation, the tenant’s licence for storing explosives would be withdrawn if buildings were erected on the landlord’s adjoining property within a certain distance from the magazine. The landlord later leased the adjoining land to another tenant for different purposes, and that tenant proceeded to erect buildings within the prohibited distance of the explosive magazine. It was held that a breach of the landlord’s obligation not to derogate from his grant had occurred. The traditional view is that the obligation will not be breached where the landlord lets adjoining premises for a purpose which competes with the business carried on by another tenant of the same landlord, even if economic detriment can be proved.238 This proposition has been recently qualified by the English courts. While it is true that non-​derogation will not lie in cases which involve only economic detriment as a result of a lease to a competitor, 236 237 238

See also Lawson v Hartley-​Brown (1995) 71 P & CR 242 at 255 (CA). See also Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200 at 225 (CA); Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268 at [94]. Port v Griffith [1938] 1 All ER 295; Romulus Trading Co Ltd v Comet Properties Ltd [1996] 2 EGLR 70. [14.220]  705

PART 4 Divided Ownership of Land

it may lie where the rented premises is not just a separate and independent retail unit, but is a shop in a shopping arcade or mall. This has been justified on the basis that the court must consider the obligations which were implicit in the use for which the landlord had designed the arcade and for which the tenant had taken the lease of the unit.239 In addition, no remedy will lie where the use to which the tenant puts the demised premises is particularly sensitive, and the landlord was unaware of the sensitivity at the time he or she granted the lease.240 It is clear from all these authorities that to amount to derogation from grant, the interference must be substantial.241 The principle of non-​derogation from grant partially overlaps in its operation with the covenant of quiet enjoyment. Conceptually, the two principles are different. As stated by Young CJ in Eq in Glasshouse Investments Pty Ltd v MPJ Holdings Pty Ltd [2005] NSWSC 456 at [27]: The difference between a covenant for quiet enjoyment and an obligation not to derogate from the grant essentially is that the former springs from the relevant instrument, but the latter from the duty imposed on the grantor in consequence of the relation which he has taken upon himself towards the grantee.

The principles of non-​derogation from grant and quiet enjoyment may be distinguished as concerning user of the retained part on the one hand and enjoyment of the premises on the other. Non-​derogation from grant is concerned with user of the retained part which makes the demised premises less fit for the purpose for which they were let. The covenant for quiet enjoyment is concerned with the enjoyment of the premises and any disturbance of such enjoyment. However, Young CJ in Eq concluded in Glasshouse Investments (at [28]) that the differences between the two are minimal. Implied covenant by the landlord of quiet enjoyment [14.225] The covenant for quiet enjoyment, which is implied into all leases in the absence

of an express covenant for quiet enjoyment,242 is commonly misunderstood. In this context, “quiet” means “peaceful” or “freedom from interruption”, rather than “without noise”.243 This implied term imposes an obligation on the landlord to put the tenant into possession and allow the tenant to remain peacefully in possession during the term of the lease free from interruption.244 The covenant is prospective in nature and amounts to an obligation on the landlord not to do anything after the date of the grant which substantially interferes with the tenant’s occupation; the covenant does not provide a remedy where the state of affairs existed at the date of grant of the lease.245 A  merely temporary disturbance

239

Oceanic Village Ltd v Shirayma Shokussan Co Ltd [2001] EGCS 162; Petra Investments Ltd v Jeffrey Rogers PLC [2001] L&TR 451. 240 Robinson v Kilvert (1889) 41 Ch D 88 (CA). 241 Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150; Nordern v Blueport Enterprises Ltd [1996] 3 NZLR 450 at 455; Mount Cook National Park Board v Mount Cook Motels Ltd [1972] NZLR 481. 242 Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185. 243 Southwark Borough Council v Baxter [2001] 1 AC 1 (HL). 244 See, for example, A F Textile Printers Pty Ltd v Thalut Nominees Pty Ltd [2007] VSC 73; Jaeger v Mansions Consolidated Ltd (1903) 87 LT 690 (CA); Markham v Paget [1908] 1 Ch 697. 45 Glasshouse Investments Pty Ltd v MPJ Holdings Pty Ltd [2005] NSWSC 456; Southwark London Borough Council 2 v Baxter [2001] 1 AC 1; [1999] 4 All ER 449; [1999] 3 WLR 939, discussed in (1999) 143 Sol J 1058; (2000) 74 ALJ 353; [2000] Conv 161. For the meaning of “substantially” in this context, see Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 at 8–​10; Byrnes v Jokona Pty Ltd [2002] FCA 41 at [64]. 706 [14.225]

Leases  Chapter  14

of enjoyment and which does not interfere with title or possession is not a breach of the covenant.246 The covenant is independent of the covenant to pay rent; thus non-​payment of rent does not remove the obligation on the landlord to give quiet enjoyment, even where the obligation is expressed to be subject to the tenant complying with the provisions of the lease.247 Where a breach occurs, recent cases have decided that in some circumstances the tenant may be able to treat the lease as having been repudiated and may leave the premises without liability for further rent or other obligations under the lease.248 A covenant of quiet enjoyment is not a guarantee against all disturbance by the landlord. In Goldmile Properties Ltd v Lechouritis [2003] 2 P & CR 1 the lease also contained a covenant by the landlord to use its reasonable endeavours to keep the building in repair. Pursuant to this repair clause, the landlord undertook building works over a six-​month period which involved the erection of scaffolding and sheeting to the outside of the building. This had the effect of seriously disrupting the tenant’s restaurant business. The English Court of Appeal held that there was no breach of the covenant of quiet enjoyment on the basis that it was sufficient under the covenant that the landlord took all reasonable steps to avoid disturbing the tenant rather than all possible steps. It is sometimes said that this covenant provides the tenant with a legal remedy in all cases of harassment. Some instances of harassment are undoubtedly within the scope of the covenant: thus, for example, the covenant has been held to be breached where the landlord removed the doors and windows to the premises249 and cut off the gas and electricity supplies250 in order to induce the tenant to vacate the premises. Unfortunately, however, this statement is too broad-​ranging to be accurate; while some acts of harassment undoubtedly breach the covenant of quiet enjoyment, other acts are outside the scope of the covenant. There are two limitations on the scope of the implied covenant. First, the covenant does not amount to a guarantee of title. The landlord is not liable for acts of his or her predecessors-​in-​title or grantees of rights or interests created by predecessors-​in-​title.251 The landlord is only liable for a breach of the covenant if he or she personally disturbs the tenant’s peaceful possession or authorises a third party claiming under him or her to commit a disturbance.252 Thus, for example, if the landlord lets premises adjoining the tenant to other persons who engage in unruly behaviour and disturb the tenant’s peaceful possession, there will only be a breach of the implied covenant if the tenant can prove that the landlord either authorised or encouraged the other persons to commit the disturbance. In the absence of

246 247 248

249 250 251 252

Glasshouse Investments Pty Ltd v MPJ Holdings Pty Ltd [2005] NSWSC 456 at [16]; Manchester, Sheffield & Lincolnshire Railway Co v Anderson [1898] 2 Ch 394 at 401. Edge v Boileau (1885) 16 QBD 117 at 119; Dowse v Wynyard Holdings Ltd [1962] NSWR 252 at 263; Hawkesbury Nominees Pty Ltd v Battik Pty Ltd [2000] FCA 185, discussed in (2000) 8 APLJ 181. Norden v Blueport Enterprises Ltd [1996] 3 NZLR 450; Chartered Trust PLC v Davies [1997] 2 EGLR 83; Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 (CA). See Rissman, “The Price of Quiet Enjoyment” (1999) 7 APLJ 155. Lavender v Betts [1942] 2 All ER 72. See also Drane v Evangelou [1978] 1 WLR 455. Perera v Vandiyar [1953] 1 All ER 1109. Celsteel Ltd v Alton House Holdings Ltd (No 2) [1987] 2 All ER 240 (CA). See, for example, Sanderson v Mayor of Berwick-​on-​Tweed (1884) 13 QBD 547 (CA); Malzy v Eichholz [1916] 2 KB 308 at 318 (CA). For the meaning of “claiming under”, see Celsteel Ltd v Alton House Holdings Ltd (No 2) [1987] 2 All ER 240 (CA). [14.225]  707

PART 4 Divided Ownership of Land

such authorisation or encouragement, the tenant’s only remedy would be to sue the unruly persons in nuisance.253 Secondly, there is no remedy under the implied covenant where the tenant’s possession is disturbed by a person claiming through title paramount.254 The most common illustration of this arises in the case of subleases. Take the case where X leases premises to Y and Y sublets the premises to Z.  If Y breaches one of the covenants of the head lease and X exercises a right of re-​entry under the express or implied terms of the lease, the sublease to Z will be determined automatically and the remedy of quiet enjoyment will be regarded by the courts as inoperative. Historically, there was a further limitation on the scope of the implied covenant in that it applied only in cases of direct physical interference with the tenant’s peaceful possession.255 In Browne v Flower [1911] 1 Ch 219, where the tenant of the upper floors of a building obtained the landlord’s permission to erect a staircase outside the plaintiff tenant’s flat on the ground floor, the fact that this constituted an invasion of privacy was held to be irrelevant to the covenant of quiet enjoyment and a remedy for breach of this covenant was refused.256 However, the House of Lords in Southwark London Borough Council v Baxter [2001] 1 AC 1; [1999] 4 All ER 449; [1999] 3 WLR 939257 expressed the view that a substantial physical interference is not required. The court held that regular excessive noise is capable of amounting to a breach of the covenant. This view has recently been accepted by Australian courts.258 The landlord’s right of re-​entry for breach of covenants other than the covenant to pay rent [14.230]  As in the case of non-​payment of rent, a statutory right of re-​entry for breach of all

other covenants is now granted to landlords.259 This right may be exercised in the case of any breach or non-​observance of any of the covenants implied by law or expressed in the lease where the breach or non-​observance has continued for the minimum period of one month in Victoria and Western Australia, two months in New South Wales, Queensland and the Australian Capital Territory and three months in South Australia, Tasmania and the Northern Territory. Except in Queensland, any or all of the statutory terms can be modified or excluded by express declaration in the instrument of lease.260 In Queensland, however, the statutory obligations contained in s 106 of the Property Law Act 1974 (Qld) concerning the repair of 253 254 255 256 257 258 259

260

See Smith v Scott [1973] Ch 314; Mowan v Wandsworth London Borough Council [2001] BLGR 228 (CA). Jones v Lavington [1903] 1 KB 235 (CA); Kenny v Preen [1963] 1 QB 499 (CA). Browne v Flower [1911] 1 Ch 219; Gordon v Lidcombe Developments Pty Ltd [1966] 2 NSWR 9. See also Gordon v Lidcombe Developments Pty Ltd [1966] 2 NSWR 9; Owen v Gadd [1956] 2 QB 99 (CA). See also Nordern v Blueport Enterprises Ltd [1996] 3 NZLR 450 at 455; Barton v Lantsbery (2004) V ConvR 58-​577. See, for example, Spathis v Hanave Investment Co Pty Ltd [2002] NSWSC 304 at [151]; Telstra Corporation Ltd v Sicard Pty Ltd [2009] NSWSC 827 at [21]. Conveyancing Act 1919 (NSW), s 85(1)(d); Transfer of Land Act 1958 (Vic), s 67(1)(d); Property Law Act 1974 (Qld), s 107(d); Real Property Act 1886 (SA), s 125(c); Transfer of Land Act 1893 (WA), s 93(2); Land Titles Act 1980 (Tas), s 67(b); Land Titles Act 1925 (ACT), s 120(1)(d); Law of Property Act (NT), s 119(1)(d)(ii). Conveyancing Act 1919 (NSW), s 74(2); Transfer of Land Act 1958 (Vic), s 112; Real Property Act 1886 (SA), s 262; Transfer of Land Act 1893 (WA), s 131; Land Titles Act 1980 (Tas), s 57(1); Land Titles Act 1925 (ACT), s 112. See further Law of Property Act (NT), s 119(1).

708 [14.230]

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rented premises where the lease does not exceed three years are stated to apply notwithstanding any agreement to the contrary. In addition to the statutory covenants implied in leases, in respect of Torrens land in Victoria, Western Australia, Tasmania and the Australian Capital Territory there is an implied covenant in every sublease that the sublessor will during the term of the sublease pay the rent and perform and observe the covenants and agreements contained in the original lease.261 The tenant’s duty to yield up possession to the landlord at the end of the lease [14.235] This implied covenant requires the tenant not merely to vacate the premises, but

to ensure that the landlord is able to retake possession. Thus, for example, the covenant will be breached if a caretaker or a subtenant installed by the tenant during the term of the lease fails to vacate at the end of the lease. Loss of rent and other expenses may be claimed by the landlord in these circumstances.262 A tenant does not deliver up vacant possession if he or she leaves rubbish on the premises at the end of the lease other than a minimal quantity.263

ASSIGNMENTS AND SUBLEASES Nature of assignments and subleases [14.245]  Both landlords and tenants are recognised as holding proprietary interests and as

such hold interests that can be transferred in whole or in part. Once a lease has been created the interest held by the landlord is the “leasehold reversion”. If the landlord sells the fee simple estate in the property during the term of the lease, the purchaser is the “assignee of the reversion”. The tenant may also dispose of her or his possessory interest to a third party before the expiry of the lease, either by an “assignment” or a “sublease”. Careful attention must be given to the basic distinction between these terms. If the tenant disposes of the whole of her or his interest, the tenant will be held to have assigned the interest, notwithstanding that the conveyance may be described as a sublease.264 The practical legal effect of this is that the assignee substitutes for the tenant in relation to the enforceability of the parties’ rights and duties.265 An assignment does not create a new lease.266 In this situation the landlord and the assignee will be in privity of estate with one another. However, if the tenant does not dispose of the whole interest, he or she will be held to have created a sublease.267 In this case, the tenant’s rights and duties vis-​a-​vis the landlord will be unaffected, and there will be no privity of estate 261

Transfer of Land Act 1958 (Vic), s 74(1); Transfer of Land Act 1893 (WA), s 103; Land Titles Act 1980 (Tas), s 69(3); Land Titles Act 1925 (ACT), s 91. 262 Henderson v Squire (1869) LR 4 QB 170. 263 Waterhouse v Waugh [2003] NSWCA 139 at [62]. 264 See Secure Parking (WA) Pty Ltd v Wilson [2005] WASC 264; White v Kenny [1920] VLR 290; Beardman v Wilson (1868) LR 4 CP 57. At common law the assignment of a lease does not create a new lease: Mason v Harris [1921] 1 KB 563 at 655; Taylor Farms (Aust) Pty Ltd v A Calkos Pty Ltd [1999] NSWSC 186. 265 Richardson v Landecker (1950) 66 WN (NSW) 236; Haidar v Blendale Pty Ltd [1993] 2 VR 524. 266 Debonair Nominees Pty Ltd v J & K Berry Nominees Pty Ltd (2000) 77 SASR 261 at 265; Mason v Harris [1921] 1 KB 563 at 655. 267 Note that there may be a valid argument where the tenant delivers up his or her whole interest in part of the rented premises: G J Coles & Co Ltd v FCT (1975) 132 CLR 242. [14.245]  709

PART 4 Divided Ownership of Land

between the landlord and the subtenant. Where this occurs, there will be two concurrent, separate leases, one between the landlord and the tenant, the other between the tenant and the subtenant. In this situation the lease between the landlord and the tenant is often referred to as the “head lease” and the tenant as the “mesne lessor”. Consider the situation where A grants a fixed-​term lease to B, expiring on 31 December 2015. If, prior to that date, the tenant B enters into an agreement with C whereby B disposes of B’s interest until 31 December 2015, an assignment will have been created. Conversely, if B disposes of B’s interest until any day up to and including 30 December 2015, a sublease will have been created. The courts will look at the substance rather than the form of the document. Thus, if the tenant does not dispose of the whole of the tenant’s interest, the grantee will be held to be a subtenant, even if the document is expressed to be an assignment.268 [14.247]  There is no limit to the number of assignments and subleases which may be made

during the term of a lease. Where a number of transactions occur, the fact situation may be clarified by the use of a diagram. The diagram would be drawn as follows: A hypothetical example will illustrate the point. A executes a 10-​year fixed-​term lease with B. B later assigns B’s interest to C, who sublets the premises for two years to D. D later assigns D’s interest to E, and A sells the property to F. In cases of this complexity, where one party commits a breach of covenant the question of enforceability will arise; in other words, who can sue whom? The common law rule is that before one party can sue another, the parties must be in either privity of contract or privity of estate with one another. Privity of contract means that the parties have contracted with one another and in the example privity of contract exists between A and F, A and B, B and C, C and D, and D and E. Privity of estate exists where the parties stand in the position of landlord and tenant as between each other. In the example privity of estate exists between F and C and between C and E. The major effect of the common law rule is to deny that a legal relationship exists between a landlord and subtenant (ie, between F and E).269 Thus, if the head lease is validly determined by the effluxion of time, forfeiture or a notice to quit, the sublease will automatically terminate at the same time.270 The subtenant has no standing to maintain the subtenant’s right of possession in these circumstances. By virtue of this common law rule, if the head tenant breaches a term of the tenancy agreement, the subtenant as well as the head tenant is subject to eviction through no fault of the subtenant.271

Covenants prohibiting assignments and subleases [14.250]  In the absence of an express covenant to the contrary, at common law both the

landlord and the tenant have the right to dispose of all or part of their respective interests to a third party during the term of a lease by way of assignment (in the case of the landlord) or either assignment or sublease (in the case of the tenant).272 The only exceptions to this rule are

268 269 270

409 Lonsdale Pty Ltd v Carra [1974] VR 887. For the converse situation, see Milmo v Carreras [1946] KB 306. Fuller’s Theatre & Vaudeville Co Ltd v Rofe [1923] AC 435 (PC). Great Western Rly Co v Smith (1876) 2 Ch D 235 at 253 (CA); Metropolitan Trade Finance Co Pty Ltd v Coumbis (1973) 131 CLR 396. 271 Subject to the statutory right of the subtenant to seek relief from forfeiture: see [14.335]. 72 Henningsen v Nolan (2004) 88 SASR 214; Commonwealth Life (Amalgamated) Assurance Ltd v Anderson 2 (1945) 46 SR (NSW) 47; Keeves v Dean [1924] 1 KB 685 (CA). 710 [14.247]

Leases  Chapter  14

in respect of tenancies at will and tenancies at sufferance,273 where any attempt to assign or sublet by the tenant will automatically determine the lease and will create no interest in the third party.274 Most modern leases contain a covenant by the tenant prohibiting or restricting the tenant’s common law right to assign or sublet his or her interest. The drafting of the covenant varies from lease to lease, but the following form is typical: The tenant covenants with the landlord not to assign over nor in any way dispose of or part with possession of the said premises or any part thereof and not to sublet lend license or install a caretaker in the said premises or any part thereof either furnished or unfurnished unless written permission has first been obtained from the landlord.

A landlord is obliged to give an answer within a reasonable time on request by the tenant for consent to assign or sublet the premises or else there will be a constructive refusal of consent.275 Despite such a covenant, an assignment or sublease by the tenant in breach of the covenant is effective to pass the estate, but gives the landlord the right to sue for damages or (assuming the existence of a forfeiture clause) the right of re-​entry for the breach.276 The basic rule of interpretation of such covenants is that they are construed against the landlord.277 Thus, for example, it has been held that a covenant against subletting is not infringed where the tenant sublets part of the premises,278 a covenant against assigning is not breached where the tenant sublets the premises,279 and a covenant against assigning or subletting is not infringed where the tenant parts with possession pursuant to a revocable licence.280 However a covenant against subletting or parting with possession of the premises will be breached where the tenant assigns the term.281 Regardless of the wording of the covenant, it will only be breached where there is a voluntary dealing by the tenant with his or her interest. Thus, at common law there is no breach where the interest involuntarily vests in a trustee in bankruptcy if the tenant becomes bankrupt.282 It has further been held that a bequest of the lease283 and an equitable mortgage created by the deposit of the title deeds284 did not breach the covenant. In New South Wales,

273 274

275 276 277 278 279 280 281 282 283 284

Picone v Grocery & General Merchants Ltd [1964] NSWR 1018 (FC); Martin v Elsasser (1878) 4 VLR (L) 481. Note that this exception does not apply to tenancies at will arising under the Conveyancing Act 1919 (NSW), s 127(1); Property Law Act 1974 (Qld), s 129(1); Property Law Act 1969 (WA), s 71; Law of Property Act (NT), s 144. See [14.55] for a discussion of this legislation. Provident Capital Ltd v Zone Developments Pty Ltd (2002) NSW ConvR 56-​003; Omar Parks Ltd v Elkington (1992) 65 P & CR 26 (CA). Secure Parking (WA) Pty Ltd v Wilson [2005] WASC 264; Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd [1986] 1 Qd R 406; Commonwealth Life (Amalgamated) Assurance Ltd v Anderson (1945) 46 SR (NSW) 47. Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11; Field v Barkworth (1986) 277 EG 193. Cook v Shoesmith [1951] 1 KB 752 (CA). Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699 (CA). Stening v Abrahams [1931] 1 Ch 470. See also Chaplin v Smith [1926] 1 KB 198; Re Smith’s Lease [1951] 1 All ER 346. Marks v Warren [1979] 1 All ER 29. Marsh v Gilbert (1980) 256 EG 715; Re Riggs; Ex parte Lovell [1901] 2 KB 16; Re Farrow’s Bank Ltd [1921] 2 Ch 164 (CA). Doe d Goodbehere v Bevan (1815) 3 M & S 353; 105 ER 644 (KB). Doe d Pitt v Hogg (1824) 4 Dow & Ry 224; 171 ER 1144 (NP). See also Gentle v Faulkner [1900] 2 QB 267 (CA). [14.250]  711

PART 4 Divided Ownership of Land

Queensland and the Northern Territory this matter is partially dealt with by legislation. The New South Wales provision reads:285 Neither the assignment nor the underletting of any leasehold by The Official Receiver in Bankruptcy or the trustee of the estate of a bankrupt, or by the liquidator of a company (other than a liquidator in a voluntary winding-​up of a solvent company), nor the sale of any leasehold under an execution, nor the bequest of a leasehold, shall be deemed to be a breach of a covenant, condition, or agreement against the assigning, underletting, parting with the possession, or disposing of the land leased.

A further common prohibition is one forbidding the tenant to “part with possession”. The authorities suggest that possession in this context should be limited to legal possession.286 Thus, a tenant who merely parts with the right to use and occupy the premises, but retains legal possession, cannot be said in this context to have “parted with possession”.287 The major authority is the Privy Council decision in Lam Kee Ying Sdn Bhd v Lamb Shes Tong [1975] AC 247 (PC). This case involved a lease of commercial premises. During the term of the lease the tenant formed a company which took over his business. Among other things, the tenant erected a signboard with the company’s name outside the premises, transferred the electricity and telephone accounts into the company’s name and paid the rent with the company’s cheques. The landlord claimed that the tenant had breached an express covenant in the lease against assigning, subletting or parting with possession, arguing that on the facts the tenant had parted with possession in favour of the new company. The Privy Council regarded the evidence of the signboard and the electricity and telephone accounts as equivocal, but upheld the landlord’s contention on the basis that the payment of rent by a company cheque indicated that the tenant regarded the company as entitled to legal possession. In Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55 the court held that the parting of possession by the tenant to its subsidiary amounted to a breach of covenant not to part with possession. While each case will be decided on its facts, it thus appears that the payment of the rent by the occupier will prima facie be regarded as proof of possession by the occupier.288 [14.255]  A covenant against assignments or subleases may absolutely prohibit assignments

and subleases in all cases or (more commonly) will state that there must be no assignment or sublease unless the prior consent in writing of the landlord has been obtained. The former is usually referred to as an “absolute” covenant and the latter as a “qualified” covenant. In respect of both absolute and qualified covenants, an assignment or sublease in breach of the covenant will be effective to convey the legal estate. The remedy for the landlord is an action for damages against the tenant and the exercise of the right of forfeiture of the lease if the lease contains a forfeiture clause.289 Alternatively, if the landlord is sufficiently prompt, he 285

Conveyancing Act 1919 (NSW), s 133; Property Law Act 1974 (Qld), s 122; Law of Property Act (NT), s 135. The Queensland and Northern Territory provisions are similar, although not identical. 286 See, for example, Stoyles v Job (1954) 73 WN (NSW) 41; Watson Holdings Pty Ltd v Hodinott (1957) 75 WN (NSW) 168; Scala House and District Property Co Ltd v Forbes [1974] QB 575 (CA). 87 Note, however, that this situation would amount to the grant of a licence, which may also be prohibited 2 under the terms of an express covenant. 88 See also Melksham v Archerfield Airport Corporation [2004] QSC 164; Huseyin Akici v L R Butlin Ltd [2006] 1 2 WLR 201. 89 Massart v Blight (1951) 82 CLR 423; Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] 2 WASCA 11; Old Grovebury Manor Farm Ltd v W Seymour Plant Sales & Hire Ltd (No 2) [1979] 1 WLR 1397 (CA); Morison v Hall [1923] VLR 93; JDM Investments Pty Ltd v Todbern Pty Ltd [2000] NSWSC 349. 712 [14.255]

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or she may obtain an injunction to restrain any proposed assignment or sublease prior to its occurrence.290 Under an absolute covenant, the landlord has an unchallengeable right to refuse to consent to an assignment or a sublease regardless of his or her motive for doing so or any other circumstances.291 However, the landlord may allow a particular assignment or sublease to take place if he or she so wishes. At common law, the rule in Dumpor’s Case (1601) 4 Co Rep 119b; 76 ER 1110 (KB) held that one act of waiver would render the covenant void, but this has since been repealed by legislation in all States specifically stating that any waiver of a covenant or condition by a landlord or persons deriving title under him or her shall not operate as a general waiver of the benefit of any such covenant or condition.292 In addition, at common law the acceptance of rent by the landlord from the assignee or subtenant would amount to a waiver of the right to insist on the covenant and would be treated as an implied consent by the landlord to the assignment or sublease.293 In relation to qualified covenants against assignment or subletting by the tenant, legislation exists in New South Wales, Victoria, Queensland, Western Australia and the Northern Territory which states that it is implied into such a covenant that the landlord shall not unreasonably withhold his or her consent.294 The parties cannot restrict the operation of this provision by a stipulation as to what shall be deemed reasonable or unreasonable.295 In New South Wales, Queensland and the Northern Territory the implication applies notwithstanding any express agreement to the contrary, but in Victoria and Western Australia the implication may be excluded by an express provision to the contrary. In Tasmania the legislation is silent on this issue, while in South Australia the only safeguard for tenants is the statutory power of the courts to grant relief against forfeiture where the landlord vexatiously withholds consent to the assignment or sublease.296 The effectiveness of the statutory safeguard in New South Wales, Victoria, Queensland and Western Australia has been drastically reduced by decisions in both Australia and England upholding the validity of an express covenant requiring a tenant who wishes to assign or sublet his or her interest to first offer to surrender the lease to the landlord, whereupon the landlord may require payment for agreeing to the assignment or sublease.297 A further problem with the effectiveness of this legislation is that where a clause in a lease expressly excludes a statutory provision prohibiting the landlord from refusing to consent to an assignment or sublease unless the refusal is reasonable, the court will not imply a covenant to the effect that the landlord’s power to refuse consent must be exercised in good faith.298 290 291 292

293 294 295 296 297 298

McEachern v Colton [1902] AC 104 (PC). Tredegar v Harwood [1929] AC 72 (HL). Conveyancing Act 1919 (NSW), ss 120, 123; Property Law Act 1958 (Vic), ss 143, 148; Property Law Act 1974 (Qld), s 119; Landlord and Tenant Act 1936 (SA), s 47; Property Law Act 1969 (WA), ss 73, 79; Conveyancing and Law of Property Act 1884 (Tas), s 16; Civil Law (Property) Act 2006 (ACT), s 423; Law of Property Act (NT), ss 132(b), 133. Hyde v Pimley [1952] 2 QB 506 (CA). Conveyancing Act 1919 (NSW), s 133B(1); Property Law Act 1958 (Vic), s 144(1); Property Law Act 1974 (Qld), s 121; Property Law Act 1969 (WA), s 80(1); Law of Property Act (NT), s 134(1). JDM Investments Pty Ltd v Todbern Pty Ltd [2000] NSWSC 349. Landlord and Tenant Act 1936 (SA), s 12(4). Creer v P & O Lines of Australia Pty Ltd (1971) 125 CLR 84; Bocardo SA v S & M Hotels Ltd [1979] 3 All ER 737 (CA). Australian Mutual Provident Society v 400 St Kilda Road Pty Ltd [1991] 2 VR 417 (App Div). [14.255]  713

PART 4 Divided Ownership of Land

Consent to assignments and subleases [14.260]  The requirement for consent to an assignment or subletting is often qualified by a

condition that consent is not to be withheld unreasonably. There are numerous authorities concerning the circumstances in which a landlord will be said to have withheld consent unreasonably.299 The House of Lords has recently concluded in Ashworth v Gloucester City Council [2002] 1 All ER 377; [2001] 1 WLR 2180 that reasonableness is to be determined by considering what the reasonable landlord would do when asked to consent in the particular circumstances before the court.300 In Australia the major authority is the decision of the Full Court of the Supreme Court of Queensland in JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd (1992) 2 Qd R 121. In this case Kelly SPJ stated that there are two applicable propositions: [F]‌irstly, that in considering whether to give or to withhold consent the landlords were entitled to consider the effect which the transactions might have on their ability in the future to let satisfactorily the different parts of their property, particularly in the case of default on the part of the tenant in performing his obligations and, secondly, that it was sufficient if a reasonable man in the lessor’s position might have regarded the proposed transaction as damaging to his property interests, even though some persons might take a different view.301

Although the matter has not been finally resolved in Australia, the better view appears to be that the court can take account of any relevant factors when determining whether the landlord has been unreasonable in withholding his or her consent. In the United Kingdom the House of Lords in Ashworth Frazer Ltd v Gloucester City Council (No 2) [2002] 1 All ER 377; [2001] 1 WLR 2180302 has expounded the following propositions: 1.

A landlord is not entitled to refuse consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease.

2.

It is not necessary for the landlord to prove that the conclusions which led him to refuse to consent were justified if they were conclusions which might be reached by a reasonable man in the circumstances.

3.

In each case it is a question of fact, depending on all the circumstances, whether the landlord’s consent to an assignment has been unreasonably withheld.303

[14.265]  Illustrations of situations where the landlord’s refusal to consent has been declared

unreasonable are: (a) where the assignee might intend to breach the covenant as to user, but where the assignment would not necessarily lead to a breach of the covenant;304 (b) where the 299 See Annand, “ ‘Reasonable’ Grounds for Landlord’s Refusal to Certain Consents” (1983) 127 NLJ 247; Kodilinye, “Refusal for Consent to Assign: The Unreasonable Landlord” [1988] Conv 45. 300 Followed in Eddadock Pty Ltd v Denning Properties Pty Ltd [2002] NSWSC 208. 301 JA McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd (1992) 2 Qd R 121 at 130. 302 See also International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513; Ponderosa International Development Inc v Pengap Securities (Bristol) Ltd (1986) 277 EG 1252; Sportoffer Ltd v Erewash Borough Council [1999] L&TR 433 (Ch D); Mount Eden Land Ltd v Straudley Investments Ltd (1996) 74 P & CR 306. 303 See also Boss v Hamilton Island Enterprises Ltd [2009] QCA 229; Sportoffer Ltd v Erewash Borough Council [1999] L&TR 433 (Ch D); Provident Capital Ltd v Zone Developments Pty Ltd [2002] NSW ConvR 56-​003; Homebase Ltd v Allied Dunbar Assurance PLC [2002] 2 EGLR 23 (CA). 304 Killick v Second Covent Garden Property Co Ltd [1973] 1 WLR 658 (CA). 714 [14.260]

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tenant was a respectable and responsible person and had purchased the tenant’s business;305 (c)  where the landlord’s motive was to force the tenant to offer to surrender the lease;306 (d)  where the sole purpose of the refusal was to give the landlord a new advantage not originally contemplated in the lease;307 (e)  where the refusal of consent was motivated by the landlord’s wish to increase the value of the reversion;308 (f) where the proposed use of an office block was not a conventional office use and would be less attractive to institutional investors;309 and (g) where the landlord sought to impose a condition on its giving of consent that the proposed assignee enter into a contract to comply with the plaintiff’s own regulations regarding driving and tree felling on Hamilton Island.310 Illustrations of situations where the landlord’s refusal to consent has been declared reasonable are:  (a) where the assignee would be able to claim the benefit of legislation conferring rent control and security of tenure;311 (b)  where the use to which the assignee intends to put the rented premises might injure other neighbouring property belonging to the landlord;312 (c) where the terms of the proposed sublease were such that the covenant as to user in the head lease would clearly be breached;313 (d) where the landlord had real doubts as to the proposed assignees’ financial ability to meet the obligations under the lease;314 and (e) where insufficient details are available upon which the landlord can make a reasonable decision.315 The burden of proving that the landlord has acted unreasonably uniformly rests on the tenant.316 The tenant’s task is made more difficult by the rule that the landlord is not obliged to give any reasons for his or her decision, although in these circumstances the court may be willing to infer that he or she has been unreasonable.317 Mason J stated in Secured Income Real Estate (Australia) Ltd v St Martin’s Investments Pty Ltd (1979) 144 CLR 596 at 609 that the issue for consideration is whether the landlord’s consent was unreasonably withheld in light of the reasons which, at the time of refusal, prompted the landlord to refuse. Mason J accepted that there may be cases where it is appropriate to rely on a ground not taken by the landlord at the time of the refusal.318 Where the tenant believes that the landlord is acting 305 306 307 308 309 310 311 312 313 314 315 316

317 318

McKenzie v McAllum [1956] VLR 208. Bates v Donaldson [1896] 2 QB 241 (CA); Colvin v Bowen (1958) 75 WN (NSW) 262. Bromley Park Garden Estates Ltd v Moss [1982] 2 All ER 890 (CA). Blockbuster Entertainment Ltd v Leakcliff Properties Ltd [1997] 08 EG 139 (Ch D). International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513. Boss v Hamilton Island Enterprises Ltd [2009] QCA 229. Lee v K Carter Ltd [1949] 1 KB 85 (CA); Re Cooper’s Lease (1968) 19 P & CR 541. Louis Vuitton New Zealand Ltd v Princes Wharf Property Fund Ltd [2005] ANZ ConvR 245; Governors of Bridewell Hospital v Fawkner and Rogers (1892) 8 TLR 637. Barina Properties Pty Ltd v Bernard Hastie (Australia) Pty Ltd [1979] 1 NSWLR 480 (CA). This decision was followed in Re Archos [1994] 1 Qd R 223. Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11; British Bakeries (Midlands) Ltd v Michael Testler & Co Ltd (1986) 277 EG 1245. Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd [1986] Qd R 406. This decision is discussed in (1986) 16 Qd L Soc J 185. Kids Campus Holdings Pty Ltd v Kelly [2007] VSC 282; Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11; Provident Capital Ltd v Zone Developments Pty Ltd [2002] NSW ConvR 56-​003; Shanly v Ward (1913) 29 TLR 714 (CA); Mills v Cannon Brewery Co Ltd [1920] 2 Ch 38; International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513. Frederick Berry Ltd v Royal Bank of Scotland [1949] 1 KB 619. See Kids Campus Holdings Pty Ltd v Kelly [2007] VSC 282 at [11]. [14.265]  715

PART 4 Divided Ownership of Land

unreasonably, the tenant has two possible courses of action: he or she can either apply for a declaration from the court that the landlord is acting unreasonably, or he or she may assign or sublet his or her interest without the landlord’s consent and take the risk that if the landlord later sues for damages the court will determine that the landlord was unreasonable.319 Where a landlord grants consent to a proposed sublease or assignment by the tenant pursuant to the terms of a qualified covenant, the landlord may lawfully require the payment of a reasonable sum in respect of any legal or other expenses incurred in relation to the granting of the consent. In South Australia and Tasmania, where no legislation exists on this issue, the landlord may also impose a general fee or payment as a precondition to the granting of his or her consent. In the remaining jurisdictions, however, legislation320 states that no fine or sum of money in the nature of a fine shall be payable for the landlord’s consent.321 Where a tenant sublets or assigns premises without the landlord’s consent and the subtenant or assignee both knew of the breach and intended that it be committed, the landlord is entitled to an injunction requiring the surrender of the sublease or assignment and damages in the amount that it might reasonably have demanded for relaxing the covenant against subleasing or assigning.322

THE ENFORCEABILITY OF COVENANTS BY AND AGAINST ASSIGNEES OR SUBTENANTS Relationships after assignment or sub-​letting [14.270]  An assignment does not create a new lease.323 The effect of an assignment is to alter

relationships dependent upon privity of estate, but not to alter those relationships dependent upon privity of contract.324 Where a tenant assigns the lease to a third party, he or she remains liable to the landlord for breaches of covenant committed while a tenant.325 The landlord’s liability to the tenant for existing breaches survives the assignment of the lease, in the same way as the tenant’s liability to the landlord.326 In addition, regardless of whether the landlord assigns or the tenant assigns or sublets his or her interest,327 based on the principle of privity of contract each party will remain liable for the remainder of the term for the performance of the various covenants contained in the lease.328

319 320

See Yared v Spier [1979] 2 NSWLR 291. Conveyancing Act 1919 (NSW), s 132; Property Law Act 1958 (Vic), s 144(1); Property Law Act 1974 (Qld), s 121(1); Property Law Act 1969 (WA), s 80(1); Law of Property Act (NT), s 134(1)(b). 321 Under similar United Kingdom legislation, the Court of Appeal held in Andrew v Bridgman [1908] 1 KB 596 that any money paid by the tenant cannot be recovered by later court action as the legislation does not declare the payment to be unlawful. 22 Crestfort Ltd v Tesco Stores Ltd [2005] EG 148. 3 23 Hamatan Pty Ltd v Narracan Nominees Pty Ltd [1993] V ConvR 54-​471; A Calkos Pty Ltd v Taylors Farms (Aust) 3 Pty Ltd [1998] NSW ConvR 55-​867; Dileum Pty Ltd v J K Corporation Pty Ltd (1989) 1 WAR 244. 24 Henningsen v Nolan (2004) 88 SASR 214 at 223. 3 25 Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11; Karacominakis v Big 3 Country Developments Pty Ltd [2000] NSWCA 313; Liristis v Wallville [2001] NSWSC 428. 26 City & Metropolitan Properties Ltd v Greycroft Ltd [1987] 1 WLR 1085. 3 327 The difference between an assignment and a sublease is discussed at [14.15]. 28 Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11; Debonair Nominees Pty 3 Ltd v J & K Berry Nominees Pty Ltd (2000) 77 SASR 261; Sina Holdings Ltd v Westpac Banking Corporation 716 [14.270]

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Thus, for example, if the tenant assigns his or her interest and the assignee fails to pay the rent, the landlord may sue the original tenant for the rent as an alternative to the assignee.329 If the lease provides for rent review, and the rent is increased after the assignment, the original tenant is liable for the increased rent.330 Similarly, if the landlord disposes of his or her interest and the assignee fails to fulfil a covenant to repair, the original landlord may be sued for damages.331 In these circumstances the injured party cannot recover double damages. Thus, in the case of failure to pay rent, the landlord cannot recover damages from the original tenant if the landlord has already successfully sued the assignee.332 The liability of a third party to the lease, whether an assignee or a subtenant, will depend on the principle of privity of estate, as privity of contract will be irrelevant in this context. The meaning of privity of estate is discussed at [14.20]. The major conclusion reached therein is that whereas privity of estate exists between the landlord and the tenant’s assignee, and between the tenant and the landlord’s assignee, it does not exist between the landlord and a subtenant. Neither the landlord nor the subtenant may sue or be sued by the other for breach of covenant.333 For this reason, further discussion will be limited to the enforceability of covenants by and against assignees.

The covenant must touch and concern the demised land [14.275] Before an assignee of either party can sue or be sued for breach of covenant, in

addition to proving that privity of estate exists between the parties, it must be shown that the covenant “touches and concerns” the demised land and that the detailed common law and statutory rules concerning the passing of the benefit and burden of covenants are satisfied. The phrase “touch and concern” is a common law expression, which technically only applies where the tenant rather than the landlord assigns the tenant’s interest. Where the landlord assigns the landlord’s interest, the liability of the assignee to sue or be sued is governed by legislation in each State, copied from ss 141 and 142 of the Law of Property Act 1925 (UK). The legislation employs the term “having reference to the subject matter [of the lease]” instead of “touching and concerning” the land. In practice, however, the meaning of touching and concerning is relevant wherever either party disposes of their interest, as it has been held that the meaning of “touching and concerning” and “having reference to the subject-​matter [of the lease]” is identical.334

329

330 331 332 333

334

[1995] 1 NZLR 1 (CA); Baker v Merckel [1960] 1 QB 657; Hindcastle Ltd v Barbara Attenborough Associates Ltd [1996] 2 WLR 262 (HL). In England the liability of the original contracting parties for post-​assignment breaches of covenant has been abolished: Landlord and Tenant (Covenants) Act 1995 (UK). See Duncan, “The Continuing Liability of Original Lessees after Assignment of Lease” (2005) 12 APLJ 93. Re Teller Home Furnishers Pty Ltd [1967] VR 313; 195 Crown Street Pty Ltd v Hoare [1969] 1 NSWR 193 (CA); Warnford Investments Ltd v Duckworth [1979] Ch 127; Bel Madelyn Investments Pty Ltd v Briscoes Charter Service (1988) 146 LSJS 30. Picton-​Warlow v Allendale Holdings Pty Ltd [1988] WAR 107; Selous Street Properties Ltd v Oronel Fabrics Ltd (1984) 270 EG 643. Stuart v Joy [1904] 1 KB 362 (CA); Eccles v Mills [1898] AC 360 (PC). See Brett v Cumberland (1619) Cro Jac 521; 79 ER 446 (KB). Note, however, that the landlord may possibly be able to obtain an injunction against a subtenant protecting a restrictive covenant under the principle in Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143 (Ch), discussed at [18.100]. See Hall v Ewin (1888) 37 Ch D 74, where the Court of Appeal held that a restrictive covenant in a head lease can be enforced against any occupier of the land who enters into possession with knowledge of the covenant, regardless of whether privity of estate exists. Davis v Town Properties Investment Corporation Ltd [1903] 1 Ch 797 (CA). [14.275]  717

PART 4 Divided Ownership of Land

There have been numerous attempted definitions of “touch and concern”. The best known is that of Scott LJ, who stated in Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1 (CA) that a covenant touches and concerns the land if it affects either the landlord qua landlord or the tenant qua tenant (at 7). In other words, the covenant must affect the landlord or the tenant in their normal capacity as landlord or tenant According to Bayley J in Mayor of Congleton v Pattison (1808) 10 East 130; 103 ER 725 at 138 (East), 728 (KB),335 an assignee cannot sue or be sued unless “the covenant … either affect[s]‌the land itself during the term, such as those which regard the mode of occupation, or it … [is] such as per se, and not merely from collateral circumstances, affects the value of the land at the end of the term”. The most recent guide for determining the meaning of touching and concerning is that of Lord Oliver of Aylmerton in P & A Swift Investments v Combined English Stores Group Plc [1989] AC 632 at 642:336 [I]‌t seems to me that, without claiming to expound an exhaustive guide, the following provides a satisfactory working test for whether, in any given case, a covenant touches and concerns the land: (1) the covenant benefits only the reversioner for time being, and if separated from the reversion ceases to be of benefit to the covenantee; (2) the covenant affects the nature, quality, mode of user or value of the land of the reversioner; (3) the covenant is not expressed to be personal (that is to say neither being given only to a specific reversioner nor in respect of the obligations only of a specific tenant); (4) the fact that a covenant is to pay a sum of money will not prevent it from touching and concerning the land so long as the three foregoing conditions are satisfied and the covenant is connected with something to be done on, to or in relation to the land.

It is clear from these definitions that the purpose of the requirement that the covenant touches and concerns the land is to prevent personal covenants affecting third parties. Such covenants are enforceable between the original contracting parties, but not otherwise. Also excluded from the scope of the definition are covenants which may relate to the land, but not to the parties in their capacity as landlord and tenant. Covenants of this nature are sometimes referred to as “collateral covenants”. An illustration is a covenant giving the tenant an option to purchase the land at a certain price during the term of the lease. This covenant has been held not to run in favour of the tenant’s assignee as it does not affect the contracting parties in their relationship as landlord and tenant.337 The phrase “touch and concern” can perhaps best be understood by the use of illustrations in reported cases. The most recent is the decision of the High Court in Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237.338 One of the issues in this case was whether a guarantor’s covenant guaranteeing performance of the tenant’s obligation to pay the rent due and perform its other covenants touched and concerned the land and so could be enforced by a transferee of the reversion. The court held in the affirmative on two separate grounds: first, on the application of the four-​fold test of Lord Oliver of Aylmerton in P & A Swift Investments v Combined English Stores Plc (see

335 336 337 338

See also Horsey Estate Ltd v Steiger [1899] 2 QB 79 at 89 (CA) per Lord Russell CJ. See also Kumar v Dunning [1989] QB 193; Lang v Asemo Pty Ltd [1989] VR 773 (FC). Charles Frodsham & Co Ltd v Morris (1972) 229 EG 961. See also Re Hunter’s Lease [1942] Ch 124; Collison v Lettsom and Whitton (1815) 6 Taunt 224; 128 ER 1020 (CP). Discussed by Butt, “Son of Shevill” (2008) 82 ALJ 363; McGill, “Anti-​Shevill Clauses and Statutory Protection of Tenants from Forfeiture: What’s left After Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd?” (2009) 17 Australian Property L J 326.

718 [14.275]

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above); and secondly, that as a covenant by a tenant to pay rent touches and concerns the land, a covenant by a surety guaranteeing the performance of the tenant’s covenant must also touch and concern the land.339 The following covenants, inter alia, have also been held to touch and concern the rented premises: (a) covenants by the tenant to repair the premises,340 to pay rent,341 not to assign or sublet without the landlord’s prior consent,342 to insure the premises against fire,343 to use the premises as a private dwelling only,344 to sell fixtures,345 and not to advertise upon the rented premises;346 (b) covenants by the landlord not to serve a notice to quit in respect of a periodic lease for a period of three years,347 not to build on certain parts of neighbouring property,348 to renew the lease,349 to consent to the assignment of a lease,350 and to supply the rented premises with good water;351 (c) a covenant by a surety guaranteeing that a tenant’s covenants which touched and concerned the land would be performed and observed;352 and (d) an option to purchase the reversion.353 These covenants should be contrasted with the following covenants which, inter alia, have been held not to satisfy the touching and concerning test: (a) covenants by the tenant to pay rates assessed in respect of other property354 and to pay a sum of money not reserved as rent to a third party;355 (b) covenants by the landlord not to open another public house within half a mile of the demised premises,356 to pay the tenant a fixed sum of money at the end of the lease unless a renewal is offered and accepted,357 to purchase buildings erected by the tenant,358 and to repay a security deposit (even though the events to which it relates are contained in covenants which do touch and concern the land).359

339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359

This decision was applied on similar facts in Accordent Pty Ltd & Portellos v Breismark Nominees Pty Ltd (2008) 101 SASR 286; discussed by Butt in (2009) 83 ALJ 220. Williams v Earle (1868) LR 3 QB 739; Martyn v Clue (1852) 18 QB 661; 118 ER 249. Parker v Webb (1699) 3 Salk 5; 91 ER 656 (KB). Cohen v Popular Restaurants Ltd [1917] 1 KB 480; Goldstein v Sanders [1915] 1 Ch 549; McEachern v Colton [1902] AC 104 (PC). Vernon v Smith (1821) 5 B & Ald 1; 106 ER 1094 (KB). Wilkinson v Rogers (1864) 2 De GJ & S 62; 46 ER 298 (Ch). Malmsbury Confluence Gold Mining Co Ltd v Tucker (1877) 3 VLR (L) 213. White v Kenny [1920] VLR 290. Breams Property Investment Co Ltd v Stroulger [1948] 2 KB 1. Ricketts v Enfield Churchwardens [1909] 1 Ch 544. Weg Motors Ltd v Hales [1961] Ch 176; Muller v Trafford [1901] 1 Ch 54. Re Rakita’s Application [1971] Qd R 59. Jourdain v Wilson (1821) 4 B & Ad 266; 106 ER 935 (KB). P & A Swift Investments v Combined English Stores Group Plc [1989] AC 632; discussed in (1989) 63 ALJ 294. See also Coronation Street Industrial Properties Ltd v Ingall Industries Plc [1989] 1 WLR 304. Griddith v Pelton [1958] Ch 205; Price v Murray [1970] VR 782; Denham Bros Ltd v W Freestone Leasing Pty Ltd [2002] QSC 307. Gower v Postmaster-​General (1887) 57 LT 527. Mayho v Buckhurst (1617) Cro Jac 438; 79 ER 374 (KB); Flight v Glossopp (1835) 2 Bing NC 125; 132 ER 50 (CP). Thomas v Hayward (1869) LR 4 Ex 311. Re Hunter’s Lease [1942] Ch 124. Lee v Close (1870) 10 SCR (NSW) 86; Cheyne v Moses [1919] St R Qd 74 (FC). Hua Chiao Commercial Bank Ltd v Chiapua Industries Ltd [1987] AC 99 (PC). [14.275]  719

PART 4 Divided Ownership of Land

Ability to sue and liability to be sued General [14.280] Once the threshold test that the covenant must touch and concern the rented

premises is satisfied, the ability of an assignee to sue and liability to be sued for breach of covenant will depend on the detailed common law and statutory rules concerning the passing of the benefit and burden of leasehold covenants. The rules make a fundamental distinction between the situation an assignee of a tenant and that of an assignee of a landlord. Assignees from the tenant [14.285] The position of an assignee of the tenant is governed by common law. The rule,

stipulated originally in Spencer’s Case (1583) 5 Co Rep 16a; 77 ER 72 (KB), is that wherever a tenant assigns the tenant’s interest, the assignee will be able to sue the original landlord for breach of covenant provided that the covenant touches and concerns the land. There are no exceptions or qualifications to this rule. Similarly under by the rule in Spencer’s Case wherever a tenant assigns the tenant’s interest the original landlord will be able the assignee for breach of covenant provided that the covenant touches and concerns the land. However, liability as assignee is limited to breaches of covenant which occur while the possessory interest is vested in the assignee. Unlike the original tenant, who is liable for any breach occurring at any time during the lease, the assignee is not liable for breaches which occur before the assignment or after the assignee has reassigned the property to a third party.360 However, that in the case of continuing breaches, the assignee will be liable even though the breach first occurred before the original assignment.361 Furthermore, the assignee’s liability for a breach of covenant occurring during the entitlement to possession will continue even if the assignee later reassigns the property to a third party.362 Tichborne v Weir (1892) 67 LT 735 (CA) establishes the proposition that a squatter who extinguishes the tenant’s title by adverse possession is not classed as an assignee at common law due to the lack of a contractual relationship between the squatter and the tenant. For this reason, the landlord is unable to sue a squatter for damages for breach of the tenant’s covenants. The rule in Spencer’s Case originally only applied to covenants in esse, and not to covenants in posse. Covenants in esse were covenants relating to an object already in existence, such as a covenant to repair a house, whereas covenants in posse were covenants relating to an object not yet in existence, such as a covenant to build a house. This anomalous distinction has now been abolished by legislation in all jurisdictions except for general law land in South Australia,363 and the rule in Spencer’s Case is capable of applying to all types of covenants.

360 361 362 363

Renshaw v Maher [1907] VLR 520; Paul v Nurse (1828) 8 B & C 486; 108 ER 1123 (KB); Grescot v Green (1700) 1 Salk 199; 91 ER 179 (KB). Granada Theatres Ltd v Freehold Investment (Leytonstone) Ltd [1959] Ch 592; Rankin v Danby (1883) 9 VLR (L) 278. Valliant v Dodemede (1742) 2 Atk 546; 26 ER 728 (Ch). Conveyancing Act 1919 (NSW), s 70A; Property Law Act 1958 (Vic), s 79(1); Property Law Act 1974 (Qld), s 53(2A); Real Property Act 1886 (SA), s 151; Property Law Act 1969 (WA), s 48(2); Conveyancing and Law of Property Act 1884 (Tas), s 71A(2); Law of Property Act (NT), s 171. As the Real Property Act 1886 (SA) applies only to Torrens land, the distinction between covenants in posse and in esse appears still to apply in respect of general law land in South Australia.

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Assignees from the landlord [14.290]  The situation of an assignee from the landlord is covered by statute except in South

Australia. At common law, unlike in the situation where the tenant assigned his interest, the benefit and burden of a covenant did not pass to an assignee of the landlord. This situation was reversed in England by the Grantees of Reversions Act 1540 (Imp), which introduced in the present context a similar rule to that in Spencer’s Case (1583) 5 Co Rep 16a; 77 ER 72 (KB). In every jurisdiction except South Australia legislation has been introduced re-​enacting in modern form the terms of the 1540 statute. In relation to the passing of the benefit of a covenant with the landlord’s interest, the legislation is almost identical in each jurisdiction to s 141 of the Property Law Act 1958 (Vic) which reads:364

(1) Rent reserved by a lease, and the benefit of every covenant or provision therein contained,365 having reference to the subject-​matter thereof, and on the lessee’s part to be observed or performed, and every condition of re-​entry and other condition therein contained, shall be annexed and incident to and shall go with the reversionary estate in the land, or in any part thereof, immediately expectant on the term granted by the lease, notwithstanding severance of that reversionary estate, and without prejudice to any liability affecting a covenantor or his estate.



(2) Any such rent, covenant or provision shall be capable of being recovered, received, enforced and taken advantage of, by the person from time to time entitled, subject to the term, to the income of the whole or of any part as the case may require, of the land leased.



(3) Where that person becomes entitled by conveyance or otherwise, such rent, covenant or provision may be recovered, received, enforced or taken advantage of by him notwithstanding that he becomes so entitled after the condition of re-​entry or forfeiture has become enforceable, but this subsection shall not render enforceable any condition of re-​entry or other condition waived or released before such person becomes entitled as aforesaid.

With respect to the passing of the burden of a covenant to an assignee of the landlord, every jurisdiction except South Australia has also enacted legislation in almost identical terms to s 142 of the Property Law Act 1958 (Vic) which reads:366

(1) The obligation under a condition or of a covenant entered into by a lessor with reference to the subject-​matter of the lease shall, if and as far as the lessor has power to bind the reversionary estate immediately expectant on the term granted by the lease, be annexed and incident to and shall go with that reversionary estate, or the several parts thereof, notwithstanding severance of that reversionary estate, and may be taken advantage of and enforced by the person in whom the term is from time to time vested by conveyance, devolution in law, or otherwise; and, if and as far as the lessor has power to bind the person from time to time entitled to that reversionary estate, the obligation aforesaid may be taken advantage of and enforced against any person so entitled.

This subsection refers to covenants “having reference to the subject-​matter [of the lease]” and makes no reference to the need for the covenant to touch and concern the land. Although 364

365 366

Conveyancing Act 1919 (NSW), s 117; Property Law Act 1974 (Qld), s 117; Property Law Act 1958 (Vic), s 141; Property Law Act 1969 (WA), s 77; Conveyancing and Law of Property Act 1884 (Tas), s 10; Civil Law (Property) Act 2006 (ACT), s 400; Law of Property Act (NT), s 130. Cole v Kelly [1920] 2 KB 106 (CA) held that the phrase “therein contained” includes implied as well as express covenants. Conveyancing Act 1919 (NSW), s 118; Property Law Act 1958 (Vic), s 142; Property Law Act 1974 (Qld), s 118; Property Law Act 1969 (WA), s 78; Conveyancing and Law of Property Act 1884 (Tas), s 11; Civil Law (Property) Act 2006 (ACT), s 401; Law of Property Act (NT), s 131. For a detailed discussion of the New South Wales provision, see Heggies Bulkhaul v Global Minerals Australia [2003] NSWSC 851. [14.290]  721

PART 4 Divided Ownership of Land

there is authority that the statutory and common law expressions have a similar meaning,367 in Heggies Bulkhaul v Global Minerals Australia (2003) 59 NSWLR 312; [2003] NSWSC 851 Austin J stated (at [46]) that the statutory phrase is, at least potentially, less restricting. According to his Honour: The proper inquiry should be whether the covenant affects either the landlord qua landlord or the tenant qua tenant. A covenant may very well have reference to the land, but, unless it is reasonably incidental to the relation of landlord and tenant, it cannot be said to touch and concern the land so as to be capable of running therewith or with the reversion.

The New South Wales Court of Appeal has recently held in Waterhouse v Waugh [2003] NSWCA 139 that based on the phrase “the benefit of every covenant or provision contained therein”, the section only applies to leases in writing.368 The effect of this modern legislation is to extend its scope beyond leases created by deed under seal so as to include all types of leases valid at law, including oral periodic leases and oral leases for a term not exceeding three years.369 The position in relation to equitable leases is less certain. In South Australia, in the absence of State legislation, the terms of the Grantees of Reversions Act 1540 (Imp) continue to apply. Although the scope of this statute is limited to leases created by deed under seal, the requirement for a deed to be sealed has since been abolished by s 41(4) of the Law of Property Act 1936 (SA). Despite this reform, however, a written deed is still required,370 and it appears that the benefit of the tenant’s covenants will not pass with the landlord’s reversionary interest in respect of oral periodic leases or oral leases for a fixed period not exceeding three years. Once a landlord assigns the reversion, it has been held that the original landlord is henceforth unable to sue the original tenant for past breaches of covenant. The right to sue vests solely in the assignee from the landlord, regardless of whether the breach is a continuing breach and regardless of whether the breach occurred prior to the assignment.371 This conclusion was reached by virtue of the use by the legislatures of the words “go with” in addition to “shall be annexed and incident to”. The only exception to this is where the landlord expressly reserves the right to sue for past breaches of covenant in the deed of assignment.372 Prior to modern legislative changes, under the Grantees of Reversions Act 1540 (Imp), it was not possible for the assignee of part only of the landlord’s reversion to enforce a covenant agreed to between the landlord and the tenant. This limitation has now been rectified by legislation in all States (including South Australia) apportioning any conditions in the case of a part assignment of the landlord’s interest. In the case of part assignment, where the lease contains a right of entry, the legislation also allows the assignee to exercise the right against the tenant in respect of that part of the land assigned to him, but where this occurs the

367 368

Davis v Town Properties Investment Corporation Ltd [1903] 1 Ch 797 (CA). See also Blane v Francis [1917] 1 KB 252 (CA). Note, however, that the section has been held to apply to leases evidenced only by an exchange of correspondence (Cole v Kelly [1920] KB 106 (CA)) and where the only note or memorandum in writing was that signed by the landlord: Rye v Purcell [1926] 1 KB 446. 369 The scope of the 1540 statute did not extend to oral leases: Blane v Francis [1917] 1 KB 252 (CA). 70 Blane v Francis [1917] 1 KB 252 (CA). 3 71 London & County (A & D) Ltd v Wilfred Sportsman Ltd [1971] Ch 764 (CA); Re King [1963] Ch 459 (CA); 3 Ashmore Developments Pty Ltd v Eaton [1992] 2 Qd R 1 (FC). 72 Re King [1963] Ch 459 (CA). 3 722 [14.290]

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legislation also gives the tenant the right within one month to determine the lease in regard to the rest of the land by giving the owner of the reversionary estate a counter-​notice expiring at the same time as the original notice.373 Lack of formalities [14.295]  The analysis to this point assumes that all dealings are effective at law. The analysis

has to be reconsidered in two situations; first, where the original lease is valid only in equity rather than in law; and, secondly, where, although the original lease is valid, the assignment is only effective in equity. Neither of these cases will have any bearing on the liability of the original contracting parties. Each party may sue and be sued by the other throughout the term of the lease for breach of covenant based on the principle of privity of contract.374 The result in situations of assignments by the landlord would also appear to be unaffected by either of these cases. The State and Territory legislation cited at [14.290] refers to “leases”. It appears to be beyond doubt that “leases” in this context includes equitable leases. This conclusion is reached by virtue of other sections in the same statutes in each jurisdiction although the legislation varies from jurisdiction to jurisdiction. In Victoria, for example, the Property Law Act 1958 (Vic) states that “ ‘lease’ includes so far as circumstances will admit any instrument of letting whether under seal or not”.375 [14.300] The situation of assignees from the tenant remains for consideration. Where the

original lease is equitable, or where the original lease is legal but the assignment is equitable, no privity of estate is created between the assignee and the original contracting party as privity of estate is a common law concept.376 In these circumstances the operative rule is the contractual principle that the benefit of a covenant can be assigned, but not the burden.377 Thus, it appears that an equitable assignee of the tenant’s interest would be able to sue the landlord for a breach of any of the landlord’s covenants. However, a landlord would not be able to enforce the burden of any of the covenants in the original lease against an assignee of the tenant. Authority for this latter proposition is Purchase v Lichfield Brewery Co [1915] 1 KB 184,378 where after an assignment of the term of the lease it was held that the assignee was not liable to the landlord for breach of the covenant to pay rent contained in the original lease.379 373

Conveyancing Act 1919 (NSW), s 119; Property Law Act 1958 (Vic), s 140; Property Law Act 1974 (Qld), s 116; Landlord and Tenant Act 1936 (SA), s 50; Property Law Act 1969 (WA), s 76; Conveyancing and Law of Property Act 1884 (Tas), s 12; Civil Law (Property) Act 2006 (ACT), s 422; Law of Property Act (NT), s 129. See Nevill Long & Co (Boards) Ltd v Firmenich & Co (1981) 261 EG 461; Jelley v Buckman [1974] QB 488 (CA). 374 Because the parties have made a contract with one another, normal contractual principles apply. 75 Property Law Act 1958 (Vic), ss 136, 154. For the interrelationship of these sections, see Thomson v Cross 3 [1954] VLR 635. Compare Conveyancing Act 1919 (NSW), s 128; Property Law Act 1974 (Qld), s 123; Property Law Act 1969 (WA), s 81(5); Law of Property Act (NT), s 136(2). There is no equivalent legislation in the remaining jurisdictions. 76 Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11. 3 377 See Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), Ch 8. 78 See also Elliott v Johnson (1866) LR 2 QB 120; The Marquis Camden v Batterbury (1860) 7 CB (NS) 864; 141 3 ER 1055 (CP). 379 Denning LJ argued in Boyer v Warbey [1953] 1 QB 234 (CA) that since the fusion of law and equity an equitable assignee can be sued. Romer LJ concurred on this point: at 247. The argument does seem an expansive view of the effect of the Judicature Acts. [14.300]  723

PART 4 Divided Ownership of Land

It has been argued that the entry into possession and payment of rent by the assignee may be sufficient to give rise to the implied creation of a periodic tenancy between the landlord and the assignee on the same terms as the lease between the landlord and the tenant.380 If this is correct, the landlord would be able to enforce the covenants against the assignee on the principle of privity of contract. The validity of these arguments has yet to be fully explored or finally resolved in Australia. In the meantime, the more likely conclusion is that an assignee of the tenant where the original lease is equitable or where the original lease is legal but the assignment is equitable cannot be sued by the landlord for breach of covenant. If this is correct, it exposes a serious deficiency in the law. The covenant which the landlord would most commonly wish to enforce against the tenant’s assignee would be the covenant to pay rent. While the covenant itself appears not to be capable of enforcement against the assignee, the assignee would presumably be liable for an action for use and occupation as soon as the assignee takes possession on the basis of enjoyment of possession. Thus, any hardship to the landlord based on the rule in Purchase v Lichfield Brewery Co [1915] 1 KB 184 would be alleviated in these circumstances. Indemnity by assignees [14.305]  At common law where a tenant assigns the tenant’s interest and the assignee breaches

any of the covenants in the lease, the landlord may sue either the tenant or the assignee for damages. Although the landlord has an unfettered discretion as to which party to sue, the primary debtor is the assignee as the right of exclusive possession is vested in the assignee at the time of the breach of covenant.381 If the tenant is sued by the landlord, at common law to a quasi-​contractual action is given to the tenant for reimbursement against the assignee.382 In the event that the assignee reassigned, the quasi-​contractual action would lie on behalf of the tenant directly against the second assignee. However, if the assignee sublet the premises, the quasi-​contractual claim would not lie against the subtenant but against the assignee, In these circumstances the question whether the assignee also has a right of reimbursement will depend on the terms of the sublease.383 As an alternative to this quasi-​contractual action, the tenant may claim reimbursement from his or her assignee under a covenant to indemnify contained in the deed of assignment. An express covenant of this nature will usually be included in deeds of assignment. If no such covenant is expressed, in Victoria, South Australia and Western Australia it will be implied by legislation.384 In Victoria the legislation states that the covenant shall be in the following terms:385 That the assignees or the persons deriving title under them, will at all times, from the date of the conveyance or other date therein stated, duly pay all rent becoming due under the lease creating

380

381 382 383 384 385

See Buckworth v Simpson and Benner (1835) 1 Cr M & R 834; 149 ER 1317 (Exch); Birch v Wright (1786) 1 TR 378; and the discussion in Smith, The Running of Covenants in Equitable Leases and Equitable Assignments of Legal Leases (1978) 37 CLJ 98 at 105ff. Moule v Garrett (1872) LR 7 Ex 101; Humble v Langston (1841) 7 M & W 517; 151 ER 871 (Exch). See, for example, Wolveridge v Steward (1833) 1 Cr & M 644; 149 ER 557 (Exch Ch); Murphy v Harris [1924] QSR 187; Teparyl Pty Ltd v Willis [2009] VSC 259. Bonner v Tottenham & Edmonton Permanent Investment Building Society [1899] 1 QB 161 (CA). Property Law Act 1958 (Vic), s 77(1)(c); Real Property Act 1886 (SA), s 152; Transfer of Land Act 1893 (WA), s 95. See Johnsey Estates Ltd v Lewis and Manley (Engineering) Ltd (1987) 54 P & CR 296 (CA). Property Law Act 1958 (Vic), Pt IX of Fourth Schedule.

724 [14.305]

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the term or interest for which the land is conveyed, and observe and perform all the covenants, agreements and conditions therein contained and thenceforth on the part of the lessees to be observed and performed: And also will at all times, from the date aforesaid, save harmless and keep indemnified the conveying parties and their estates and effects, from and against all proceedings, costs, claims and expenses on account of any omission to pay the said rent or any breach of any of the said covenants, agreements and conditions.

Where there have been multiple assignments of the term by, the statutory covenants enable joinder as a party to the action. Indemnity will be awarded against the assignee who was entitled to possession at the time when the breach of covenant occurred.

DETERMINATION OF LEASES BY FORFEITURE The nature of the right of forfeiture [14.310]  A right of forfeiture is the right of a landlord in certain circumstances to terminate

a lease on the ground that the tenant or his or her assignee has committed a breach of one or more of the terms of the lease. In the absence of an express provision in the lease, there is a right at common law to forfeit the lease where the tenant breaches one of its express or implied conditions.386 However, in relation to covenants, at common law there is no such right of forfeiture. The only remedy for the landlord in these circumstances is an action for damages and/​or an injunction.387 This common law rule is subject to two exceptions. First, a right of re-​entry for breach of covenant will be implied by equity in agreements for a lease, although only in respect of the non-​ payment of rent.388 Secondly, statute law has since intervened and has partially redressed the situation at common law.389 These reforms have no application to general law land in Victoria, South Australia, Western Australia and Tasmania. Because of the absence of an automatic right of forfeiture in all cases for breach of covenant, most fixed-​term leases contain an express forfeiture clause, sometimes referred to as a proviso for re-​entry. One commonly found illustration is as follows: If the tenant shall commit a breach of or fail to observe and/​or perform any of the conditions or agreements contained or implied in this agreement or fail to pay the rent herein reserved as herein provided whether formally demanded or not notwithstanding the waiver of any previous breach the landlord and/​or his agent may re-​enter upon the said premises or any part thereof (and for such purpose may break open any inner or outer door or windows without thereby becoming liable for damage trespass assault or otherwise) and expel and remove all persons therefrom and to put an end to this tenancy agreement and in the latter case this agreement may be produced by the landlord or his agent to any person on the premises as a notice to quit duly given and expired. 386

387 388 389

Doe d Lockwood v Clarke and Brown (1807) 8 East 185; 103 ER 313 (KB). Modern cases refer to the distinction between essential and non-​essential terms of a contract: see, for example, Associated Newspapers Ltd v Bancks (1951) 83 CLR 322. Bashir v Commissioner of Lands [1960] AC 44 (PC); Whall v Bulman [1953] 2 QB 198 (CA); Sanders v Wadham (1870) 4 SALR 73. Re Brain (1874) LR 18 Eq 389. See Conveyancing Act 1919 (NSW), ss 74, 84, 85; Transfer of Land Act 1958 (Vic), ss 67, 112; Property Law Act 1974 (Qld), ss 105–​107; Real Property Act 1886 (SA), ss 124, 125, 262; Transfer of Land Act 1893 (WA), ss 92, 93, 131; Land Titles Act 1980 (Tas), ss 57, 66, 67; Land Titles Act 1925 (ACT), ss 112, 119–​120; Law of Property Act (NT), ss 117–​119, 121. [14.310]  725

PART 4 Divided Ownership of Land

Such a clause is occasionally also found in periodic leases, where it has a similar effect.390 The reason why it is used less commonly in respect of periodic leases is that it is usually much simpler and quicker for a landlord to terminate a periodic lease by giving a notice to quit than to rely on forfeiture. The only exception to this is in respect of yearly periodic leases which require a minimum of six months’ notice.391 Forfeiture clauses, however drafted, will be treated as valid provided that they are couched in clear and unambiguous terms.392 The clause will be construed strictly at common law393 and no forfeiture will arise unless the terms of the clause are complied with fully.394 [14.315] The effect of a forfeiture clause is to render the lease voidable, not void, when a

breach of the lease occurs.395 Thus, the lease remains in effect even after the breach until the landlord exercises his or her right of re-​entry.396 The lease will be treated as voidable even if the forfeiture clause states that the lease shall be void as soon as the breach occurs.397 Where a breach occurs and the landlord decides to exercise the right of re-​entry, the lease terminates at the time when the landlord unequivocally decides to forfeit the lease. Henceforth, the tenant is regarded at law as a trespasser and is liable to mesne profits, rather than rent.398 Where the landlord becomes entitled to a right of re-​entry, he or she has the right at common law either to exercise a right of peaceful re-​entry or to commence an action for possession. In the latter case, re-​entry will not occur until the writ is both issued and served. Rent may be claimed up to and including the date of service.399 The right of peaceful re-​entry has been abolished in respect of residential premises in all jurisdictions except Tasmania,400 but (except in the Northern Territory) remains available in respect of all other leases.401 This right entitles the landlord to use self-​help to expel a tenant, rather than to invoke a remedy from the courts. Pursuant to this right, the landlord may use as much force as is reasonably necessary in order to remove the tenant and his or her goods from the rented premises, and in so doing the landlord is protected from liability for trespass and/​or assault. The major authority on this issue is Hemmings v Stoke Poges Golf Club [1920] 1 KB 720.402 In this case the plaintiff was formerly an employee of the defendant. When the 90 See, for example, Maley v Fearn (1947) 176 LT 203 (CA). 3 391 Sidebotham v Holland [1895] 1 QB 378 (CA); Landale v Menzies (1909) 9 CLR 89 at 101. 392 See Richard Clarke & Co Ltd v Widnall (1976) 33 P & CR 339 (CA) concerning the absence of any formal requirements as to the drafting of a forfeiture clause. 393 Doe d Lloyd v Powell (1826) 5 B & C 308; 108 ER 115; Doe d Abby v Stevens (1823) 3 B & Ad 299; 110 ER 112. 394 Hamilton v Warne (1907) 4 CLR 1293. 395 Massart v Blight (1951) 82 CLR 423; MacIntosh v Bebarfalds Ltd (1922) 22 SR (NSW) 371; Quesnel Forks Gold Mining Co Ltd v Ward [1920] AC 222 (PC). 396 Global College Pty Ltd v Sooncorp Holdings Pty Ltd [2008] NSWSC 750. 397 Roberts v Davey (1833) 4 B & Ad 664; 110 ER 606 (KB); Davenport v The Queen (1877) 3 App Cas 115 (PC). 398 Wilson v Kelly [1957] VR 147; Elliott v Boynton [1924] 1 Ch 236 (CA); Islam v South Sydney City Council (1999) NSW ConvR 56,930. 399 Canas Property Co Ltd v K L Television Services Ltd [1970] 2 QB 433 (CA). 400 Landlord and Tenant Act 1899 (NSW), s 2AA; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 277; Residential Tenancies Act 1995 (SA), s 95; Residential Tenancies Act 1987 (WA), s 80; Residential Tenancies Act 1997 (ACT), s 37; Residential Tenancies Act (NT), s 106. 401 Section 137(1) of the Law of Property Act (NT) states that no right of entry can be exercised without a court order or unless the tenant abandons or voluntarily gives up possession of the premises. 402 See also Housing Commission (NSW) v Allen [1967] 1 NSWR 776 (CA); Aglionby v Cohen [1955] 1 All ER 785. 726 [14.315]

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plaintiff resigned, his licence to occupy a cottage on the defendant’s property was determined. On the refusal of the plaintiff to vacate the cottage, the defendant’s agent, accompanied by several men, gently pushed the plaintiff from the cottage and carried his wife outside. The agent also removed the plaintiff’s furniture and stored it in the adjoining garage. The plaintiff unsuccessfully claimed damages for trespass and assault. The Court of Appeal upheld the existence of the right of peaceful re-​entry and held on the facts that no more force had been used than was reasonably necessary to expel the plaintiff from the premises. The right of peaceful re-​entry is seldom invoked in modern times. It has been described by Lord  Templeman in Billson v Residential Apartments Ltd [1992] 1 AC 494 (HL) as “a dubious and dangerous method of determining a lease”.403 A landlord, by exercising such a right, although immune from civil liability for damages provided that excessive force is not used, may incur criminal liability for a breach of the peace. The legislation is similar between the jurisdictions and is based on the Statute of Forcible Entry 1381 (Imp). For example, s  9(1)(g) of the Summary Offences Act 1966 (Vic) states:404 “Any person who … without lawful excuse, enters any place (whether private or public) in a manner likely to cause a breach of the peace or reasonable apprehension of a breach of the peace  –​shall be guilty of an offence”. A  maximum penalty of 25 penalty units or imprisonment for six months is prescribed. Lord Denning MR stated in McPhail v Persons, Names Unknown [1973] Ch 447 at 459 (CA)405 that a landlord would always incur criminal liability under the Statute of Forcible Entry 1381, however the right of peaceful re-​entry was effected and regardless of the degree of force used. If a landlord institutes an action for possession, he or she may not later curtail the proceedings by exercising a right of peaceful re-​entry. This proposition emerges from Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377. In this case Needham J stated that where a landlord has taken proceedings to establish the right to possession, he or she is not entitled, before the right has been upheld in the proceedings, to exercise a right of peaceful re-​entry at common law, which depends for its existence upon an affirmative answer to the question whether the former tenant’s right to possession has been determined. In so concluding, his Honour distinguished earlier cases where a right of peaceful re-​entry was held to be lawful where the landlord’s right of possession had been proven and a warrant for possession had already been obtained. Waiver [14.320]  As a breach of a covenant entitling the landlord to exercise a right of forfeiture will

render the lease voidable rather than void, it follows that the landlord has a right of election406 in each case whether to exercise the right of re-​entry. The election does not have to comply with any formalities; it can be oral or in writing.407 If the landlord elects not to enforce the

403 404

Compare Kataria v Safeland PLC [1998] 05 EG 155 (CA). See also Summary Offences Act 1953 (SA), s 17D. In New South Wales the 1381 UK Act is expressly preserved by s 18 of the Imperial Acts Application Act 1969 (NSW). 405 See also R v Robinson [1971] 1 QB 156 (CA). 406 For recent general discussions of the operation of waiver in the context of leases, see Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55 at [147]ff; Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 at [359]ff. 07 Brikom Investments Ltd v Carr [1979] QB 467 (CA). 4 [14.320]  727

PART 4 Divided Ownership of Land

right, he or she is said to have waived the breach. It is not the tenant’s breach that is being waived, but rather the landlord’s right to forfeit the lease and re-​enter the premises.408 At common law, under the rule in Dumpor’s Case (1601) 4 Co Rep 119b; 76 ER 1110 (KB), a waiver by the landlord of one breach amounted by operation of law to a general waiver of all breaches. However, legislation in modern times has since abrogated this rule and any waiver nowadays applies only to the particular breach.409 A waiver may be made expressly. More commonly, however, it will be implied. Implied waiver has been held to arise where the landlord becomes aware of a breach of covenant entitling him or her to forfeit the lease and where he or she does an unequivocal act recognising the continuance of the relationship of landlord and tenant.410 What is required is knowledge of the essential facts constituting the breach.411 As stated by Stephen J in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 642:  “For the doctrine to operate there must be both an element of knowledge on the part of the [landlord] and words or conduct sufficient to amount to the making of an election as between the two inconsistent rights [forfeiting and not forfeiting] which he possesses”. The acts of the landlord are not relevant for determining whether waiver has occurred until the landlord becomes aware of the breach, even if this knowledge of the breach does not arise for a long period after the actual breach.412 When determining whether on the facts the landlord has waived the right of forfeiture, the courts lean in favour of the conclusion that waiver has occurred. This is because forfeiture is regarded at common law as stricti juris.413 A well-​known illustration of this point is Moore v Ullcoats Mining Co Ltd [1908] 1 Ch 575. This case concerned a fixed-​term lease of certain iron ore mines. The lease contained a covenant by the tenant to allow the landlord and his agents to inspect the mines at all reasonable times, and a proviso for re-​entry in the usual form. The successors-​in-​title of the lessor were refused permission to inspect the mines, whereupon they issued a detailed writ claiming, inter alia, possession, mesne profits and damages. In addition, claim 4 in the writ sought an order permitting inspection of the mines. The inclusion of this clause was held to constitute an equivocal rather than an unequivocal demand for possession. Warrington J stated (at 585): I think the real question that I  have to consider is whether this writ is in such a form that it would not have been open to the plaintiffs thereafter, if they had considered that their most convenient course, to ask for relief on the footing of the lease being in existence, and to abandon their claim for possession. I think I am bound to come to the conclusion that this writ was equivocal … It seems to me, therefore, that the writ was not an unequivocal demand for possession. I think the writ was so framed that it might have been possible for the plaintiffs, if they had been so minded, to say: “We will go for the other relief expressed in the writ; we will not go for possession”: in other words, I think that the claim for possession and the claim

408 409

410 411 412 413

McDrury v Luporini [2000] 1 NZLR 652 at 664 (CA). Conveyancing Act 1919 (NSW), ss 120, 123; Property Law Act 1974 (Qld), s 119; Landlord and Tenant Act 1936 (SA), s 47; Property Law Act 1958 (Vic), ss 143, 148; Property Law Act 1969 (WA), ss 73, 79; Conveyancing and Law of Property Act 1884 (Tas), s 16; Civil Law (Property) Act 2006 (ACT), s 423; Law of Property Act (NT), ss  132–​133. Matthews v Smallwood [1910] 1 Ch 777; Fuller’s Theatre & Vaudeville Co Ltd v Rofe [1923] AC 435 (PC); Davenport v Smith [1921] 2 Ch 270. McDrury v Luporini [2000] 1 NZLR 652 at 656 (CA). Endeavour Lodge Motel Ltd v Langford [1998] 2 NZLR 121. Doe d Lloyd v Powell (1826) 5 B & C 308; 108 ER 115.

728 [14.320]

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for an injunction and for the order expressed in claim 4 are inconsistent, and therefore the plaintiffs cannot obtain possession in this present action.

This strict approach appears to have been slightly relaxed in recent cases. The New Zealand Court of Appeal held in McDrury v Luporini [2000] 1 NZLR 652 that, after becoming aware of a breach, landlords are entitled to a reasonable time to assess their options, and that the mere acceptance of rent during this period does not necessarily constitute waiver. Once the landlord has unequivocally treated the lease as forfeited, no subsequent act will take away from the conclusion of a waiver. Thus, for example, in NGL Properties Pty Ltd v Harlington Pty Ltd [1979] VR 92414 the lease was held to be forfeited once the landlord had issued and served a writ of possession; the fact that the landlord later discontinued the action was held to be irrelevant. [14.325] There are many authorities on the issue as to what constitutes waiver. Delay has

been held not to constitute a waiver,415 nor does mere inaction on the part of the landlord416 or the service of a notice under s 146(1) of the Property Law Act 1958 (Vic) (and its equivalent in the other jurisdictions).417 On the other hand, waiver has been held to occur where the landlord executes a lease with knowledge that previous breaches have occurred,418 where the landlord describes the lessee as his or her tenant,419 if the landlord issues and serves a notice to quit,420 or if the landlord institutes any legal proceedings which imply that the lease has not been determined.421 The most common example of implied waiver is where the landlord accepts or demands rent after he or she has knowledge of a breach of covenant entitling him or her to forfeiture.422 Waiver will occur by operation of law in this latter situation even if the rent is accepted or demanded without prejudice423 or if the demand and acceptance occurred as a result of a clerical mistake.424 In the case of rent payable in advance, however, the receipt of such payment has been held not to deprive the landlord of the right to forfeit the lease if a right of forfeiture later arises during the period for which payment has been made.425 Further exceptions are where the landlord has already issued and served on the tenant a writ or

414 415 416 417 418 419 420 421 422

423 424 425

See also Civil Service Co-​operative Society Ltd v McGrigor’s Trustee [1923] 2 Ch 347. Selwyn v Garfit (1888) 38 Ch D 273 (CA). Perry v Davis (1858) 3 CB (NS) 769; 140 ER 945 (CP). The legislation is set out at [14.340]. See also Church Commissioners for England v Nodjoumi (1986) 51 P & CR 155. Carson v Wood (1884) 10 VLR (L) 223. Green’s Case (1582) Cro Eliz 3; 78 ER 269 (KB). Doe d Nash v Birch (1826) 1 M & W 402; 150 ER 490 (Exch). Evans v Davis (1878) 10 Ch D 747. Gumland Property Holding Pty Ltd v Duffy Bros Fruit Markets (Campbelltown) Pty Ltd [2006] NSWSC 10 at [101]ff; Spathis v Hanave Investment Co Pty Ltd [2002] NSWSC 304 at [118]; Owendale Pty Ltd v Anthony (1967) 117 CLR 539 at 556; Segal Securities Ltd v Thoseby [1963] 1 QB 887; M’Goun v Smith (1886) 12 VLR 244. Compare Chrisdell Ltd v Johnson (1987) 283 EG 1553 (CA). See also Wilkinson, “Acceptance of Rent as Surrender” (1988) 138 NLJ 95. Spathis v Hanave Investment Co Pty Ltd [2002] NSWSC 304 at [118]; Oak Property Co Ltd v Chapman [1947] KB 886 (CA); Davenport v The Queen (1877) 3 App Cas 115 (PC). Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 (CA). Toogood v Mills (1896) 23 VLR 106. [14.325]  729

PART 4 Divided Ownership of Land

summons for possession426 and where the landlord has merely given the tenant a statement of the amount of rent owing.427 The parties may agree that the demand and acceptance of rent shall not constitute a waiver; where this occurs, waiver will not occur automatically by operation of law but may still be held to have occurred on the facts at bar.428 In the case of continuing breaches of covenant, waiver only applies to past acts of the tenant and those occurring during the period of time in which the landlord knew that the breaches would continue.429 Any breaches which occur after this time will lead to a further right of forfeiture. In recent cases it has been decided that waiver will occur where rent is demanded and accepted by the landlord’s agent,430 even if the landlord instructed the agent not to do so431 and even if the landlord was unaware that a breach of covenant giving rise to a right of forfeiture had occurred.432 In these circumstances, the landlord would have a remedy in negligence against the agent. Finally, it should be noted that the issue whether the landlord has waived the right of forfeiture in any particular situation does not affect the right of the landlord in all cases to sue for damages for breach of covenant.433 Forfeiture for breach of the covenant to pay rent [14.330]  A proviso for re-​entry in the event of the failure of the tenant to pay rent is expressly

included in most leases. If such a clause is not included, no right of forfeiture arises except in the case of agreements for a lease and where the statutory implied covenant provided in s 84(1)(d) of the Conveyancing Act 1919 (NSW) or its equivalents applies.434 At common law, a right of re-​entry cannot be exercised unless the landlord first makes a formal demand for the rent.435 Under this doctrine,436 “the landlord or his authorised agent must demand the exact sum due on the day when it falls due at such convenient hour before sunset as will give time to count out the money, the demand being made upon the demised premises and continuing until sunset”. This common law rule has been modified by statute throughout Australia,\ as most jurisdictions have introduced legislation stipulating that re-​entry may be effected without

426

Civil Service Co-​operative Society Ltd v McGrigor’s Trustee [1923] 2 Ch 347; Grimwood v Moss (1872) LR 7 CP 360; Lidsdale Nominees Pty Ltd v Elkharadly [1979] VR 84. 427 Inner City Businessmen’s Club Ltd v James Kirkpatrick Ltd [1975] 1 NZLR 636. 428 Owendale Pty Ltd v Anthony (1967) 117 CLR 539. 429 Segal Securities Ltd v Thoseby [1963] 1 QB 887. 430 Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWLR 377. 431 Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 (CA). 432 David Blackstone Ltd v Burnetts (West End) Ltd [1973] 1 WLR 1487. 433 Wilson v Stewart (1889) 15 VLR 781 (FC). 434 Conveyancing Act 1919 (NSW), s 84(1)(a); Transfer of Land Act 1958 (Vic), s 67(1)(a); Property Law Act 1974 (Qld), s 105(1)(a); Real Property Act 1886 (SA), s 124(1); Transfer of Land Act 1893 (WA), s 92(i); Land Titles Act 1980 (Tas), s 66; Land Titles Act 1925 (ACT), s 119(a); Law of Property Act (NT), s 117(1). The legislation is discussed at [14.165]. 435 Gallic Pty Ltd v Cynayne Pty Ltd (1986) 83 FLR 31 (NTSC); Hill v Kempshall (1849) 7 CB 975; 137 ER 386. For an illustration of a defective demand, see Glentham Pty Ltd v Luxer Holdings Pty Ltd [2002] WASC 80. 436 Bridge, Cookee and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 20193) at [17–​029]; referring to 1 Wms Saund (1871), pp 434ff, being notes to Duppa v Mayo (1669). See also Gleeson v Richey [1959] VR 258; Lo Giudice v Biviano (No 1) [1962] VR 412. 730 [14.330]

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formal demand where one half-​year’s rent is in arrears.437 In New South Wales and Queensland no demand is necessary where the rent is more than one month in arrears.438 In practice, the doctrine is of little relevance as most forms of lease exempt its operation by including the words “whether formally demanded or not” in the proviso for re-​entry. Provided that the formal demand requirement is satisfied, a right of forfeiture for non-​ payment of rent may be exercised in all cases where it is available by law or where a proviso for re-​entry exists. It has been held that the right may be exercised where the non-​payment of rent is due to the tenant’s bankruptcy.439 Once the landlord has exercised the right of re-​entry, the tenant will remain liable for any accrued rent owed prior to the forfeiture. This rule applies regardless of the working of the forfeiture clause.440

Relief against forfeiture [14.335]  Even though a landlord is entitled to forfeiture or has exercised the right of forfeiture,

in certain circumstances the tenant may claim relief against forfeiture. If relief is granted, the landlord will be restrained from regaining possession; if the landlord has already regained possession, the tenant may be reinstated into the premises. Relief in this context was originally the prerogative of equity. The Court of Chancery regarded a forfeiture clause as security for the payment of rent and would usually grant relief against forfeiture wherever the landlord received accrued arrears and costs prior to the making of an order for possession.441 As stated by Jenkins LJ in Gill v Lewis [1956] 2 QB 1 at 13 (CA): [S]‌ave in exceptional circumstances, the function of the court in exercising this equitable jurisdiction is to grant relief when all that is due for rent and costs has been paid up, and (in general) to disregard any other causes of complaint that the landlord may have against the tenant. The question is whether provided all is paid up, the landlord will not have been fully compensated; and the view taken by the court is that if he gets the whole of his rent and costs, then he has got all he is entitled to so far as rent is concerned, and extraneous matters of breach of covenant, and so forth, are, generally speaking, irrelevant.

The purpose of the discretionary power is to prevent a landlord taking advantage of a breach by which he or she is not commensurately or irrevocably damaged.442 The equitable rules in relation to relief against forfeiture have been held not to apply to retail tenancies leases.443 The equitable rules have now been consolidated into legislation in each Australian jurisdiction.444 This legislation varies slightly between the jurisdictions. Where the tenant pays all arrears of rent and costs into court or to the landlord at any time before the

437 438 439 440 441

442 443 444

Landlord and Tenant Act 1899 (NSW), s 8; Supreme Court Act 1986 (Vic), s 79; Landlord and Tenant Act 1936 (SA), s 4. Compare Supreme Court Civil Procedure Act 1932 (Tas), s 11(14). Conveyancing Act 1919 (NSW), ss 85(1)(d), 85(2); Property Law Act 1974 (Qld), s 107(d). Ezekiel v Orakpo [1976] 3 All ER 659. See Hartshorne v Watson (1838) 4 Bing NC 178; 132 ER 756 (KB). See Chandless-​Chandless v Nicholson [1942] 2 KB 321 at 323 (CA); Jam Factory Pty Ltd v Sunny Paradise Pty Ltd [1989] VR 584 at 590; Symmons Plains Pastoral Holdings Pty Ltd v Tasmanian Motor Racing Co Pty Ltd (1996) 6 Tas R 284 at 289; Dee Tech Pty Ltd v Neddam Holdings Pty Ltd (No 2) [2009] NSWSC 1355 at [125]. Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 at [34]. ABC Developmental Learning Centres Pty Ltd v BM Childrens Services Pty Ltd [2010] VSC 262; see further Xiao v Perpetual Trustee Co Ltd [2008] VSC 412. Landlord and Tenant Act 1899 (NSW), ss 8–​10; Conveyancing Act 1919 (NSW), ss 128–​131; Supreme Court Act 1986 (Vic), ss 79, 80, 85; Property Law Act 1958 (Vic), ss 146–​147; Property Law Act 1974 (Qld), ss 123–​ 128; Landlord and Tenant Act 1936 (SA), ss 4, 5, 7, 9; Law of Property Act (NT), ss 136–​143. [14.335]  731

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hearing for the recovery of possession, all further proceedings in the action shall cease. This is a mandatory provision and is not subject to the court’s discretion. If the tenant does not pay all rent arrears and costs prior to the hearing, the legislation gives the court a discretion to grant relief on equitable grounds to the tenant within six months after the judgment of the court is executed.445 After the six-​month period, relief may not be granted in any circumstances.446 Where the court is granted a discretion in this matter, it is usually exercised in the tenant’s favour, provided that the tenant pays the outstanding rent, plus interest and costs.447 Relief against forfeiture may occur in relation to performance of obligations other than payment of rent, particularly in relation to repairs and maintenance. In Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd [2002] WASC 54, the court found that the tenant had breached obligations under the lease in failing to maintain the premises in good order and repair and failing to conduct the business on the premises with due diligence. Entitlement to forfeiture was thus established. The court found, however, that it had a broad discretion to grant relief against forfeiture having regard to the conduct of the parties and other circumstances. Relief would normally be granted where a breach had been remedied and any financial loss made good. The breaches involved were not trivial, though not of the first order of seriousness. The breaches were not of a systematic failure but rather from human error. Forfeiture would cause significant financial detriment to the tenant. The tenant wished to continue to operate the business and the judge found the tenant had the capacity to run the business profitably. Relief against forfeiture was granted. Relief against forfeiture is discretionary and the court has to balance all relevant factors. The position is best summarised by Ann Lyons J in the Queensland Court of Appeal in Meridian Airlie Beach Pty Ltd v Karamist Pty Ltd [2015] QCA 192 at [45]. I consider that there was a clear acknowledgement of the discretionary nature of the relief and that Karamist needed to establish that the arrears of rent had been paid and there were no third party interests. It was clear that his Honour was balancing the factors that go into the discretion. He indicated that he was not satisfied that the default was wilful in that it was deliberate. His Honour was also satisfied that the evidence indicated that the loss of liquidity was temporary and that Mr Barrett took steps to put Karamist in funds to meet its obligation to Meridien. Furthermore, the reasons made it clear that the primary judge considered it was unlikely that there would be any further breaches in the future, given all the rent under the subleases had in fact been paid and the only future obligation related to future outgoings and a significant amount of $80,000 was put into escrow. That aspect was also the subject of significant analysis by the primary judge during submissions. [14.336]  Applying normal equitable principles, relief against forfeiture may be denied. Relief has been denied where breach has been deliberate or remedy of the breach is unlikely. Past instances have occurred where the six-​month period after re-​entry has almost expired and the landlord had agreed to let the premises to a third party,448 where the tenant was shown to

445 At equity, prior to the legislation, there was no six-​month limitation: Bowser v Colby (1841) 1 Hare 109; 66 ER 969 (V-​C). 446 See Dennis and Copley v Eddie [1952] VLR 92. 447 Water Wine and Juice Pty Ltd v Konstantopoulos [2010] NSWSC 312; Constantine v Sanders [2007] NSWSC 250; Kelly v Alternative Web Pty Ltd [2010] SASC 4; Wynsix Hotels (Oxford St) Pty Ltd v Toomey [2004] NSWSC 236; Jam Factory Pty Ltd v Sunny Paradise Pty Ltd [1989] VR 584; Merhi v New Quay Stage 2 Pty Ltd [2003] VSC 190; Melacare International v Daley Investments [1999] NSWSC 496. 448 Re Catholic Supplies Ltd and Jones [1922] NZLR 196 (SC in banco); Stanhope v Haworth (1886) 3 TLR 34 (CA). 732 [14.336]

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be unable to make future rental payments even if the present rental could be paid,449 where the tenant was found to be insolvent,450 and where the tenant had failed in the past to take care of the premises.451 In appropriate circumstances relief may be granted only on specified terms or conditions.452 As recently explained by Bryson J of the Supreme Court of New South Wales, in a case of forfeiture for non-​payment of rent, relief is granted fairly readily, but on a discretionary basis, on the footing that the right to terminate the lease is security for the payment of rent.453 Kourakis  J added in Kelly v Alternative Web Pty Ltd [2010] SASC 4 at [76]: Relief against forfeiture in the case of non-​payment of rent is usually granted unless there is reason to believe that the tenant will not meet his or her future obligations. A history of non-​ payment remains a relevant consideration, but relief against forfeiture for non-​payment has been granted even in cases where there is a history of irregular payments of rent.

Relief against forfeiture for non-​payment of rent will be refused on the ground of breach of some other covenant only in very exceptional circumstances.454 The statutory rules as to relief against forfeiture for non-​payment of rent appear to have a wide application. It has been held that relief against forfeiture extends to tenants holding possession pursuant to an agreement for a lease rather than a lease455 and to cases where the landlord exercises the right of peaceful re-​entry.456 The High Court in Legione v Hateley (1983) 152 CLR 406457 has affirmed and expanded the inherent jurisdiction of equity to grant relief against forfeiture. In this case relief was granted to a defaulting purchaser against the forfeiture of his interest even though he had failed to comply with a condition whereby time was of the essence of the contract. Mason and Deane JJ based their decision on the jurisdiction to grant relief against unconscionable conduct. This case has been held to extend to all categories of lease.458 The Legione v Hateley decision, coupled with the later High Court decision in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, where the concept of unconscionable conduct was applied in the context of estoppel, “demonstrate an acceptance of the general principle of equity, that a

449 450

Direct Food Supplies (Vic) Pty Ltd v DLV Pty Ltd [1975] VR 358. Inner City Businessmen’s Club Ltd v James Kirkpatrick Ltd [1975] 1 NZLR 636; Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 at [36]. Compare Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49. 451 Stieper v Deviot Pty Ltd (1977) 2 BPR 9602 (NSWCA). 452 See, for example, Belgravia Insurance Co Ltd v Meah [1964] 1 QB 436; Newbolt v Bingham (1895) 72 LT 852 (CA). 53 Melacare International v Daley Investments [1999] NSWSC 496; Chittick v Galea [2007] NSWSC 38; Water 4 Wine and Juice Pty Ltd v Konstantopoulos [2010] NSWSC 312 at [97]. 54 Lo Giudice v Biviano (No 1) [1962] VR 412; Symmons Plains Pastoral Holdings Pty Ltd v Tasmanian Motor 4 Racing Co Pty Ltd (1996) 6 Tas R 284 at 289, 292; Chittick v Galea [2007] NSWSC 38 at [31]; Pioneer Quarries (Sydney) Pty Ltd v Permanent Trustee Co of NSW Ltd (1970) 2 BPR 9652 at 97145-​6. 55 Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49. 4 56 Howard v Fanshawe [1895] 2 Ch 581. 4 57 Applied in Leads Plus Pty Ltd v Kowho Intercontinental Pty Ltd [2000] NSWSC 459. For a discussion of the legal 4 ramifications of Legione v Hateley (1983) 152 CLR 406, see Gummow, “Forfeiture and Certainty: The High Court and the House of Lords” in Finn (ed), Essays in Equity (Law Book Co, Sydney, 1985), p 30. 58 McPherson v Minister for Natural Resources (1990) 22 NSWLR 671. The importance of unconscionability as 4 the basis for relief against forfeiture was emphasised by Barrett J in Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 at [393]ff. [14.336]  733

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court may relieve against the detriment caused by unconscionable conduct, particularly when it is associated with fraud, accident, surprise or mistake”.459 [14.338]  The rules against forfeiture are applicable to land held under the Torrens system. In

each State the Torrens system legislation requires the Registrar of Titles to enter a memorandum in the register book where a right of re-​entry is exercised.460 The issue arises whether relief against forfeiture for non-​payment of rent may be granted where a memorandum of forfeiture has already been entered on the title. The issue was answered in the affirmative in New South Wales in Brooker’s Colours Ltd v Sproules (1910) 10 SR (NSW) 839, although in respect of the South Australian legislation, the Privy Council stated in Laffer v Gillen (1927) 40 CLR 86461 that once a memorandum had been entered in the register book the validity of the forfeiture cannot be questioned, for the statute provides that the estate of the tenant shall thereupon determine. In the absence of further authority, the matter must be considered unresolved. Whalan462 cites a New Zealand case, Maori Trustee v Kahuroa [1956] NZLR 713, as authority for the proposition that relief cannot be granted if the notification of re-​entry is followed by the registration of a new lease to a third party. Forfeiture for breach of covenants other than the covenant to pay rent [14.340]  The proviso for re-​entry commonly found in most leases applies equally to covenants

other than the covenant to pay rent. If such a clause is not included, no right of forfeiture arises except in the case of agreements for a lease and where the statutory implied covenant discussed at [14.230] applies. Unlike in the case of forfeiture for non-​payment of rent, no formal demand is necessary before the right of forfeiture can be exercised. However, based on legislation in all States, the landlord must first serve a notice containing specified particulars on the tenant. The legislation is based on earlier United Kingdom legislation and is similar (although not identical) in all States. For example, s 146(1) of the Property Law Act 1958 (Vic) states:463 A right of re-​entry or forfeiture under any proviso or stipulation in a lease … for a breach of any covenant or condition in the lease … shall not be enforceable, by action or otherwise, unless and until the lessor serves on the lessee a notice –​

(a) specifying the particular breach complained of; and



(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and



(c) in any case, requiring the lessee to make compensation in money for the breach –​ and the lessee fails, within a reasonable time thereafter, or the time not being less than fourteen days fixed by the lease to remedy the breach, if it is capable of remedy, and to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.

459 460

461 462 463

Federal Airports Corporation v Makucha Developments Pty Ltd (1993) 114 ALR 679 at 698 per Davies J. See Real Property Act 1900 (NSW), s 55; Transfer of Land Act 1958 (Vic), s 70; Land Title Act 1994 (Qld), s 68; Real Property Act 1886 (SA), s 126; Transfer of Land Act 1893 (WA), ss 96, 104; Land Titles Act 1980 (Tas), s 68; Land Titles Act 1925 (ACT), s 87; Land Title Act (NT), s 70. See also Hill v Short [1910] SASR 141. Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 201. See also Conveyancing Act 1919 (NSW), s 129(1); Property Law Act 1974 (Qld), s 124(1); Landlord and Tenant Act 1936 (SA), s 10; Property Law Act 1969 (WA), s 81(1); Conveyancing and Law of Property Act 1884 (Tas), s 15(1); Civil Law (Property) Act 2006 (ACT), s 426; Law of Property Act (NT), ss 137–​138. This legislation is discussed in Christensen and Duncan, “Breaches of Lease ‘Capable of Remedy’: A Technical or Practical Approach” (2006) 13 Australian Property L J 204.

734 [14.338]

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This requirement for a notice acts as a form of protection for the tenant in that it enables the tenant to consider the issue before a right of re-​entry is exercised and to determine whether he or she wishes to make compensation in order to avoid the landlord prematurely terminating the lease.464 Where there are two or more tenants, the statutory notice must be served on each one.465 There are a number of exceptions to the operation of this legislation. Excepted from its scope in most jurisdictions are covenants relating to the non-​payment of rent466 and (in New South Wales, Victoria and Queensland) covenants in a mining lease allowing the landlord to have access to or to inspect books and accounts or to enter or inspect the mine or its workings.467 In all States except South Australia conditions of forfeiture on the bankruptcy of the tenant or on taking in execution of the tenant’s interest as specified leases are also excepted.468 This latter exception recognises that on the bankruptcy of the tenant or where the tenant’s interest is taken in execution, in respect of certain leases it is vital for the landlord to recover his or her interest. The relevant specified leases are leases of (a) agricultural or pastoral land, (b) mines or minerals, (c) a home used or intended to be used as licensed premises, (d) a house let as a dwelling-​house with the use of any furniture, books, works of art or other chattels not being in the nature of fixtures, and (e) any property with respect to which the personal qualifications of the tenant are of importance for the preservation of the value or character of the property, or on the ground of neighbourhood to the landlord, or to any person holding under him or her. The legislation in all jurisdictions operates notwithstanding any provision to the contrary in the lease.469 A  number of past attempts by landlords to circumvent the requirement for a notice have been thwarted by the courts. For example, in Holden v Blaiklock [1974] 2 NSWLR 262 the fixed-​term lease gave the landlord an option to convert the lease into a periodic lease in the event of a breach by the tenant of any of the covenants. It was held that the exercise by the landlord of this option would amount to a forfeiture within the meaning of the legislation. A  further illustration is Plymouth Corp v Harvey [1971] 1 All ER 623; [1971] 1 WLR 549. In this case the tenant was required to execute a deed of surrender to be held in escrow by a solicitor on the condition that he would deliver it to the landlord if the tenant had not performed certain obligations under specified covenants within an agreed time. Plowman J held that the deed was void in that it infringed the legislation and should be regarded as a forfeiture in the guise of a surrender. [14.345] There are many authorities concerning the contents of a notice. In general, the

purpose of the legislation is to inform the tenant as to what he or she is required to do, and

464 465 466

467 468

469

Horsey Estate Ltd v Steiger [1899] 2 QB 79 at 91 (CA) per Lord Russell CJ. Blewett v Blewett [1936] 2 All ER 188 (CA). Conveyancing Act 1919 (NSW), s 129(8); Property Law Act 1958 (Vic), s 146(12); Property Law Act 1974 (Qld), s 124(7); Landlord and Tenant Act 1936 (SA), s 12(5); Property Law Act 1969 (WA), s 81(9); Conveyancing and Law of Property Act 1884 (Tas), s 15(7); Civil Law (Property) Act 2006 (ACT), s 426(5). Conveyancing Act 1919 (NSW), s 129(6)(d); Property Law Act 1958 (Vic), s 146(8)(b); Property Law Act 1974 (Qld), s 124(6)(d). Conveyancing Act 1919 (NSW), s 129(6)(e); Property Law Act 1958 (Vic), s 146(9); Property Law Act 1974 (Qld), s 124(6)(c); Property Law Act 1969 (WA), s 81(8)(b); Conveyancing and Law of Property Act 1884 (Tas), s 15(6); Civil Law (Property) Act 2006 (ACT), s 426(5). Conveyancing Act 1919 (NSW), s 129(10); Property Law Act 1958 (Vic), s 146(13); Property Law Act 1974 (Qld), s 124(9); Landlord and Tenant Act 1936 (SA), s 12(6); Property Law Act 1969 (WA), s 81(10); Conveyancing and Law of Property Act 1884 (Tas), s 15(8); Civil Law (Property) Act 2006 (ACT), s 425(1); Law of Property Act (NT), s 138(6)(b). [14.345]  735

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the notice must give the tenant sufficient details of the alleged breach of covenant in order to fulfil this purpose.470 The major Australian authority is Gerraty v McGavin (1914) 18 CLR 152, where the High Court, in the case of an alleged breach of covenant to repair, held that it is not sufficient for the notice merely to state that there has been a breach of the covenant; rather, the notice must state the condition of the premises. Any ambiguity in the notice will result in it being declared void. Thus, for example, a notice was held void where it required the tenant to remove a structure without referring to which of two possible structures it concerned.471 A fortiori, a notice referring to a breach of the wrong covenant or to a breach of a covenant not included in the lease will be invalid.472 Section  146(1)(b) of the Property Law Act 1958 (Vic) (and its equivalent in the other States)473 requires the court to determine which breaches are capable of remedy. The English Court of Appeal has recently held that this question depends on whether the harm suffered by the landlord by the relevant breach is capable of being remedied in practical terms.474 A breach of a positive covenant, whether continuous or once and for all, is distinguishable from a breach of a negative covenant, and is ordinarily capable of remedy provided that the remedy is carried out within a reasonable time. What is a reasonable time depends on the circumstances of each case.475 According to one view, all negative covenants are incapable of remedy.476 However, this view has been disapproved and appears to be expressed too widely.477 Again, each case must be determined on its facts. In the past the following breaches of covenant have been held to be incapable of remedy: using the premises as a gaming house,478 or for immoral purposes,479 breaching the licensing laws,480 and (after earlier doubts) assigning or subletting without obtaining the landlord’s prior consent.481 Conversely, a breach of a covenant against parting with possession or sharing possession, falling short of creating or transferring a legal interest, is capable of remedy.482 Where the breach is irremediable, the notice need not require the tenant to remedy the breach, although the remainder of the procedure must be followed.483 The final requirement of the notice is the compensation requirement. Regardless of whether the breach of covenant is capable of remedy, it has been held that a notice will never be void 470 471 472 473

Fox v Jolly [1916] 1 AC 1 (HL); Fletcher v Nokes [1897] 1 Ch 271. Davenport v Smith [1921] 2 Ch 270; cf Guillemard v Silverthorne (1908) 99 LT 584. Jacob v Down [1900] 2 Ch 156. Conveyancing Act 1919 (NSW), s 129(1); Property Law Act 1974 (Qld), s 124(1); Landlord and Tenant Act 1936 (SA), s 10; Property Law Act 1969 (WA), s 81(1); Conveyancing and Law of Property Act 1884 (Tas), s 15(1); Civil Law (Property) Act 2006 (ACT), s 426; Law of Property Act (NT), ss 137–​138. 474 Expert Clothing Service and Sales Ltd v Hillgate House Ltd [1986] 1 Ch 340 (CA). 475 Expert Clothing Service and Sales Ltd v Hillgate House Ltd [1986] 1 Ch 340 (CA) at 355. 476 See, for example, Hoffman v Fineberg [1949] Ch 245 at 254 per Harman J; Rugby School (Governors) v Tannahill [1934] 1 KB 695 (at first instance). 77 Rugby School (Governors) v Tannahill [1934] 1 KB 695; Bass Holdings Ltd v Morton Music Ltd [1988] 1 Ch 493. 4 78 Hoffman v Fineberg [1949] Ch 245. 4 79 British Petroleum Pension Trust Ltd v Behrendt (1986) 52 P & CR 117 (CA); Egerton v Esplanade Hotels London 4 Ltd [1947] 2 All ER 88; Borthwick-​Norton v Romney Warwick Estates Ltd [1950] 1 All ER 798; Rugby School (Governors) v Tannahill. Compare Dunraven Securities Ltd v Holloway (1982) 264 EG 709 (CA). 80 Bickerton’s Aerodromes Ltd v Young (1958) 108 LJ 218. 4 81 Scala House & District Property Co Ltd v Forbes [1974] QB 575 (CA); Johnson v Senes and Berger [1961] NSWR 4 566. Compare Batson v De Carvalho (1948) 48 SR (NSW) 417. 82 Huseyin Akici v L R Butlin [2006] 1 WLR 201. 4 83 Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 (CA); Hoffman v Fineberg [1949] Ch 245; 4 Horsey Estate Ltd v Steiger [1899] 2 QB 79 (CA). 736 [14.345]

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for failure to include a reference to the payment of compensation as the landlord need not claim compensation if he or she does not require it.484 In all jurisdictions the legislation states that the tenant must be given “a reasonable time” after the service of the notice to remedy the breach, if it is capable of remedy, and to make reasonable compensation.485 In Victoria the legislation contains the additional words “or the time not being less than fourteen days fixed by the lease”. The effect of this additional clause appears to be that the necessary period of time will be that specified in the lease, provided that it is a minimum of 14 days, regardless of whether it is a reasonable time;486 if a lease does not fix a period of time, the time will be what the court considers to be “a reasonable time”. The courts have held that where the breach is capable of remedy, a “reasonable time” will usually be three months.487 Where the breach is not capable of remedy, the tenant is allowed a certain time to consider his or her position; in these circumstances, 14 days has been held to be sufficient488 and two days has been held to be insufficient.489 The courts will resist any attempt by the landlord to reduce the time considered reasonable; thus, in Dogan v Morton (1935) 35 SR (NSW) 142, where a notice required a breach of covenant to be remedied within a reasonable time “which is seven days from the date hereof”, the seven-​day period was disregarded as surplusage.

Relief against forfeiture [14.350]  As in the case of non-​payment of rent, relief against forfeiture may be granted by the

courts in respect of all leases falling within the scope of s 146 of the Property Law Act 1958 (Vic) (or its equivalent in the other jurisdictions). This relief also extends to subtenants: see [14.320]. The relevant legislation in each jurisdiction reads as follows:490 Where a lessor is proceeding, by action or otherwise, to enforce or has enforced without the aid of the Court or the County Court such a right of re-​entry or forfeiture, the lessee may apply to the Court for relief; and the Court may grant or refuse relief, as the Court or judge, having regard to the proceedings and conduct of the parties under the foregoing provisions of this section, and to all the other circumstances thinks fit; and in case of relief may grant it on such terms (if any) as to costs, expenses, damages, compensation, penalty or otherwise, including the granting of an injunction to restrain any like breach in the future, as the Court, in the circumstances of each case, thinks fit.

This legislation creates a discretionary power. There is no need for a tenant seeking relief to show an equitable ground for intervention.491

484 485

486 487 488 489 490

491

Rugby School (Governors) v Tannahill [1934] 1 KB 695. Conveyancing Act 1919 (NSW), s 129(1); Property Law Act 1958 (Vic), s 146(1); Property Law Act 1974 (Qld), s 124(1); Landlord and Tenant Act 1936 (SA), s 10; Property Law Act 1969 (WA), s 81(1); Conveyancing and Law of Property Act 1884 (Tas), s 15(1); Law of Property Act (NT), s 137(3). See Re Automotive & General Industries Ltd’s Lease (unreported, VSC, Adam J, 1 May 1970). Penton v Barnett [1898] 1 QB 276 (CA). Civil Service Co-​operative Society Ltd v McGrigor’s Trustee [1923] 2 Ch 347; Scala House & District Property Co Ltd v Forbes [1974] QB 575 (CA). Horsey Estate Ltd v Steiger [1899] 2 QB 79 (CA). Conveyancing Act 1919 (NSW), s 129(2); Property Law Act 1958 (Vic), s 146(2); Property Law Act 1974 (Qld), s 124(2); Landlord and Tenant Act 1936 (SA), s 11; Property Law Act 1969 (WA), s 81(2); Conveyancing and Law of Property Act 1884 (Tas), s 15(2); Civil Law (Property) Act 2006 (ACT), s 428; Law of Property Act (NT), s 137(2) (applying to relief against forfeiture in all cases). Melacare International v Daley Investments [1999] NSWSC 496. [14.350]  737

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The argument that in addition to this legislation the court still has an equitable jurisdiction to grant relief in any circumstances in which the statutory jurisdiction is not available, has been accepted in Australia in Esther Investments Pty Ltd v Cherrywood Park Pty Ltd [1986] WAR 279 (FC).492 Kenny J added in Canberra International Airport Pty Ltd v Ansett Australia Ltd (2002) 41 ACSR 309; [2002] FCA 329 at [45] that, although the discretion of the court is unfettered, a court may decline relief where a breach on the assignee’s part is deliberate, as where the assignee knows the effect of a covenant against assignment. Equally, however, in these circumstances a court may grant relief, notwithstanding the assignee’s knowledge, if the landlord suffered no loss and the assignee was willing and able to fulfil future obligations. As the relevant legislation refers to forfeiture “under any proviso or stipulation in a lease”, it follows that relief against forfeiture is not available where the tenant denies the landlord’s title.493 For a similar reason, adverse possessors cannot claim relief against forfeiture.494 Despite earlier decisions to the effect that the tenant must seek relief against forfeiture prior to the court order for possession,495 the House of Lords held in Billson v Residential Apartments Ltd [1992] 1 AC 494 that a tenant may apply for relief after the landlord has forfeited by re-​entry. The court reasoned that the wording of the legislation permitted the tenant to apply for relief both where the landlord was “proceeding” by action and where the landlord was proceeding “otherwise” than by action. This latter situation included the case where the landlord was proceeding to forfeit the lease by re-​entry after the expiration of the statutory notice.496 However, an application for relief against forfeiture would be adversely affected if the applicant had, in the meantime, permitted a third party to acquire rights in respect of the premises.497 Earlier attempts by the courts to lay down guidelines or principles which the courts should follow in determining how to exercise their jurisdiction have been disapproved498 and it has been held that the discretion is wide and unfettered.499 The courts will consider the question of unconscionable conduct, especially where the conduct is associated with fraud, mistake, accident or surprise.500 The test in relation to unconscionability is whether, in the light of the tenant’s remedying the breach of contract, use by the landlord of the right of re-​entry would be unconscionable. Where the tenant’s conduct shows a history of willful breaches of more than one covenant, a deliberate disregard of the landlord’s rights over a period of time and a total lack of evidence as to the tenant’s ability to remedy the default, the court will not grant relief against forfeiture.501

492

See also Melacare International v Daley Investments [1999] NSWSC 496; Melksham v Archerfield Airport Corporation [2004] QSC 164. 493 Warner v Sampson [1958] 1 QB 404. 494 Tickner v Buzzacott [1965] Ch 426. 495 Rogers v Rice [1892] 2 Ch 170 (CA); Lock v Pearce [1893] 2 Ch 271; Quilter v Mapleson (1882) 9 QBD 672. 496 Followed in Canberra International Airport Pty Ltd v Ansett Australia Ltd [2002] FCA 329. 497 On Demand Information PLC v Michael Gerson (Finance) PLC [2001] 1 WLR 155; Canberra International Airport Pty Ltd v Ansett Australia Ltd [2002] FCA 329. 498 See the general principles enunciated by Cozens-​Hardy MR in Rose v Spicer [1911] 2 KB 234 at 241–​242 (CA). These have been declared not to be authoritative in New South Wales: Melacare International v Daley Investments [1999] NSWSC 496. 99 Hyman v Rose [1912] AC 623 (HL). 4 00 Legione v Hateley (1983) 152 CLR 406; Beamer Pty Ltd v Star Lodge Supported Residential Services Pty Ltd 5 [2005] VSC 236. 01 Beamer Pty Ltd v Star Lodge Supported Residential Services Pty Ltd [2005] VSC 236 at [442]. 5 738 [14.350]

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In Dee Tech Pty Ltd v Neddam Holdings Pty Ltd (No  2) [2009] NSWSC 1355 relief against forfeiture was refused where the facts showed a history of persistent breaches of the terms of the lease, a wilful refusal to comply with certain terms of the lease, an absence of any explanation for the failure such as ignorance, inadvertence, accident or mistake, the absence of any error on the part of the landlord contributing to the failure and the absence of the tenant’s recognition of the error of its ways. Palmer J, referring to dicta in the High Court decision of Legione v Hateley (1983) 152 CLR 406 at 429 and 449, stated in Byron Bay Retirement Villages Pty Ltd v Zandata Pty Ltd [2008] NSWSC 1123 at [44]: The Court has regard to the nature and circumstances of the breach of lease committed, together with such damage as the lessor may suffer as a consequence of such breach, and also has regard to what the lessee stands to lose if the lease is forfeited. Where the forfeiture is excessively punitive as far as the lessee’s breach is concerned, i.e. where the damage suffered by the lessor in consequence of the breach is far less in consequence than that which would be occasioned to the lessee if the lease were forfeited, or where the lessor would, if forfeiture were allowed, obtain a windfall or an unmerited benefit, then the Court usually grants relief against forfeiture.

In practice, it is a rare case where relief is denied to a tenant who applies within the specified time period, provided that the tenant remedies the breach and pays the landlord’s costs.502 The courts appear to be even more willing to grant relief in these circumstances than in respect of a breach of the covenant to pay rent.503 Relief has been refused in the past in respect of negative covenants, such as a breach of the covenant not to use the premises for immoral purposes.504 Even here, however, relief has occasionally been granted in the past.505 Relief was refused in Earl Bathurst v Fine [1974] 1 WLR 905 (CA) on the basis that the lease was one in which the personal qualifications of the tenant were important for the preservation of the value of the property and the tenant had been shown to be an unfit person to be a tenant of the property. Relief was also refused in Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55, where the grant of possession by the original tenant to its subsidiary without the landlord’s consent was held to amount to an ongoing breach of covenant which it would be commercially unfair on the landlord to regularise. The law on this point has recently been summarised by Murray J in Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd [2002] WASC 54 at [253] as follows: [The cases] seem to me to show that relief will generally be granted where the breach has been remedied or any financial loss made good so that the bargain secured to the parties by the lease may continue for their mutual benefit. However, the Court on occasions displays a rather punitive attitude and may refuse relief in the exercise of discretion where the applicant for relief is a recidivist, in breach of the lessee’s covenants on numerous occasions, or where the breach is wilful or deliberate, unless the lessee can be seen to recognise the error of his ways.

It is usual for the court to make relief against forfeiture conditional on the tenant paying all the landlord’s costs.506 Although rarely done, it is possible for the courts to impose other

502 See, for example, Earl Bathurst v Fine [1974] 1 WLR 905 (CA); Old Papa’s Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11. 503 See, for example, Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 (CA). 504 Borthwick-​Norton v Romney Warwick Estates Ltd [1950] 1 All ER 798. 505 Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 (CA). 506 Langley v Foster (1909) 10 SR (NSW) 54; McPherson v Minister for Natural Resources (1990) 22 NSWLR 671. [14.350]  739

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conditions upon the tenant when granting him or her relief against forfeiture.507 It is a matter for the tenant whether to accept the terms. The tenant may withdraw the claim for relief if he or she is unwilling to abide by the conditions.508 Protection of subtenants and mortgagees [14.355] At common law, whenever a head lease is determined, the sublease is

simultaneously determined by operation of law.509 In modern times, however, legislation has intervened to safeguard the position of subtenants in certain circumstances where the head lease is determined.510 The legislation, which is similar although not identical in each jurisdiction, stipulates that where a landlord is proceeding by action or otherwise to enforce or has enforced a right of re-​entry or forfeiture for breach of any covenant, including the covenant to pay rent, the court may, on the application of a subtenant, make an order vesting in the subtenant a leasehold estate for the whole term of the lease or any less term.511 The leasehold estate may be granted on such conditions as the court may think fit in the circumstances of each case. In no case shall the subtenant be entitled to require a lease to be granted to him or her for any longer term than the subtenant had under the original sublease. This provision is sufficiently wide to include a mortgagee, if the mortgage is by sublease or legal charge.512 Relief will not be granted to a subtenant in the absence of proof that he or she has acted reasonably and has not participated in the tenant’s breach of covenant.513 In general, the court’s discretion will be granted sparingly because it thrusts upon the landlord a person whom he or she has never accepted as tenant and creates in invitum a privity of contract between them.514 Thus, for example, in Hill v Griffin (1987) 282 EG 85 (CA) the court refused relief to the subtenant as he was unwilling to enter into a similar covenant to repair as under the forfeited head lease. The surrender of a head lease does not constitute a breach of the covenant of quiet enjoyment in respect of the sub-​lease.515 A further form of protection for subtenants applicable in all jurisdictions is the common law rule that if the head tenant is granted relief against forfeiture, the sublease is revived in its entirety by operation of law. The court does, however, retain a discretion to grant relief to

507 See, for example, Platt v Ong [1972] VR 197; Duke of Westminster v Swinton [1948] 1 KB 524; McIvor v Donald [1984] 2 NZLR 487 (CA). 508 Talbot v Blindell [1908] 2 KB 114. 509 PW & Co v Milton Gate Investments Ltd [2004] Ch 142; Great Western Rly Co v Smith (1876) 2 Ch D 235 (CA); Pennell v Payne [1995] QB 192; Evans v Athedim (Vic) Pty Ltd (2000) V ConvR 64,334; GMS Syndicate Ltd v Gary Elliott Ltd [1982] Ch 1 at 10. 510 Conveyancing Act 1919 (NSW), s 130; Property Law Act 1958 (Vic), s 146(4); Property Law Act 1974 (Qld), s 125; Property Law Act 1969 (WA), s 81(4); Conveyancing and Law of Property Act 1884 (Tas), s 15(3); Civil Law (Property) Act 2006 (ACT), s 428; Law of Property Act (NT), s 139. Compare Landlord and Tenant Act 1936 (SA), s 12. 511 Hammersmith & Fulham London BC v Top Shop Centres Ltd [1989] 2 All ER 655. 512 Re Good’s Lease [1954] 1 WLR 309; Grand Junction Co Ltd v Bates [1954] 2 QB 160; Chelsea Estates Investment Trust Co Ltd v Marche [1955] Ch 328. 513 Imray v Oakshette [1897] 2 QB 218 (CA). 514 Creery v Summersell and Flowerdew & Co Ltd [1949] Ch 751 at 767 per Harman J; Hill v Griffin (1987) 282 EG 85 (CA) at 86 per Slade LJ. 515 Fleeton v Fitzgerald (1998) 9 BPR 16,715 (CA). 740 [14.355]

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a tenant without reviving a sublease if the court is satisfied that the breach of covenant was caused by the subtenant.516 In Ladup Ltd v Williams and Glyn’s Bank [1985] 2 All ER 577 relief was granted to an equitable chargee who had no interest in the lease entitling him to possession. The rationale for this decision was that there is no fetter on the jurisdiction of courts of equity to grant relief against forfeiture where the object of the right to forfeit was to secure the payment of money. Thus, the principle that relief against forfeiture will be granted in equity if it is unconscionable for the landlord to insist on the right to forfeit a lease applies regardless of the identity of the person to whose detriment the forfeiture would operate. Note that this decision is only valid on the assumption that the court still has an equitable relief to grant relief against forfeiture in any circumstances in which the statutory jurisdiction is not available. This issue is discussed at [14.310].

DETERMINATION OTHER THAN BY FORFEITURE Natural expiration of the term [14.360] At common law, a fixed-​term lease automatically determines at the expiration of

the fixed term. No notice to quit is required. This rule, which differs from that in effect in civil law jurisdictions,517 is subject to a number of exceptions contained in the residential and retail tenancies legislation, where a notice to vacate is required.518 A sublease will automatically determine on the expiration of the term of the head lease even if the sublease is expressed to continue beyond that date.519 Unlike at common law, where a fixed-​term lease expires due to the effluxion of time without the need for notice by either party,520 in New South Wales, Victoria and the Northern Territory the retail tenancies legislation provides that a fixed-​term retail premises lease will no longer automatically terminate at the expiration of the term. Not less than six months and not more than 12 months before the expiry of a lease, the landlord must either offer the tenant a renewal or extension of the lease on specified terms or inform the tenant that the landlord does not propose to renew or extend the lease.521 Any offer to renew or extend the lease cannot be revoked for one month after it is made (60 days in Victoria).522 If the landlord fails to give the requisite notice, the lease is automatically extended until six months after the landlord finally gives the notification, provided that the tenant requests the extension before the lease would otherwise have expired.523 The section does not apply where the tenant has an option to renew or extend the lease.524 516 517 518 519 520 521 522 523 524

GMS Syndicate Ltd v Gary Elliott Ltd [1982] Ch 1. See Report of the Committee on the Rent Acts (1971), HMSO Cmnd 4609 at 161. See [14.535]ff and [15.155]–​[15.175]. Weller v Spiers (1872) 26 LT 866. Rogers v Moonta Town Corporation (1981) 37 ALR 49; Cobb v Stokes (1807) 8 East 358; 103 ER 380; Ackland v Lutley (1839) 9 Ad & El 879; 112 ER 1446. Retail Leases Act 1994 (NSW), s 44(1); Retail Leases Act 2003 (Vic), s 64(2); Business Tenancies (Fair Dealings) Act (NT), s 60(1). Retail Leases Act 1994 (NSW), s 44(2); Retail Leases Act 2003 (Vic), s 64(3); Business Tenancies (Fair Dealings) Act (NT), s 60(2). Retail Leases Act 1994 (NSW), s 44(3); Retail Leases Act 2003 (Vic), s 64(4); Business Tenancies (Fair Dealings) Act (NT), s 60(3). Retail Leases Act 1994 (NSW), s 44(5); Retail Leases Act 2003 (Vic), s 64(1); Business Tenancies (Fair Dealings) Act (NT), s 60(5). [14.360]  741

PART 4 Divided Ownership of Land

Notice to quit [14.365] At common law either party may terminate the lease by giving a notice to quit

of a minimum duration commensurate with the length of the period of the lease. Thus, one week’s notice is necessary for a weekly tenancy525 and a month’s notice is necessary for a monthly tenancy.526 The only common law exception is that a yearly periodic tenancy may be determined by six months’ notice by either party expiring at the end of the completed year.527 In Victoria, s 32(4) of the Landlord and Tenant Act 1958 (Vic), which applies only to dwelling-​houses,528 states that in the case of periodic leases the recurring period of which does not exceed one month, a notice to quit given by a landlord shall be at least 14 days except where the tenant is in arrears of rent for at least four weeks. In all cases the notice to quit must expire at the end of one of the recurring periods of the tenancy.529 Thus, for example, in the case of a monthly periodic lease where the recurring periods commence on the first day of each month, a notice to quit given on 15 February will not expire until 31 March.530 An exception applies in those jurisdictions where the legislation states that all periodic tenancies must be construed as monthly and that the one month’s notice in writing is not required to be one calendar month’s notice: see [14.55]. As an alternative to the notice to quit procedure, a periodic lease may be determined by forfeiture or by any of the other methods referred to at [14.270]ff. However, in view of the simplicity and effectiveness of the notice to quit procedure, these other methods are seldom invoked in the case of periodic leases. Although the general rule is that a fixed-​term lease cannot be prematurely terminated prior to the end of the term by a notice to quit, this rule only applies in the absence of an express provision to the contrary. Thus, it is possible, for example, for the parties to stipulate in the instrument of lease that a 10-​year fixed term can be terminated after three years by either party on giving six months’ notice.531 There is no requirement that a notice to quit should be formal.532 At common law, the notice can be oral533 and, if written, need not correspond with any particular form.534 In contrast, the rules as to the contents of the notice are more strict. It has been held that the notice must be expressed clearly and unequivocally.535 In addition, while the notice need not

525

Precious v Reedie [1924] 2 KB 149; Gleeson v Richey [1959] VR 258; Amad v Grant (1947) 74 CLR 327. Note that some authorities exist to the effect that “reasonable notice” is required in the case of a weekly tenancy, which depending on the facts may be less than one week: see Carter v Aldous [1921] VLR 234; Mornane v All Red Carrying Co Pty Ltd [1935] VLR 341 at 346–​347; Dikstein v Kanevsky [1947] VLR 216 at 224–​225. Bradbrook, Croft and Hay, Commercial Tenancy Law in Australia (3rd ed, LexisNexis Butterworths, Sydney, 2009) at [20.03] conclude that it is unlikely that less than one week’s notice would be acceptable. 526 Willshire v Dalton (1948) 65 WN (NSW) 54 (SC in banco); Turner v York Motors Pty Ltd (1951) 85 CLR 55. 527 Sidebotham v Holland [1895] 1 QB 378 (CA); Landale v Menzies (1909) 9 CLR 89 at 101. 528 “Dwelling-​houses” is defined in s 29 of the Landlord and Tenant Act 1958 (Vic). 29 Lin v State Rail Authority of NSW [2004] FCAFC 219; Amad v Grant (1947) 74 CLR 327; Lemon v Lardeur 5 [1946] KB 613 (CA); Ninubon v Gag Pty Ltd (1998) 9 BPR 16,479. 530 This rule does not apply under State residential tenancies legislation. See Chapter 15. 31 Hankey v Clavering [1942] 2 KB 326. 5 32 W H Tuckett & Sons v Ransom [1914] VLR 8. 5 33 Roe ex d Dean and Chapter of Rochester v Pierce (1809) 2 Camp 96; 170 ER 1093. 5 34 Marshall v Burman (No 2) [1961] VR 161; Love v Chryssoulis (1977) 16 ACTR 1. 5 35 Gardner v Ingram (1889) 61 LT 729. 5 742 [14.365]

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refer to the specific date on which possession is required, if no date is mentioned, the notice must contain a method by which the tenant can calculate the date.536 In general, although the courts will not declare a notice void for breach of a technicality, the courts will determine the validity of a notice according to whether the notice would be likely to mislead the tenant.537 The onus of proving that a notice is valid is on the party who serves the notice.538 A notice may be given by or to an agent of the other party, provided that the agent has been given the necessary authority.539 If either party is a corporation, the notice must be addressed to the name of the corporation rather than any of its officers.540 In the case of two or more joint tenants holding a periodic lease, the House of Lords has held in Hammersmith & Fulham London Borough Council v Monk [1992] 1 AC 478541 that the lease may be determined by a notice to quit given by one of the tenants without the concurrence of the other tenants, except where the terms of the lease provide to the contrary. Denial of title [14.375]  If at any stage during the term of a lease a tenant denies the landlord’s title, the lease

is determinable by way of forfeiture at the election of the landlord.542 This ground of forfeiture does not apply in respect of oral denials of title by tenants holding under a fixed-​term lease,543 but appears to apply in respect of all categories of periodic leases.544 As in respect of all other grounds of forfeiture, the landlord may waive the disclaimer, in which case the right of forfeiture will be lost.545 The State legislation cited at [14.300] providing for relief against forfeiture for breach of covenant is expressed to apply to forfeiture “under any proviso or stipulation in a lease”. Accordingly, as denial of title is a common law concept, no relief against forfeiture is available in this context.546

Surrender [14.380]  Surrender has been described as “a species of merger which occurs when a lessee

gives up his leasehold interest to his immediate lessor and the lessor accepts it”.547 The essential elements are the offer by the tenant to terminate the lease and the acceptance of that offer by the landlord. Where this occurs, the lease is extinguished.

36 5 537 538 539 540

See, for example, Addis v Burrows [1948] 1 KB 444 (CA). Carradine Properties Ltd v Aslam [1976] 1 All ER 573. Lemon v Lardeur [1946] KB 613 (CA). Freeman v Hambrook [1947] VLR 70; Heyward v Miles [1944] VLR 155. Doe d Carlisle v Woodman and Forster (1807) 8 East 227; 103 ER 329 (KB). Compare Ex parte Palmer (1912) 12 SR (NSW) 756. 541 Compare Hounslow London Borough Council v Pilling [1994] 1 All ER 432 (HL). 542 See, for example, Re Teller Home Furnishers Pty Ltd [1967] VR 313; Scanlon v Campbell (1911) 11 SR (NSW) 239. Compare Australian Safeway Stores Pty Ltd v Toorak Village Development Pty Ltd [1974] VR 268. 43 Doe d Graves v Wells (1839) 10 Ad & E 427; 113 ER 162 (KB). 5 44 See Wisbech St Mary Parish Council v Lilley [1956] 1 WLR 121 (CA). 5 45 Warner v Sampson [1958] 1 QB 404; Sydney Real Estate & Investment Co Pty Ltd v Rich (1957) 74 WN (NSW) 5 427; Douglas & Co (Insurance) Pty Ltd v Economic Insurance Co Ltd (1951) 68 WN (NSW) 225. 46 Warner v Sampson [1958] 1 QB 404. 5 47 Helmore, The Law of Real Property in New South Wales (2nd ed, Law Book Co, Sydney, 1966), p 107. 5 [14.380]  743

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A surrender may be created expressly or may arise by operation of law. In respect of express surrenders, the State legislation requires a deed or assurance to be executed, even in the case of oral leases.548 However, under the rule in Walsh v Lonsdale (1882) LR 21 Ch D 9 (CA) (see [14.30]), where the surrender is oral and value is given, the surrender will be effective if the tenant can adduce evidence of part performance or an informal written agreement. Surrender by operation of law is based on estoppel by conduct549 and arises wherever the parties, by their conduct, show an intention to treat the lease as terminated, and where it would be inequitable for them to continue to treat the lease as valid.550 The conduct relied on must be unequivocal.551 There must either be the giving up of possession by the tenant and its acceptance by the landlord, or some other conduct consistent only with the termination of the lease.552 The most obvious illustration of this is where the landlord grants a new lease of the premises to a third party553 or changes the locks on the property.554 This situation must be distinguished from an assignment of the lease by the existing tenant, where surrender is an irrelevant issue,555 and where the landlord accepts rent from a third party.556 Other illustrations of surrender are where the landlord grants a fresh lease during the term of the lease for a shorter or longer fixed-​term period557 or where the tenant abandons the premises or leaves by agreement and the landlord re-​enters the premises.558 Note, however, that mere abandonment by the tenant without re-​entry by the landlord will not constitute surrender.559 The mere giving up of the keys to the premises to the landlord,560 and the signing by the tenant of a contract to purchase the reversion,561 have also been held not to amount to a surrender by operation of law.

548

Conveyancing Act 1919 (NSW), s 23B(1); Property Law Act 1958 (Vic), s 52(1); Property Law Act 1974 (Qld), s 10(1); Law of Property Act 1936 (SA), s 28(1); Property Law Act 1969 (WA), s 33(1); Conveyancing and Law of Property Act 1884 (Tas), s 60(1); Law of Property Act (NT), s 9(1). 549 Indian Taj Pty Ltd v Gilany [2004] NSWSC 1193; Robinson v Kingsmill (1954) 71 WN (NSW) 127; Wallis v Hands [1893] 2 Ch 75; Lyon v Reed (1844) 13 M & W 285; 153 ER 118 (Exch). 550 Steve Christenson & Co Ltd v Furs & Fashions (NZ) Ltd [1971] NZLR 129; Foster v Robinson [1951] 1 KB 149 (CA); Nickells v Atherstone (1847) 10 QB 944; 116 ER 358 (KB). There is no requirement for a deed in respect of surrenders by operation of law. See Conveyancing Act 1919 (NSW), s 23B(2)(c); Property Law Act 1958 (Vic), s 52(2)(c); Property Law Act 1974 (Qld), s 10(2)(b); Law of Property Act 1936 (SA), s 28(2)(c); Property Law Act 1969 (WA), s 33(2)(c); Conveyancing and Law of Property Act 1884 (Tas), s 60(1)(c); Law of Property Act (NT), s 9(2)(b). 551 Konica Business Machines Australia Pty Ltd v Tizine Pty Ltd (1992) 26 NSWLR 687 (CA); Gumland Property Holding Pty Ltd v Duffy Bros Fruit Markets (Campbelltown) Pty Ltd [2006] NSWSC 10; Mattey Securities Ltd v Ervin (1999) 77 P & CR 160 (CA); Fleeton v Fitzgerald (1998) 9 BPR 16,715 (CA). 552 Emhill Pty Ltd v Bonsoc Pty Ltd (No 2) [2007] VSCA 108; Tarjomani v Panther Securities Ltd (1983) 46 P & CR 32. 553 Metcalfe v Boyce [1927] 1 KB 758; Wallis v Hands [1893] 2 Ch 75; Maridakis v Kouvaris (1975) 5 ALR 197. 554 R v Croydon London Borough Council [1996] 18 HLR 493. 555 See, for example, Ahern v L A Wilkinson (Northern) Ltd [1929] St R Qd 66. 56 Cromwell Developments Ltd v Godfrey (1998) 33 EG 72; Mattey Securities Ltd v Erwin (1998) 34 EG 91. 5 57 Knight v Williams [1901] 1 Ch 256; Fenner v Blake [1900] 1 QB 426. 5 58 Buchanan v Byrnes (1906) 3 CLR 704; Robinson v Kingsmill (1954) 71 WN (NSW) 127; Fleeton v Fitzgerald 5 (1998) 9 BPR 16,715 (CA). Compare Barakat v Ealing London Borough Council [1996] RVR 138 (QBD). 59 Spinks v Mundy [1957] St R Qd 234; Andrews v Hogan (1952) 86 CLR 223. See also Konica Business Machines 5 Australia Pty Ltd v Tizine Pty Ltd (1992) 26 NSWLR 687 (CA). 60 Siggers v Scott (1951) 68 WN (NSW) 131; Oastler v Henderson (1877) 2 QBD 575 (CA). 5 61 Nightingale v Courtney [1954] 1 QB 399 (CA). 5 744 [14.380]

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Surrender has been held to apply to both fixed-​term and periodic leases, although not to tenancies at will, as although these may be abandoned, there is no term which can be surrendered.562 In the absence of authority, tenancies at sufferance presumably cannot be surrendered for the same reason. Leek and Moorlands Building Society v Clark [1952] 2 QB 788 (CA)563 is authority for the proposition that, in the case of two or more joint tenants, all the tenants must join in the surrender before the surrender will be valid. Any purported act of surrender by one tenant without the authority of the others will be insufficient to determine the lease. Even where a surrender occurs, the tenant will remain liable for any breach of covenant which has occurred prior to that time. All future liability under the covenants is extinguished, however.564 Finally, the application of the doctrine of surrender to Torrens land must be considered.565 A universal feature of the Torrens statutes is that, except in the case of the bankruptcy of the tenant, no lease subject to a mortgage or charge can be surrendered without the written consent of the mortgagee, encumbrancee or chargee.566 Subject to this rule, surrender of a registered lease can be effected as follows. In Western Australia the Torrens statute states that a registered lease may be surrendered and determined by the word “surrendered”, with the date being endorsed on the duplicate and signed by the lessee and lessor.567 In Victoria the registered proprietor of a lease may, with the consent of the mortgagee and of any charge over the lease, surrender the lease by an instrument in an appropriate approved form.568 In New South Wales, Queensland, South Australia, the Australian Capital Territory and the Northern Territory569 surrender will occur on the registration of a surrender and in Tasmania570 on the registration of a memorandum of surrender.571 In all jurisdictions the legislation provides that the Registrar shall enter in the Register Book and on the duplicate lease (if any) a memorandum of the surrender, whereupon the tenant’s interest shall vest in the landlord.572 The provisions relating to the application of the doctrine of surrender by operation of law to Torrens land are less clear. The most straightforward provisions are s 98 of the Transfer of Land Act 1893 (WA), s 69(1) of the Land Title Act 1994 (Qld) and s 71(1) of the Land

562 563 564 565 566

Chelsea Investments Pty Ltd v FCT (1966) 115 CLR 1. See also Greenwich London BC v McGrady (1983) 46 P & CR 223 (CA). Richmond v Savill [1926] 2 KB 530 (CA); Dalton v Pickard [1926] 2 KB 545n (CA). See generally, Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), pp 195ff. Real Property Act 1900 (NSW), s 54(5); Transfer of Land Act 1958 (Vic), s 69(1); Land Title Act 1994 (Qld), s 69(2); Real Property Act 1886 (SA), s 123; Transfer of Land Act 1893 (WA), s 98; Land Titles Act 1980 (Tas), s 65(3); Land Titles Act 1925 (ACT), s 86(6); Land Title Act (NT), s 71(2). In New South Wales the legislation does not require the consent to be in writing, but, according to Whalan, it is required in practice: The Torrens System in Australia (Law Book Co, Sydney, 1982), p 196. 567 Transfer of Land Act 1958 (Vic), s 69(1); Transfer of Land Act 1893 (WA), s 98. In Western Australia there must be attestation by a witness. 568 Transfer of Land Act 1958 (Vic), s 69(1). 569 Real Property Act 1900 (NSW), s 54(1); Land Title Act 1994 (Qld), s 69; Real Property Act 1886 (SA), s 120; Land Titles Act 1925 (ACT), s 86(5); Land Title Act (NT), s 71(4). 570 Land Titles Act 1980 (Tas), s 65. 571 See the additional alternative procedure stipulated in the Real Property Act 1886 (SA), s 121. 72 Real Property Act 1900 (NSW), s 54(3); Transfer of Land Act 1958 (Vic), s 69(3); Land Title Act 1994 (Qld), 5 s 69(1); Real Property Act 1886 (SA), ss 120, 122; Transfer of Land Act 1893 (WA), s 98; Land Titles Act 1980 (Tas), s 65(2); Land Titles Act 1925 (ACT), s 86(4); Land Title Act (NT), s 71(3)–​(5). [14.380]  745

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Title Act (NT), which state that a lease may be surrendered and determined by operation of law. In Victoria the provision relating to express surrender declares valid “any other method of determining the operation of a lease”,573 which presumably encompasses surrender by operation of law. A similar implication appears to arise in New South Wales and the Australian Capital Territory,574 where the section on express surrender of a registered lease uses the words “and the surrender thereof is effected otherwise than through the operation of a surrender in law”. The only real doubt is in respect of South Australia and Tasmania, where no direct or indirect mention is made of surrender by operation of law; in these States the relevance of the principle to Torrens land is unsettled.

Merger [14.385] A merger arises where the leasehold estate and the leasehold reversion become

vested in the same person in the same right.575 Wherever this occurs the lease is immediately determined at common law by operation of law. The most obvious illustrations of merger are where the tenant acquires the reversion in the property or where the landlord acquires the lease. Note that merger will not occur where the lease and the reversion are held by one person, but in different capacities.576 An illustration of this is where the lease is held by the one person in a personal capacity and the reversion in his capacity as executor (or vice versa). Merger will also fail to occur where there is an intervening estate between the lease and the reversion, regardless of the length of this estate.577 Each State has similar legislation relating to the interrelationship of legal and equitable rules relating to merger. The Victorian legislation reads:578 “There shall be no merger by operation of law only of any estate the beneficial interest in which would not be deemed to be merged or extinguished in equity”. The effect of this provision is to allow the court to determine whether the parties intended a merger to occur as a result of their actions. The legislation effectively abolishes the common law rule pursuant to which merger occurred regardless of intention, and substitutes the equitable rule that merger is a matter of intention, and will not be held to have occurred in the absence of direct evidence of intention if it is to the interest of the party acquiring both the lease and the reversion that the merger should not take place.579 Further legislation in each State reads:580 Where a reversion expectant on a lease of land is surrendered or merged, the estate or interest which as against the lessee for the time being confers the next vested right to the land, shall be

573 574 575 576 577 578

Transfer of Land Act 1958 (Vic), s 69(2). Real Property Act 1900 (NSW), s 54(1); Land Titles Act 1925 (ACT), s 86(1). Rye v Rye [1962] AC 496 (HL); Herman v Gill (1921) 24 WALR 10. Chambers v Kingham (1878) 10 Ch D 743. Burton v Barclay and Perkins (1831) 7 Bing 745; 131 ER 288 (CP). Conveyancing Act 1919 (NSW), s 10; Property Law Act 1958 (Vic), s 185; Property Law Act 1974 (Qld), s 17; Law of Property Act 1936 (SA), s 13; Property Law Act 1969 (WA), s 18; Civil Law (Property) Act 2006 (ACT), s 206; Law of Property Act (NT), s 16. There does not appear to be a similar provision in Tasmania. 579 See Capital & Counties Bank v Rhodes [1903] 1 Ch 631 (CA); Re Fletcher [1917] 1 Ch 330 (CA). 580 This is the text of the Victorian and Western Australian provision. See also Conveyancing Act 1919 (NSW), s 122; Property Law Act 1958 (Vic), s 139(1); Property Law Act 1974 (Qld), s 115(1); Property Law Act 1969 (WA), s 75(1); Conveyancing and Law of Property Act 1884 (Tas), s 82; Law of Property Act (NT), s 128(1). The exact wording of this legislation varies slightly in some jurisdictions.

746 [14.385]

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deemed the reversion for the purpose of preserving the same incidents and obligations as would have affected the original reversion had there been no surrender or merger thereof.

This legislation effectively ensures that the rights and duties of a subtenant are unaffected where the head lease and the leasehold reversion merge. As stated by Windeyer J in Cihan v Oncu (2004) 11 BPR 21,653; [2004] NSWSC 338 at [11], the provision was enacted to enable head lessors to collect rent from sub-​tenants under the leases the reversion in which had been surrendered. Without this provision this would be impossible as there is no privity of estate or contract between the head lessor and sub-​tenant, and the estate of the sub-​tenant would remain without the obligation to pay rent. The issue whether the principle of merger applies in respect of Torrens land must be considered. On the current authorities, it appears that a registered leasehold interest will not be held to have merged as long as it remains registered as a separate interest. Before a merger will occur, it is necessary for the person acquiring the lease and the reversion to apply to the Registrar of Titles to extinguish the lease and remove the interest from the register.581 This conclusion is consistent with dicta by Dixon CJ, Fullagar and Taylor JJ in Cooper v Federal Commissioner of Taxation (1958) 100 CLR 131 and with the decision of the New South Wales Court of Appeal in Shell Co of Australia Ltd v Zanelli [1973] 1 NSWLR 216 (CA). The decision in both cases was stated to be justified on the basis that it was more consistent with the Torrens system and that full weight should be given to the Register.

Frustration [14.390]  Under the doctrine of frustration, if a contract becomes incapable of performance

because of unforeseen circumstances, both parties are relieved from their obligations under the contract.582 Historically, however, this doctrine was considered inapplicable to landlord-​ tenant law.583 Thus, at common law, in the absence of an exculpatory clause in the lease, if the rented premises are destroyed by fire, flood or storm or are expropriated by a government authority during the term of the agreement, the tenant remains bound by his or her covenant to pay the rent even though the premises are incapable of occupation. This result occurs because the land upon which the premises are situated is, of course, still in existence, and it is this legal estate in the land with which the law is historically concerned.584 In England this historical position has been overturned by the House of Lords in National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 (HL).585 By a four to one majority (Lord Russell of Killowen dissenting) the court held that frustration is capable of applying to leases, although it was emphasised that its application in this context would be

581 The Registrar is given the express power to deal with such applications pursuant to s 12(1)(i) of the Real Property Act 1900 (NSW) and s 14(1)(f) of the Land Titles Act 1925 (ACT). There is no similar provision in the Torrens statutes in the other jurisdictions, but Registrars deal with such applications as a matter of practice throughout Australia: see Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 199. 582 See Davis Contractors Ltd v Fareham Urban DC [1956] AC 686 at 729 (HL). 583 See, for example, Cricklewood Property & Investment Trust Ltd v Leighton’s Investment Trust Ltd [1945] AC 221 (HL); London & Northern Estates Co v Schlesinger [1916] 1 KB 20; Swift v Macbean [1942] 1 KB 375. 584 The other reason is that the contractual obligations of the parties are only incidental to the creation by the lease of an estate in land: see Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] VR 239 at 247 per Hudson J. For the rationale of the common law rule, see Paradine v Jane (1647) Aleyn 26; 82 ER 897 (KB). 585 Followed in Maori Trustee v Prentice [1992] 3 NZLR 344. [14.390]  747

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rare.586 Lord Wilberforce dismissed the traditional argument against the applicability of the doctrine, namely that the estate in land still exists despite the occurrence of the frustrating event, on the basis that the grant of the estate was not realistically speaking the main consideration for the transaction: it was merely a means to an end, not an aim or an end of itself (at 695). In reaching this conclusion the Court was influenced by various decisions of United States and Canadian courts applying the doctrine of frustration to leases.587 Although the Australian courts have traditionally rejected the application of the contractual doctrine of frustration to the landlord-​tenant relationship,588 by analogy with Shevill v Builders’ Licensing Board (1982) 149 CLR 620,589 Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17590 and Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 (discussed at [14.370]ff), where the High Court held that the principles of termination of contract, including the doctrine of repudiation, apply to leases, point to the probable acceptance of the doctrine of frustration in the present context. The Supreme Court of Western Australia has already decided in favour of the application of the doctrine of frustration to leases in Heytesbury Properties Pty Ltd v City of Subiaco (1999) 108 LGERA 259; [2000] WASC 8 and City of Subiaco v Haytesbury Properties Pty Ltd (2001) 24 WAR 146; [2001] WASCA 140. In the most recent case, Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29,591 Barrett J gave a very cautious and qualified acceptance of the doctrine of frustration, stating obiter (at [22]) that “it cannot be said, as an abstract proposition, that the doctrine of frustration has no application to leases, in the sense that a lease can in no circumstances whatsoever be discharged by frustration”. Like earlier courts, his Honour emphasised that the application of the doctrine to leases would be rare.

LANDLORD’S REMEDIES OTHER THAN DETERMINATION Damages and/​or injunction [14.395]  The landlord may apply for damages as compensation for past breaches of covenant

by the tenant and may seek an injunction to restrain the tenant from committing similar breaches in the future. The common law and equitable principles upon which damages and injunctions are awarded are discussed in detail elsewhere.592 The same principles apply in the present context.

586 On the facts of this case, it was held that a fixed-​term lease for 10 years in respect of a warehouse was not frustrated by the closure of the only street giving vehicular access to it for a likely period of 20 months. 587 See, for example, Highway Properties Ltd v Kelly, Douglas & Co Ltd (1971) 17 DLR (3d) 710 (SCC); Capital Quality Homes Ltd v Colwyn Construction Ltd (1976) 61 DLR (3d) 385 (Ont CA). 588 Minister of State for the Army v Dalziel (1944) 68 CLR 261. 589 See also Bayside Developments Pty Ltd v Copperart Pty Ltd (1994) 11 SR (WA) 316. 590 See also Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 (CA); De Landgrafft v Brown (1993) 9 SR (WA) 236. 591 Discussed by Butt in (2010) 84 ALJ 359. 592 Seddon and Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th ed, LexisNexis, Sydney, 2008), Chs 23, 24; Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), Chs 21, 24. 748 [14.395]

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Action for arrears of rent [14.400]  An action for arrears of rent is available wherever the tenant breaches the covenant

to pay rent. Pursuant to the State limitation of actions legislation, the landlord is limited to a maximum period of six years for recovery of arrears in Victoria, Queensland and Tasmania, 12 years in New South Wales, Western Australia and the Northern Territory and 15 years in South Australia.593

Repudiation and damages for prospective loss [14.405] The ability to repudiate and sue for future losses was for some time denied by

Australian courts.594 The position in Australia has been clarified by the Full High Court in three cases.595 In Shevill v Builders’ Licensing Board (1982) 149 CLR 620,596 after the tenant had consistently been in arrears of rent over several months, the landlord elected to terminate the lease, and sued in addition to the rent due prior to the recovery of possession, for prospective damages for loss of future rent. The Full High Court unanimously held that the doctrine of repudiation is applicable to leases, but overturned a monetary order in favour of the landlord made at first instance on the grounds that on the facts the tenant, by merely being in arrears of rent, had not repudiated the lease or committed a breach of an essential term of the lease, and that the lease did not expressly confer on the landlord the right to sue for damages for prospective loss. The effect of this decision is to place a heavy onus on legal practitioners to draft leases expressly stating that the covenant to pay rent is an essential term of the lease and/​ or that the landlord is entitled to sue for loss of future rent wherever a lease is terminated for failure to pay rent.597 The standard forfeiture clauses found prior to this decision were held to be inadequate to justify a claim for future rent. In essence, the decision allows future rent to be sued for in any of three situations. Firstly, recovery may occur where the tenant commits the breach of an essential term of the lease and termination is based on that ground.598 The second ground of recovery is where the tenant has repudiated the lease, although this “is a serious matter and is not to be lightly found or inferred”.599 This point was expanded on by Neave  JA in Natwest Markets Pty Ltd v

593

594

595

596

97 5 598 599

Limitation Act 1969 (NSW), s 27(2) and definition of “land” in s 11(1); Limitation of Actions Act 1958 (Vic), s 19; Limitation of Actions Act 1974 (Qld), s 25; Limitation of Actions Act 1936 (SA), s 4; Limitation Act 2005 (WA), s 18; Limitation Act 1974 (Tas), s 22; Limitation Act 1985 (ACT), s 13; Limitation Act (NT), s 14. See and cf Maridakis v Kouvaris (1975) 5 ALR 197 (NTSC); Buchanan v Byrnes (1906) 3 CLR 704; Leitz Leeholme Stud Pty Ltd v Robinson [1977] 2 NSWLR 544 (CA). The ability to recover future losses is discussed in Redfern, “Repudiation of Leases” (1998) 6 APLJ 153; Boge, “Repudiation of Leases” (1996) QLSJ 125. See Carter, “Repudiation of Leases” [1985] Conv 289; Carter and Hill, “Repudiation of Leases: Further Developments” [1986] Conv 262; Morgan, “Damages for Loss of Benefit of Covenants in Leases” (1985) 59 L Inst J 719; Debenham, “Contract Law and Real Property Leases” (1995) 3 APLJ 52; Chew, “Leases Repudiated: The Application of the Contractual Doctrine of Repudiation to Real Property Leases” (1990) 20 UWAL Rev 86. See also Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237; Ripka Pty Ltd v Maggiore Bakeries Pty Ltd [1984] VR 629; Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365; Maxwell v Moorabool Developments Pty Ltd [2004] VSC 392; Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209. See Drafting Comments, “Lease Drafting after Shevill’s Case” (1983) ANZ ConvR, Issue 34, p 35. For the meaning of “essential term” in this context, see Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 641–​642; Douglas v Cicirello [2006] WASCA 226 at [13]ff. Shevill v Builders’ Licensing Board (1982) 149 CLR 620 at 633 per Wilson J. [14.405]  749

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Tenth Vandy Pty Ltd (2008) 21 VR 68; [2008] VSCA 207, where her Honour stated that the ramifications of the recognition of a separate contractual basis for determination of a lease are likely to be limited. This will involve a consideration of factors such as the length of the lease and the amount of rent payable, particularly where there is no abandonment of possession by the tenant.600 Thirdly the landlord may recover future rent where the lease expressly entitles the landlord to recover damages for prospective loss. The onus here is on the landlord to show a “clear expression of intention”.601 [14.410]  A similar approach was taken in Progressive Mailing House Pty Ltd v Tabali Pty

Ltd (1985) 157 CLR 17.602 In this case the tenant company had breached its covenants relating to repairs and subletting, and was four months in arrears of rent. The Full High Court held that these breaches constituted a repudiation of the contract of lease, and that by virtue of this repudiation the landlord was entitled to terminate the lease and sue for damages for loss of the benefit of the covenant to pay rent. Mason  J stated that the ordinary principles of contract law relating to termination for repudiation or for fundamental breach apply to leases.603 His Honour stated the following formula for determining when a contract has been repudiated:604 “What needs to be established in order to constitute a repudiation is that the party evinces an intention no longer to be bound by the contract or that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way”. The following points emerge: 1. “The well recognised distinction between common law rescission and termination pursuant to a contractual power provides no reason in principle why damages are recoverable by the innocent party in one case and not in the other, provided that the exercise of the power is consequent upon a breach or default by a defendant which would attract an award for such damages” (at 31). 2.

The existence in the lease of an express proviso for re-​entry does not exclude any other right of termination of the lease by the landlord (at 29–​30).

3.

The ordinary principles of contract law apply to leases. This proposition, which was enthusiastically endorsed by the New South Wales Court of Appeal in Wood Factory Pty

600 601 602

Natwest Markets Pty Ltd v Tenth Vandy Pty Ltd [2008] VSCA 207 at [55]. Shevill v Builders’ Licensing Board (1982) 149 CLR 620 at 637. This case has been followed by the High Court in Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237 and applied in numerous lower court cases: see, for example, Emhill Pty Ltd v Bonsoc Pty Ltd (No 2) [2007] VSCA 108; Apriaden Pty Ltd v Seacrest Pty Ltd [2005] VSCA 139; Swanville Investment Pty Ltd v Riana Pty Ltd [2003] WASCA 121; Byrnes v Jokona Pty Ltd [2002] FCA 41; Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105 (CA); Findlay v Nut Farms of Australia Pty Ltd [1989] ANZ ConvR 40; Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VR 184 (FC); J & C Reid Pty Ltd v Abau Holdings Pty Ltd [1989] ANZ ConvR 44; De Landgrafft v Brown (1993) 9 SR (WA) 236; Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 (CA); Murray-​Oates v Jjadd Pty Ltd (1999) 76 SASR 38 (FC). Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 29. Reaffirmed by the Full Court of the WA Supreme Court in Copperart Pty Ltd v Bayside Developments Pty Ltd (1996) 16 WAR 396 at 401. Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 33. This formula was originally propounded by Gibbs CJ in Shevill v Builders’ Licensing Board (1982) 149 CLR 620 at 625–​627. Note that Mason J specifically rejected ((1985) 157 CLR 17 at 34) the submission that abandonment of possession is necessary to constitute a case of repudiation by a tenant.

603 604

750 [14.410]

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Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105,605 has wide-​ranging ramifications for the development of the common law of landlord and tenant. In particular, it follows that the doctrines of frustration of contract, mitigation of damages and mutuality of covenants will apply to landlord-​tenant law in the future. [14.415] In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR

623,606 the landlord company was dilatory in registering the lease granted to the tenant company. The tenant company eventually wrote to the landlord requiring the lease to be registered within 14  days and reserving its rights in respect of default. The landlord failed to register within the stipulated period, whereupon the tenant terminated the lease, claiming repudiation had occurred. The issue was whether the lease had been validly terminated. The High Court held in the affirmative and expanded as follows on the meaning and application of repudiation in the context of leases: 1.

Mason CJ stated in relation to repudiatory conduct (at 376): There is a difference between evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so. In the first case the party intends not to carry out the contract at all in the event that it does not suit him. In the second case the party intends to carry out the contract, but only to carry it out as and when it suits him. It is much easier to say of the first than of the second case that the party has evinced an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with his obligations and not in any other way. But the outcome in the second case will depend upon its particular circumstances, including the terms of the contract. In some situations the intention to carry out the contract as and when it suits the party may be taken to such lengths that it amounts to an intention to fulfil the contract only in a manner substantially inconsistent with the party’s obligations and not in any other way.

2.

Repudiation may occur in relation to the whole contract or in relation to a particular term of the contract if sufficiently important (at 380 per Brennan J).

3.

Repudiation is not ascertained by an inquiry into the subjective state of mind of the party in default, but rather in the conduct of the defaulting party which conveys to the other party the defaulting party’s inability to perform the contract or promise, or his or her intention not to perform it or to fulfil it only in a manner substantially inconsistent with his or her obligations and not in any other way (at 382 per Deane and Dawson JJ).

4. The question whether an inference of repudiation should be drawn merely from continued failure to perform requires an evaluation of the delay from the standpoint of the innocent party. Would a reasonable person in the shoes of the innocent party clearly infer that the other party would not be bound by the contract or would fulfil it only in a manner substantially inconsistent with that party’s obligations (at 382–​383 per Deane and Dawson JJ)?

605 606

See also Harrem Pty Ltd v Toyo Tyre Rubber Australia Ltd [2008] NSWSC 776 at [430]; Gallic Pty Ltd v Cynayne Pty Ltd (1986) 83 FLR 31 (NTSC); Nangus Pty Ltd v Charles Donovan Pty Ltd [1989] VR 184 (FC) at 193. Applied in RW Jaksch & Associates Pty Ltd v Hawks [2005] VSCA 307; Oliver v Lakeside Property Trust Pty Ltd [2005] NSWSC 1040. [14.415]  751

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5.

Repudiation may be established without proof of an effective notice to complete. The absence of an effective notice means that the other evidence must be examined to determine whether a clear inference of repudiation should be drawn, but it does not preclude the drawing of that inference (at 383 per Deane and Dawson JJ).

[14.420]  The Victorian Court of Appeal has recently affirmed in Apriaden Pty Ltd v Seacrest

Pty Ltd (2005) 12 VR 319; [2005] VSCA 139 that repudiation provides an additional means by which a lease may be terminated by an innocent party.607 The court specifically rejected the contention that a lease cannot be terminated unless the leasehold estate is also terminated under property law principles. Thus, where a tenant is consistently in arrears of rent and the landlord accepts the breach of covenant as a repudiation of the contract, there is no requirement on the landlord to fulfil the requirements of s 146 of the Property Law Act 1958 (Vic) (and its equivalents in other States and Territories). Despite the availability of repudiation, its use will be limited to extreme factual situations. As stated by Lord Wilberforce in Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 All ER 571; [1980] 1 WLR 277 (HL) at 576 (All ER): “Repudiation is a drastic conclusion which should only be held to arise in clear cases of a refusal, in a matter going to the root of the contract, to perform contractual obligations”. Similarly in Braham v Stephen [2015] VSC 87 the Victorian Supreme Court considered a lease at a nominal rent where the tenant held an option to purchase the land for a nominal amount. The tenant allowed his son to build a shed without a council permit; an action that was illegal and in breach of the lease. The court held that the breach did not amount to a repudiation and did not amount to a serious breach of an intermediate term. The landlord was entitled only to damages. The court indicated that contractual principles would not apply completely where as in this case the lease was for a long term and at a nominal rent. Distress for rent [14.425]  At common law, the landlord could seek to recover arrears of rent by distraining608

on the goods found in the rented premises as an alternative to or in addition to suing for the arrears. Originally this remedy was available throughout Australia, but has now been abolished by legislation of general application in New South Wales, Victoria, Western Australia, the Australian Capital Territory and the Northern Territory,609 and by residential tenancies legislation in South Australia and Tasmania.610 The remedy still applies to commercial premises in South Australia and Tasmania.611 The position in Queensland is curious. Distress was originally outlawed by s 103 of the Property Law Act 1974 (Qld). However, this section was omitted by s 29 of the Statute Law (Miscellaneous Provisions) (No 2) Act 1992 (Qld). The effect of this would appear to revive the common law remedy. Note, however, that distress is definitely abolished in respect of residential premises, by virtue of s 95 of the Residential Tenancies and Rooming Accommodation Act 2008 (Qld).

607 See McGill, “Statutory Protections from Forfeiture of a Leasehold Estate Following Apriaden Pty Ltd v Seacrest Pty Ltd” (2007) 14 Australian Property L J 126. 608 See Walton, “Landlord’s Distress –​Past Its Sell By Date?” [2000] Conv 508. 609 Conveyancing Act 1919 (NSW), s 177A; Landlord and Tenant Act 1958 (Vic), s 12; Distress for Rent Abolition Act 1936 (WA), s 2; Law Reform (Abolitions and Repeals) Act 1996 (ACT), s 5; Law of Property Act (NT), s 125. 610 Residential Tenancies Act 1995 (SA), s 60; Residential Tenancy Act 1997 (Tas), s 24. 611 For a recent reported illustration, see Turner v Kostoglou [2009] SASC 204. 752 [14.420]

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The remedy of distress empowers the landlord to enter the rented premises and to seise and sell sufficient goods found therein to satisfy the rent arrears and any expenses incurred.612 The landlord is not restricted to seizing goods belonging to the tenant, but may take any goods found on the premises regardless of their ownership. The Victorian Supreme Court has recognised a landlord’s right to exercise a contractual right to a lien over a tenant’s goods despite the result being close to the right to distress. In Asia Pacific Building Corporation Pty Ltd v Sharon Lee Holdings Pty Ltd [2013] VSC 11, a clause of the lease provided that on a prescribed default the landlord could exercise a lien over the tenant’s chattels. The court rejected an argument that the right was a form of distress and held that a separate right was involved. In those jurisdictions where the remedy of distress still survives, there are many statutory restrictions on the exercise of the remedy designed to make it more equitable.613 In outline, these restrictions are as follows. Certain goods are absolutely exempted from distress: money, animals ferae naturae, perishable items, goods actually in use by the tenant or another person, goods falling within trade privilege (ie, goods belonging to third parties delivered to the tenant in the course of a trade carried on by the tenant), and specified goods of the tenant which are regarded as necessary for everyday living (eg, clothes, cooking utensils and tools of trade up to a specified value). Certain other goods are conditionally exempted from distress (ie, they can only be seised and sold if there are insufficient other goods on the premises to satisfy the rent arrears and expenses). Illustrations are tools and instruments of trade and (in Tasmania) sheep, cattle and beasts of the plough. Special protection is also afforded to goods belonging to subtenants and lodgers and goods on hire purchase.614 There is also a prescribed procedure for protecting all goods belonging to third parties. By virtue of these restrictions, distress for rent is seldom exercised by landlords in modern times.615 Action for use and occupation [14.430]  An action for use and occupation will lie in either of two situations: first, wherever

the tenant has entered into possession under an agreement to pay rent, but the exact amount of the rent was never settled by the parties; and, secondly, wherever there is an oral agreement to pay rent or an agreement not in deed form. In this latter situation, an action for use and occupation is an alternative to an action for rent. In England the law was codified in s 14 of the Distress for Rent Act 1737 (Imp). In Tasmania similar although not identical legislation has been enacted. Section 8 of the Landlord and Tenant Act 1935 (Tas) states:

(1) Where the agreement between the landlord and tenant is not by deed, the landlord may recover a reasonable satisfaction for the lands, tenements, or hereditaments held or occupied by the defendant in an action for the use and occupation of what was so held or enjoyed.



(2) If in evidence on the trial of such action any parol demise or any agreement, not being by deed, whereon a certain rent was reserved shall appear, the plaintiff in such action shall not be non-​suited, but may make use thereof as an evidence of the quantum of the damages to be recovered.

612 Lyons v Elliott (1876) 1 QBD 210 at 213. 613 These restrictions are contained in Pt II of the Landlord and Tenant Act 1936 (SA) and Pt V of the Landlord and Tenant Act 1935 (Tas). 614 Special provisions as to hire-​purchase goods are contained in s 66 of the Landlord and Tenant Act 1935 (Tas). In South Australia hire purchase was abolished by the Consumer Transactions Act 1972 (SA). 615 See Abingdon Rural DC v O’Gorman [1968] 2 QB 811 at 819 (CA) per Lord Denning MR. [14.430]  753

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In both situations it is essential that the landlord prove that an express or implied agreement was made with the tenant to the effect that the tenant would occupy the rented premises and pay rent,616 and that the tenant actually entered into the premises.617 The quantum of the order will be the amount that the court considers that the occupation is worth on the evidence.618 Wherever the rent is specified in an unenforceable agreement, the sum specified may be used as evidence of the value of the occupation and will be persuasive although it is not conclusive on the issue.619 As this remedy is based on use and occupation, rent payable in advance cannot be sued for by the landlord.620 Actions for double rent and double value against overholding tenants [14.435]  The actions for double rent and double value originated in s 1 of the Landlord and

Tenant Act 1730 (Imp) and s 18 of the Distress for Rent Act 1737 (Imp). These ancient statutes were later incorporated into the Australian States by virtue of the reception of imperial laws legislation.621 It would appear that the actions are still available in all States except New South Wales, where they have been abolished by s 8(1) of the Imperial Acts Application Act 1969 (NSW).622 In Queensland, Victoria, Tasmania and the Northern Territory legislation in modern times has replaced the necessity for reliance on the British legislation.623 This State legislation has modernised the language of the UK legislation but has adhered to the substance of its provisions. For example, ss 138 and 139 of the Property Law Act 1974 (Qld) read: 138 Where any tenant for years, including a tenant from year to year or other person who is or comes into possession of any land by, from or under or by collusion with such tenant, wilfully624 holds over any land after –​

(a) determination of the lease or term; and



(b) after demand made and notice in writing has been given for the delivery of possession of the land by the lessor or landlord or the person to whom the remainder or reversion of such land belongs or the person’s agent lawfully authorized; then the person so holding over shall, for and during the time the person so holds over or keeps the person entitled out of possession of such land, be liable to the person so kept out

616

Ovidio Carrideo Nominees Pty Ltd v The Dog Depot Pty Ltd [2006] VSCA 6; Specktor v Lees [1964] VR 10; Sanders v Cooper [1974] WAR 129 (FC); Australian Provincial Assurance Association Ltd v Rogers (1943) 43 SR (NSW) 202 (SC in banco). 617 Woodhouse v Ah Peck (1900) 16 WN (NSW) 166 (SC in banco); Cooper v Dick (1862) 1 SCR (NSW) 127. 618 Thetford Corporation v Tyler (1845) 8 QB 95; 115 ER 810; Gibson v Kirk (1841) 1 QB 850; 113 ER 1357. 619 Murdock v Kennedy (1952) 69 WN (NSW) 191 (SC in banco). 620 Angell v Randall (1867) 16 LT 498. 621 Australian Courts Act 1828 (UK), s 24; Constitution Act 1867 (Qld), s 33; Acts Interpretation Act 1915 (SA), s 48; Imperial Acts Application Act 1980 (Vic); Interpretation Act 1984 (WA), s 73. 622 Section 8(1) of the Imperial Acts Application Act 1969 (NSW) reads: “In addition to the repeals effected by subsection two of section five of this Act all other Imperial enactments (commencing with the Statute of Merton, 20 Henry III AD 1235-​6) in force in England at the time of the passing of the Imperial Act 9 George IV Chapter 83 are so far as they are in force in New South Wales hereby repealed”. For a recent case recognising but not applying the remedy, see Fox v Toll Properties Pty Ltd [2007] VSC 138. 23 Landlord and Tenant Act 1958 (Vic), ss 9, 10; Property Law Act 1974 (Qld), ss 138, 139; Landlord and Tenant 6 Act 1935 (Tas), ss 9, 10; Law of Property Act (NT), s 152. 624 For the meaning of “wilfully”, see French v Elliott [1959] 3 All ER 866 at 874; Richards v Golden Fleece Petroleum Pty Ltd (1983) 49 ALR 337 at 345. 754 [14.435]

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of possession at the rate of double the yearly value of the land so detained for so long as the land shall have been so detained, to be recovered by action in any court of competent jurisdiction. 139 Where a lessee who has given notice of intention to quit the land held by the lessee at a time specified in such notice does not accordingly deliver up possession at the time so specified, then, the lessee shall after that time be liable to the lessor for double the rent or sum which would have been payable to the lessor before such notice was given. Such lessee shall continue to be liable for such double rent or sum during the time the lessee continues in possession, to be recovered by action in any court of competent jurisdiction.

In South Australia and Western Australia no specific State legislation covering this matter exists and reliance is still placed on the United Kingdom legislation. A number of illogical distinctions exist in the scope and operation of the present laws. While the double rent penalty applies universally regardless of the nature of the lease, the double value penalty appears not to extend to periodic leases other than yearly periodic leases.625 While it may be true to argue that there is no real justification for extending the double value penalty to short periodic leases as they are generally of less valuable premises and can be readily determined,626 the same arguments could be applied to the double rent penalty. Similarly, inexplicable is the fact that although a landlord must give the tenant written notice before he or she can sue for the double value penalty,627 in the case of the double rent penalty the notice given by the tenant can be either written or oral.628 Again, the requirement in the 1730 Act that the tenant hold over “wilfully” before being liable for the double value penalty does not appear in the 1737 Act. A further illogicality is that at common law the double rent penalty, but not the double value penalty, can be enforced by distress.629 While conceptually this latter distinction can be justified as the double value penalty is in the nature of unliquidated damages, rather than rent, the distinction makes no sense on policy grounds. [14.440]  Problems also exist in the calculation of the double value penalty. Although in

the Queensland case of Public Curator v LA Wilkinson (Northern) Ltd [1933] QWN 28 double yearly value was calculated by doubling single rent, it has been held before and since that case that “double yearly value and double rent are two entirely different things, and you cannot ordinarily estimate the former by doubling a single rent, for this might not afford an equivalent compensation”.630 Despite the assumption by some judges that the double value penalty is more favourable to landlords than the double rent penalty, this is not universally correct. The double value penalty must be calculated on the yearly

625 The action for double value does not lie against a weekly tenant: Lloyd v Rosbee (1810) 2 Camp 453; 170 ER 1216 (NP); Sullivan v Bishop (1826) 2 Car & P 359; 172 ER 162 (NP). Query whether a quarterly tenant is liable under this action: Wilkinson v Hall (1837) 3 Bing NC 508; 132 ER 506 (CP). The action definitely applies to tenancies from year to year: Ryal v Rich (1808) 10 East 48; 103 ER 693 (KB). 626 See QLRC, Relief from Forfeiture of an Option to Renew and Certain Aspects of the Law Relating to Landlord and Tenant, Report No 1 (QLRC 1, 1970), p 10. 627 Woodfall’s Law of Landlord and Tenant at [19.108]. See also French v Elliott [1959] 3 All ER 866. 628 Johnstone v Hudlestone (1825) 4 B & C 922; 107 ER 1302 (KB); Timmins v Rowlison (1765) 1 Wm Bl 533; 96 ER 309 (KB). 629 Humberstone v Dubois (1842) 10 M & W 765; 152 ER 681 (Exch); Timmins v Rowlison (1765) 1 Wm Bl 533; 96 ER 309 (KB). The remedy of distress has been abolished the majority of jurisdictions: see [14.380]. 630 Trivett v Hurst [1937] St R Qd 265 at 271 per Blair CJ. See also Doe d Matthews v Jackson (1779) 1 Doug 175; 99 ER 115 (KB). [14.440]  755

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value of the premises and must not include the value of incidental advantages. Thus, in Robinson v Learoyd (1840) 7 M & W 48; 151 ER 673 (Exch), where the landlord, the owner of a woollen mill and steam-​engine, let to the tenant a room in the mill together with a supply of power from the steam-​engine, it was held that the value of the power supplied could not be included in the calculation of the double value penalty. In addition, according to Keith J in Yonge-​Rosedale Developments Ltd v Levitt (1978) 82 DLR (3d) 263 at 270, the value of the land means “the pecuniary value to the particular landlord having regard to his own special circumstances. In other words, the true test is subjective”. In this case, despite evidence that the landlord could have let the premises at a rental of between $3,000 and $4,000 per month on a medium-​to long-​term lease, this would have conflicted with the intention of the landlord to keep the lease subject to termination on short notice. Accordingly, the double value was assessed on the rental of $2000, the value of the premises let on a short-​term lease. There is a dispute between the authorities as to whether the acceptance by the landlord of the normal rent will constitute an implied waiver of the right to apply for the double value remedy. According to one line of authorities, acceptance of rent is not necessarily fatal to a later claim for double value. For example, according to Blair CJ in Trivett v Hurst [1937] St R Qd 265 at 273:631 If after [the double value penalty] has accrued [the landlord] accepts the single rent, it is a question of fact whether such rent has been received in part satisfaction of the claim to double value or as a waiver of it. What acts on either side amount to a waiver of a notice after its expiration is ordinarily a mixed question of law and fact, the intention with which the act was done being for the jury and its legal effects for the court to decide.

However, there are cases supporting the proposition that the acceptance of single rent, accrued due subsequently to the notice to quit, is always a waiver of the landlord’s right to double value.632 Proponents of this proposition regard the receipt of rent as inherently inconsistent with a claim for double value. The matter must be regarded at present as unsettled.

TENANT’S REMEDIES Overview [14.445] Where a landlord breaches an obligation under the lease, a tenant is generally

confined to contractual remedies that involve the continuation of the lease. The normal remedies include damages for any loss sustained; those damages would seem to extend to future losses. A tenant may also seek compliance by the landlord with the obligations under the lease by way of actions for specific performance and an injunction.

The right of set-​off [14.450]  Although a specific right of rent withholding was never recognised at common law

or equity where the landlord breached any of the terms of the lease, in most circumstances

31 Ellenborough CJ expressed the same view in Ryal v Rich (1808) 10 East 48; 103 ER 693 (KB). 6 632 Doe d Cheny v Batten (1775) 1 Cowp 243; 98 ER 1066 (KB); Davenport v The Queen (1877) 3 AC 115 (HL). See also the arguments of counsel for the respondent in Public Curator v L A Wilkinson (Northern) Ltd [1933] QWN 28. 756 [14.445]

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rent may be withheld by tenants pursuant to the right of set-​off.633 This situation arises most commonly where the tenant defends an action for arrears of rent on the ground that the landlord has neglected the duty to repair. At common law, if the landlord breaches the covenant to repair, the tenant may carry out the work himself or herself and set off the cost of the repairs against his or her liability for rent due in the future. The only two qualifications to this common law right of set-​off are that the tenant must notify the landlord of the need for repair before the set-​off can arise, and that the set-​off must be for a sum which is not to be regarded as unliquidated damages.634 The basis of this right is that the money spent by the tenant is regarded as having been paid to the use of the landlord. The common law right originates from Taylor v Beal (1591) Cro Eliz 222; 78 ER 478 (KB), which held that a right of set-​off could be applied in appropriate cases even though it was denied on the facts of that case.635 The first case in modern times to recognise this right in the context of repairs in landlord-​tenant law was Lee-​Parker v Izzet [1971] 3 All ER 1099; [1971] 1 WLR 1688, a case where the plaintiff mortgagee was seeking a decree to enforce a registered charge on certain properties. These properties were in disrepair. Two of the defendants carried out repairs at their own expense and claimed the right to set-​off this cost against their liability for rent which was payable by them as tenants of the plaintiff mortgagee. Goff J held that this claim was valid. This common law remedy was of limited use to tenants in that being restricted to liquidated damages it only applied where the tenant was able to carry out the repairs himself or herself. However, British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137 and Batiste v Lenin [2002] NSWCA 316 have held that based on equity a right of set-​off will now apply where there is a claim by the tenant to unliquidated damages and that the right of set-​off for money spent on repairs may apply in respect of arrears of rent.636 In the British Anzani case, the landlords agreed to build two warehouses on the demised land and to remedy any defects in them within two years of their completion. In a later action brought by the landlords for arrears of rent, the tenant argued in defence a right of set-​off as the buildings were in a state of disrepair. Forbes J held that although the right of set-​off at common law was unavailable in that no money had been spent on repairs by the tenant, at equity a right of set-​off would be applied against the arrears of rent in respect of the unliquidated damages claimed for the landlord’s breach of his duty to repair. Thus, equity has significantly improved the position of the tenant in that, unlike at common law, the tenant is now able to use this remedy even if he or she pays no money in respect of the repairs. The only restriction on the availability of the equitable right of set-​off is that, as at common law, it will not apply unless the tenant has given the landlord notice of the need for repair.

633 See generally Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), Ch 39. See also Waite, “Disrepair and Set-​off of Damages against Rent: The Implication of British Anzani” [1983] Conv 373. 634 British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1980] QB 137 at 147–​48 per Forbes J. For a detailed discussion of the circumstances in which set-​off is available, see Hanak v Green [1958] 2 QB 9 at 17–​25 (CA) per Morris LJ. 635 Compare Waters v Weigall (1795) 2 Anst 575; 145 ER 971 (Exch). 636 See also Knockholt Pty Ltd v Graff [1975] Qd R 88; Carrathool Hotel Pty Ltd v Scutti [2005] NSWSC 401; Melville v Grapelodge Developments Ltd (1980) 39 P & CR 179 (QB Div); Tomlinson v Cut Price Deli Pty Ltd (1992) 38 FCR 490; Gibb Australia Pty Ltd v Cremor Pty Ltd (1992) 108 FLR 129. [14.450]  757

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Hirst J held in Hong Kong and Shanghai Banking Corp v Kloeckner & Co AG [1990] 2 QB 514; [1989] 3 All ER 513; [1990] 3 WLR 634 that the parties may by agreement expressly exclude the equitable right of set-​off. However, it has since been held in New Zealand Factors Ltd v Farmers Trading Co Ltd [1992] 3 NZLR 703 and Connaught Restaurants Ltd v Indoor Leisure Ltd, The Times, 19 July 1993 that clear and explicit words must be used.

758 [14.450]

CHAPTER 15

Housing [15.05] [15.25]

NEED FOR SHELTER..................................................................................................... 759 RESIDENTIAL TENANCIES............................................................................................ 762 [15.25] Scope of the legislation................................................................................. 762 [15.35] Creation of a residential tenancy relationship................................................. 765 [15.43] Tenant Databases........................................................................................................ 766 [15.45] Financial matters.......................................................................................... 766 [15.65] Rights and obligations.................................................................................. 768 [15.95] Termination of a tenancy.............................................................................. 772 [15.110] Administration and dispute resolution............................................................ 774 [15.115] ROOMING HOUSE RESIDENTS.................................................................................... 775 [15.115] Scope of the legislation................................................................................. 775 [15.135] Rights and obligations.................................................................................. 777 [15.155] RESIDENTIAL PARK DWELLERS..................................................................................... 778 [15.155] Scope of the legislation................................................................................. 778 [15.180] RETIREMENT VILLAGES................................................................................................ 780 [15.180] Scope of legislative protection........................................................................ 780 [15.210] Establishment and disclosure......................................................................... 783 [15.230] Retirement village management.................................................................... 785 [15.240] Ongoing financial matters............................................................................. 787 [15.250] Property responsibilities................................................................................. 788 [15.260] Protection of residence.................................................................................. 789 [15.315] Recovery of entry fees................................................................................... 792 [15.340] Administration and dispute resolution............................................................ 794

NEED FOR SHELTER [15.05]  The provision of shelter or accommodation is a fundamental and basic use of land.

Shelter is one of the basic human needs and it is not surprising that proprietary rights in land have, as one of their objectives, the protection of this right of shelter. In Australia it remains true that the majority of the population are provided with shelter by way of a fee simple interest in the land. Acquisition of such interests has been significantly subsidised and the first homeowners grant at the time of writing continues a well-​established government intervention. So far as our legal system can provide, fee simple owners have absolute proprietary interests in the land and their enjoyment of the land is not constrained by the proprietary interests of others. They may have granted a mortgage over the land to gain the finance for the land or granted an easement or restrictive covenant in favour of their neighbours to allow for ancillary services, such as drainage or the protection of views. The proprietary issues from these arrangements are considered in other chapters. Beyond property law, the fee simple owner will be constrained by tortious obligations (such as the law of nuisance) and statutory controls (such as planning and environmental laws).

[15.05]  759

PART 4 Divided Ownership of Land

There are many persons whose shelter is provided by proprietary rights less than an individual fee simple interest. The rights of co-​owners, holders of life interests and strata or community title holders are considered in Chapters 12 and 13. This chapter is concerned with shelter provided to residential tenants, rooming house occupants, residential park dwellers and persons living in retirement villages. [15.10]  For many persons accommodation is available only on the basis that they pay for it

as they use it, and that the person to whom payment is due can take back the land at a future time or on failure to make the due payments. This arrangement is the traditional sphere of operation of landlord and tenant law. However, legislation has been enacted essentially to protect residential tenants and the legislation has imposed obligations on the parties, set out rules and procedures for the termination of tenancies and provided cheaper and speedier dispute-​resolution processes. Although residential tenants are essentially holders of a leasehold interest at common law, the legislative term is defined except in Victoria to include some licensees because there is no necessity for exclusive possession or certainty of duration. As well as residential tenants, persons, particularly in shared accommodation, occupy as boarders or lodgers and were not included in initial residential tenancy legislation. More recently such persons and long-​term dwellers in residential or caravan parks have been protected by the extension of residential tenancy legislation and separate legislation for residential parks. [15.15] The sharing of an area of land presents possibilities of conflict of lifestyles and,

for the elderly, increased concerns for security. In Australia areas catering exclusively for the elderly have been established by retirement villages and such villages are common by world standards, although fully gated communities have not been the norm. The rights of residents of such areas have been commonly granted by licence agreements which, under the common law, confer only contractual rights. However, the rights of residents have been given legislative recognition and a distinct legal regime applicable to retirement villages has come into existence. This regime gives residents enforceable rights to possession and protection against owners and successors in title and most third parties so that the rights satisfy most criteria of proprietary interests. [15.20] Others receive shelter as family members or through the generosity or sense of

obligation of others and their legal description is that of a bare licensee. The legal system may regard spouses (and particularly married women) as co-​owners rather than dependent licensees (see [9.150]), but that status normally reflects a financial contribution to a joint enterprise. It may be that other family members (particularly children) should not be so dismissively characterised as persons whose rights exist only against the head of the household. The expression of tenants’ rights as implied terms of a contract rather than statutory obligations can result in what seems to be an unfair exclusion of protection for members of the family other than the one entering the contract. Those members may not be able to make a claim when an obligation under the lease has been breached causing injury to family members as occurred in cases such as Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 and Jones v Bartlett (2000) 205 CLR 166: see [15.90]. Some legal protection is given to residents of nursing homes and supported accommodation, but that is much more heavily dependent on administrative supervision and is outside the scope of this book. Moreover, despite its affluence, Australia still has significant numbers of 760 [15.10]

Housing  Chapter  15

homeless persons. In part, in common with some disruptive tenants, such persons are the product of the dismantling of institutions without adequate community support facilities. Nonetheless, whatever the social problems, increased protections for those in accommodation do nothing for those without accommodation. [15.23]  State and territory governments have undertaken some responsibility for the provision of housing.1 Since the 1930s governments have assumed the role of landlord of residential premises. After the Second World War shortages of housing and housing materials led to intervention by the Commonwealth Government to provide financial assistance to the states and territories for the construction of housing. This assistance was formalised into agreements, normally for three years, between the Commonwealth and the states and territories. Commonwealth financial assistance was also provided to private individuals, often with the aim of encouraging home ownership. At first state and territory governments offered housing to substantial portions of the public. However waiting lists grew ever longer and priority lists were established and ultimately the priority claims accounted for all available housing. In addition, from the last quarter of the 20th century Commonwealth funding has reduced. Increasingly public housing has been directed to the disadvantaged:  persons with limited financial means or physical or mental disabilities. Acceptance into public housing has meant a significant benefit to the successful person and decisions to grant or withdraw public housing have been subject to some form of administrative or judicial review. State and territory governments have had to decide eligibility for government housing and fitness to remain in such housing. Pressure to obtain public housing requires the exercise of discretion as to eligibility and priority of access. In the private sector decisions to grant a tenancy are within the discretion of the landlord subject to some constraints on discrimination. Because of often deprived backgrounds, public tenants could cause disturbance to neighbours and government agencies have to decide whether to seek to terminate the residential tenancy agreement. Generally public agencies are subject to the residential tenancies legislation but discretion has to be exercised as to whether to take action under that legislation. Government decisions to grant or seek to terminate a tenancy have in some jurisdictions been subject to formal review and in others to a purely administrative process. The welfare character of public housing and the significance of behavioural problems among public housing tenants have been formalised in New South Wales. Section 136 of the Residential Tenancies Act 2010 (NSW) designates tenancy agreements entered into by the Land and Housing Corporation and private landlords with similar objectives as social housing tenancy agreements. Social housing tenants may be required to enter into acceptable behaviour agreements and such agreements are deemed to be broken by anti-​social behaviour by the tenant.2 Generally the residential tenancies legislation applies to residential tenancy agreements entered into by public housing authorities. The legislation purports to bind the Crown; for instance, s 4 of the Residential Tenancies Act 2010 (NSW) states that the “Act binds the Crown in right of New South Wales and, in so far as the legislative power of the Parliament of New South Wales permits, the Crown in all its other capacities”. Similar provisions are

1

2

A detailed account giving particular attention to human rights considerations applicable to the provision of public housing is set out in Bell, “Protecting Public Housing Tenants in Australia from Forced Eviction: The Fundamental Importance of the Human Right to Adequate Housing and Home” (2013) 39 Mon LR 1. Residential Tenancies Act 2010 (NSW), s 138. [15.23]  761

PART 4 Divided Ownership of Land

set out in the legislation of the other jurisdictions.3 The binding nature of the legislation means that not only may public landlords enforce tenant behavioural obligations and use the legislative procedures to terminate the tenancy but they must meet the legislative standards of quality of housing. In some jurisdictions, public housing authorities are exempt from some of the provisions of the legislation. For example the New South Wales Land and Housing Corporation is exempt from the provisions relating to the requirement for rent receipts and rent records.4 In South Australia, most of the rights and obligations of the parties in terms of the use of the premises are outside the legislation and remain a matter of contract.5

RESIDENTIAL TENANCIES Scope of the legislation [15.25] All Australian jurisdictions now have legislation setting out a code for residential

tenancies.6 Comprehensive legislation regulating residential tenancies was initially introduced in South Australia7 and Victoria8 at the end of the 1970s and extended to all other jurisdictions in the next 20  years.9 While legislative reform has not proceeded at a uniform pace, at least in some jurisdictions what has been recognised as the second stage of reforms is now complete and a third phase is now being implemented.10 The first phase could be described as a statement of new tenant rights with a new forum for the resolution of landlord-​tenant disputes. The second stage was concerned with the extension of tenant protection to other residential occupants. The third phase involves some reconsideration of the rights enacted now seen as part of a consumer protection movement of the 1970s. The role of tenancies in society has also changed as more persons have been forced from owner-​occupation by higher housing prices; tenants are more broadly representative of the make-​up of society, particularly with respect to background and age.

3

4 5

6

7 8 9

10

See Residential Tenancies Act 1999 (NT), s 5; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 3; Residential Tenancy Act 1997 (Tas), s 4; Residential Tenancies Act 1997 (Vic), s 4; Residential Tenancies Act 1987 (WA), s 4. There are no equivalent provisions in the Australian Capital Territory and South Australian legislation. Residential Tenancies Act 2010 (NSW), ss 36, 37. Residential Tenancies Act 1995 (SA), s 5(2) lists the provisions of the Act which apply where the South Australian Housing Trust is the landlord; they are Pt 3, ss 65, 66, 71, 87, 89A, 90, 93, 99, Pt 8 Div 3, Pt 8 Div 4. Residential Tenancies Act 2010 (NSW); Residential Tenancies Act 1997 (Vic); Residential Tenancies and Rooming Accommodation Act 2008 (Qld); Residential Tenancies Act 1995 (SA); Residential Tenancies Act 1987 (WA); Residential Tenancy Act 1997 (Tas); Residential Tenancies Act 1997 (ACT); Residential Tenancies Act (NT). Residential Tenancies Act 1978 (SA). Residential Tenancies Act 1980 (Vic). The history of law reform in this area is set out in Bradbrook, MacCallum and Moore, Residential Tenancy Law and Practice –​Victoria and South Australia (Law Book Co, Sydney, 1983), Ch 1. Reform stemmed from a Poverty Commission inquiry; see Bradbrook, Poverty and the Residential Landlord-​Tenant Relationship (AGPS, Canberra, 1975). The role of the Poverty Commission and the ongoing impact of its recommendations are reviewed in Moore, “Adrian Bradbrook and Residential Tenancy Reform” in Babie and Leadbeter (eds), Law as Change, (Uni Adel Press, 2014), pp 139–​167. A detailed account of residential tenancy legislation is contained in Moore, Commercial and Residential Tenancies (Thomson Reuters, Sydney, 2008), pp 329–​ 445 and The Laws of Australia, Title 28 Real Property (Thomson Reuters, Sydney), Subtitle 28.9 Residential Tenancies. Bradbrook, “Residential Tenancy Law –​The Second Stage of Reform” [1998] Syd LR 17.

762 [15.25]

Housing  Chapter  15

The aim of the legislation has been stated expressly in the Northern Territory and Victoria. In the Northern Territory, the statement of intent refers to a balance of rights of landlords and tenants, improving understanding of their rights and obligations, provision of enforcement mechanisms, ensuring tenants with safe and habitable premises with appropriate security of tenure, and facilitating a fair rent return for landlords.11 In Victoria, reference is made to the definition of rights and duties in relation to rented premises, rooming houses and caravan parks, an inexpensive and quick dispute resolution process, and a centralised bond administration system through the Residential Tenancies Bond Administration Authority.12 Tenancy legislation has generally allowed the parties to choose the term of the tenancy. Tenants have generally offered one-​year agreements or, in less formal cases, periodic tenancies. These terms offer little security of tenure, but impose significant liability if a tenant chooses to move because of workplace opportunities or the availability of government housing or similar causes. On the other hand, landlords have had to follow a detailed process for the recovery of possession (see [15.95]). This process involves a period of default prior to notice, notice offering the opportunity to make good and then a hearing. Whilst allowance must be made for financial difficulty, the process can be exploited. The delay may lead to significant rent loss and in extreme cases property losses from damage to the property going beyond mere neglect. Another concern is that of troublesome tenants. Such tenants are seen detracting from the habitability of the neighbourhood at large. A  misfit element within a housing estate is often portrayed as an impetus to criminal behaviour by other adolescents and a cause of severe anxiety for the elderly. The problem of troublesome tenants is therefore a concern for landlords, but also for neighbours and public authorities. New South Wales has introduced special agreements relating to antisocial behaviour by public housing tenants and the Northern Territory and South Australia allow actions against tenants creating a disturbance by persons affected:  see [15.65]. Such persons can seek orders for possession even against the wishes of the landlord. Whilst troublemakers can be portrayed as bikies and similar irresponsible characters whose anti-​social behaviour is deliberate, disturbances can equally result from those with some mental instability who are dwelling within the community as a result of removing such persons from institutions. Tribunal procedure which relies primarily on adjudication following personal presentation of factual material by each side may not be well suited to an investigation of behavioural problems. Climate change impacts on residential occupation as well as most other aspects of current life. At the time of the original legislation, fitness for habitation was seen as structural soundness, cleanliness and security of occupation. Today, water and energy conservation are concerns of any residential occupant. For a tenant, control over the means of conservation depends on structural matters the responsibility and therefore the cost burden for which fall to the landlord. The landlord may not see long-​term benefit in the installation of water and energy-​saving devices. A  lack of insulation may, for example, lead to greater use of a bar radiator. This choice is not only costly for the tenant, but also places a burden on society through increased energy use. [15.30] The content of the residential tenancies legislation varies significantly between the

jurisdictions. In no jurisdiction does the Residential Tenancies Act apply to all residential

11 12

Residential Tenancies Act 1999 (NT), s 3. Residential Tenancies Act 1997 (Vic), s 1. [15.30]  763

PART 4 Divided Ownership of Land

leased premises. In each jurisdiction the Act defines a residential tenancy agreement and then expressly exempts a variety of miscellaneous types of premises from the scope of the legislation.13 It achieves this result by stating that the Act applies to a “tenancy agreement” entered into on or after the commencement of the legislation, and by then declaring that the Act does not apply to certain designated tenancy agreements. There is not uniformity even as to the type of agreement to which the legislation applies before the exemptions are taken into account. In South Australia, for example, the Act applies to what is described as a “residential tenancy agreement”. Such an agreement is defined14 as one by which a right of occupation of residential premises is granted for residential purposes, whether or not the occupation is exclusive. This definition avoids the concept of tenancy with its common law limitations,15 but the breadth of the definition makes the exemptions, such as those for tenancies connected with contracts of sale of the premises, important. There is nothing in the definition of the basic concept, or the exemptions, on the other hand, to import the requirement of certainty of duration so that an agreement to run until a grant of accommodation in a public housing unit becomes available for the tenant would be an agreement subject to the legislation. Only in Victoria is the term defined as a “tenancy”.16 The lists of exemptions vary slightly between the States. Traditionally the boundary between tenants and other occupants was most significantly the result of an exemption for boarders and lodgers,17 but today those boundaries are between different forms of regulation as boarders and lodgers will often be rooming house residents, see [15.115]ff. The exemptions also include the following categories: • where the premises form part of a farm; • tenancy agreements arising pursuant to a contract of sale or mortgage; • tenancy agreements created or arising under the terms of a contract of employment; • fixed-​term agreements exceeding five years in duration; • agreements in respect of premises that immediately before the agreement was entered into constituted the landlord’s principal place of residence; • holiday premises; • club premises; • hotels, motels; • educational institutions; • hospitals, nursing homes and homes for the disabled.

13

14 15 16 17

Residential Tenancies Act 2010 (NSW), ss 5–​6; Residential Tenancies Act 1997 (Vic), ss 6–​14; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), ss 29–​41; Residential Tenancies Act 1995 (SA), s 5; Residential Tenancies Act 1987 (WA), ss 5–​6; Residential Tenancy Act 1997 (Tas), s 6; Residential Tenancies Act 1997 (ACT), ss 5, 6; Residential Tenancies Act (NT), ss 5, 6, 74; see also McDonald v Reicht (1984) 36 SASR 299 (exemption for motels) and Shell Co Ltd v Kenpark Pty Ltd (1985) 38 SASR 297 (company as a tenant); Hamersley Iron Pty Ltd v Roberts (1996) 10 WAR 52 (company as a tenant). Residential Tenancies Act 1995 (SA), s 3(1). For the definition of a residential tenancies agreement, it has been affirmed that exclusive possession is not essential: Commissioner for Fair Trading v Voulon [2005] WASC 229. Residential Tenancies Act 1997 (Vic), s 6. Generally a boarder or lodger has no control over a defined area and therefore exclusive possession may have relevance at this point to the scope of the legislation: Noble v Centacare (2003) 150 ACTR 12.

764 [15.30]

Housing  Chapter  15

There is also a power included within the legislation to designate other premises as exempted from the operation of the legislation. Residents of university colleges have traditionally been excluded, more as a deference to history and today the cause of imbalance between university colleges and other suppliers of accommodation services for overseas students. Public housing tenancies are within the scope of the legislation, although there are certain limitations in South Australia and Queensland.18

Creation of a residential tenancy relationship [15.35]  Originally the residential tenancies legislation was generally reluctant to prescribe

or require any formalities for the conclusion of a binding contract following the common law tradition that a short-​term tenancy could be created by a handshake. In the Northern Territory, it is expressly provided that persons who have reached the age of 16 will be legally bound by any agreement to be a tenant and can sue and be sued unless the circumstances are found to be unconscionable.19 Recently New South Wales and Queensland have required that the landlord supply a written agreement; standard form agreements are established and may be used. In other jurisdictions obligations attach if a written agreement is made. In addition, until this imposition, legislative requirements have related to supplementary aspects of the arrangement, in particular, the parties are required to detail the condition of the premises in accordance with a prescribed format. Furthermore, information must be provided to the tenant as to the rights and obligations under the legislation. [15.40]  There are now rules as to the content of a written agreement, condition reports and

provision of information as to a tenant’s rights and obligations in each State: • New South Wales: There is a standard form of agreement (s 15 of the Residential Tenancies Act 2010 (NSW)); the agreement must be in writing and the standard form is to be followed (s 14); an information statement must be provided (s 31A); if a document is given to the landlord and rent paid, the agreement is enforceable (s 17). • Victoria:  If an agreement is in writing, it must follow the standard form (s  26 of the Residential Tenancies Act 1997 (Vic)); details of a condition report and a statement of rights and obligations are prescribed (s 35). • Queensland: The agreement must be in writing and the details of any written agreement are prescribed (s 61 of the Residential Tenancies and Rooming House Agreements Act 2008 (Qld)); a statement of rights and obligations must be provided (s 58) and a condition report completed (s 65); the landlord must provide a copy of the written agreement to the tenant (s 62). • South Australia: If there is a written agreement, the landlord is to provide a copy to the tenant (s 49 of the Residential Tenancies Act 1995 (SA)); the landlord is to provide to the tenant details of the landlord’s name and address (s 48). • Western Australia: If there is a written agreement, it must be in the prescribed form and a copy must be provided to the tenant (s 27A of the Residential Tenancies Act 1987 (WA));

18 19

The limitations are set out in Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 26; Residential Tenancies Act 1995 (SA), s 5(2). Residential Tenancies Act 1999 (NT), s 8. [15.40]  765

PART 4 Divided Ownership of Land

prescribed information must be given at the time of any written contract or within 14 days of the handing over of possession (s 27B) and a condition report must be completed (s 27C). • Tasmania:  Contents of a written agreement and statement of rights and obligations are prescribed (ss 13 and 14 of the Residential Tenancy Act 1997 (Tas)); if there is a bond, a condition report must be completed (s 26). • Australian Capital Territory:  Any written document is to be consistent with prescribed terms (s  9 of the Residential Tenancies Act 1997 (ACT)); a condition report must be provided (s 29). • Northern Territory: Any written agreement is to state the parties, the premises, the rent and the term (s 19 of the Residential Tenancies Act (NT)); any condition report is to be given to the tenant no later than three days after entry into possession (s 25).

Tenant Databases [15.43]  In making an assessment of a prospective tenant, landlords may utilise third party

records of tenant behaviour known as tenant databases. Controls apply to records relating to the occupation of residential premises under a residential tenancy agreement. The contents, use and disclosure of these records are controlled. The permissible content of tenant database is restricted to matters of tenant default. The person listed must have been named as a tenant in a residential tenancy agreement that has terminated. The person must have breached the agreement causing loss greater than the bond. Any information kept must be disclosed to the individual described and made available on demand. Both landlords and agents and database operators are under a duty to make corrections if they become aware that information kept is inaccurate, incomplete, ambiguous or out of date. Information must not be more than three years old.20

Financial matters [15.45]  Landlords have commonly demanded the payment of a security bond as a guarantee

of performance. The authoritative description of a bond is that of Barwick CJ in NLS Pty Ltd v Hughes (1966) 120 CLR 583 at 589, who said that the status of a bond was as “an earnest of performance which on default may be retained and credited against the damage suffered”. No common law rules existed on security deposits and there was no statutory regulation of the taking of deposits. Thus, prior to the residential tenancies, there was no maximum limit imposed on the amount of deposit which could lawfully be demanded, there were no rules as to the entitlement of either party to interest, and no rules as to the use of the deposit during the lease. Although the landlord was obliged to return the deposit at the end of the lease, the expense and time involved for the tenant in pursuing his or her claim before a Magistrates’ Court was out of proportion to the amount of money in dispute. The legislation aims to establish a system of control over the important issues of security deposits, while at the same time endeavouring to minimise the occurrence of disputes in the

20

Residential Tenancies Act 2010 (NSW), s 415; Residential Tenancies Act 1997 (Vic), s 31; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 92; Residential Tenancies Act 1995 (SA), s 55; Residential Tenancies Act 1987 (WA), s 29(1); Residential Tenancy Act 1997 (Tas), s 20; Residential Tenancies Act 1997 (ACT), Sch 1, cl 39; Residential Tenancies Act 1999 (NT), s 41(3).

766 [15.43]

Housing  Chapter  15

future. A major reform in this area is the requirement in most jurisdictions that the deposit must be deposited with a government agency.21 At the end of the lease the deposit will be returned in full to the tenant unless the landlord proves his or her entitlement to all or part of the deposit. In Queensland and the Australian Capital Territory a tenant is given the option in lieu of a security bond to provide a guarantee or undertaking from a financial institution or an amount in respect of a contract of insurance relating to the performance of the tenant’s obligations.22 The legislation regulates the maximum amount of any security deposit which may be demanded; commonly this amount can be the equivalent of up to four weeks rent with the possibility of extending the amount if pets are allowed to be kept on the premises.23 The interest in some jurisdictions is retained by the State Government and is used to defray administrative costs; any excess is used for general housing purposes.24 [15.50]  In New South Wales and Queensland provision is made for holding fees.25 Such fees

must not be more than one week’s rent. The landlord must not make an agreement with anyone else within seven days of receipt unless the tenant gives notice that the tenant no longer wishes to proceed. If an agreement is concluded between the parties, the fee must be credited towards rent. [15.55] The place and time for rent payment is generally a matter for the parties but rent

records are required. Some restrictions on the manner of payment have been a part of recent amendments, so that in New South Wales a no cost manner must be provided, in the Northern Territory the manner of payment must be specified or agreed, in Queensland alternative forms must be allowed, in South Australia provision must be made for payment other than by cash or to a third party who charges a fee and electronic transmission must be allowed, in Victoria rent is payable at the rented premises unless some alternative is specified in the agreement, and in Western Australia payment into a bank account or by cash or cheque must be allowed.26 In New South Wales charges for utility supplies cannot be made unless the service has separate metering.27

21

22 23

24

25 26

27

Residential Tenancies Act 2010 (NSW), s 162; Residential Tenancies Act 1997 (Vic), s 31; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 111; Residential Tenancies Act 1995 (SA), s 61; Residential Tenancies Act 1987 (WA), s 29; Residential Tenancy Act 1997 (Tas), s 25; Residential Tenancies Act 1997 (ACT), s 20; Residential Tenancies Act (NT), s 29. Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 119; Residential Tenancies Act 1997 (ACT), ss 16, 17. Residential Tenancies Act 2010 (NSW), s 162; Residential Tenancies Act 1997 (Vic), s 31; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 123; Residential Tenancies Act 1995 (SA), s 61(3); Residential Tenancies Act 1987 (WA), s 29(1); Residential Tenancy Act 1997 (Tas), s 25; Residential Tenancies Act 1997 (ACT), s 20; Residential Tenancies Act (NT), s 29. Residential Tenancies Act 2010 (NSW), s 162(2); Residential Tenancies Act 1997 (Vic), ss 54, 68; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 112; Residential Tenancies Act 1995 (SA), ss 100, 101; Residential Tenancies Act 1987 (WA), s 29(4), Sch 1. Residential Tenancies Act 2010 (NSW), ss 24, 25; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), ss 156–​162. Residential Tenancies Act 2010 (NSW), s 35; Residential Tenancies Act 1999 (NT), s 35; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 99; Residential Tenancies Act 1995 (SA), ss 56A, 58A; Residential Tenancies Act 1987 (WA), s 33(2). Residential Tenancies Act 2010 (NSW), ss 38, 39, 40. [15.55]  767

PART 4 Divided Ownership of Land

The frequency of rent increases is limited by the legislation. A landlord may only increase the rent if authorised to do so by the agreement and is then subject to a legislative restriction that a minimum written notice (commonly 60 days) must be provided of any increase.28 A notice is required prior to an increase and strict compliance with the formal terms of statutory notices is likely to be required. In Roads and Traffic Authority v Swain (1997) 41 NSWLR 452 tenants had a rent book which recorded payments made and due. The new rent level was noted in the book, but this method did not amount to a notice of increase. In Remely v O’Shea [2008] QCA 78 a rent that was claimed to be justified on the basis that it was for a new service was challenged but the matter was left unresolved. [15.60]  The legislation has introduced a new system of controlling excessive rents. This new

system enables any tenant who considers that the rent payable is excessive, having regard to the fact that the landlord has reduced or withdrawn any goods, services or facilities provided with the rented premises, or who has received notice from the landlord of a rent increase and considers that the increase is excessive, to apply for an order declaring that the rent, or proposed rent, is excessive.29 Any order made may include a determination of the maximum amount of rent payable in respect of the premises. This order will continue in effect for a maximum period of 12 months after the day on which the order comes into operation.30 In South Australia the legislation is broader and permits a tenant to challenge the original rent as excessive before the Tribunal.31 In all States the legislation lists a number of factors which must be taken into account when determining whether the rent is excessive.32

Rights and obligations [15.65] While the tenant has only possession for a limited time, during the currency of

the tenancy the land is entitled to undisturbed possession even against the landlord. The legislation imposes a statutory obligation on the landlord to provide vacant possession at the commencement of the tenancy and to respect that possession by guaranteeing to the tenant quiet enjoyment of the premises.33 The landlord’s entry onto the premises is limited to specified purposes, including rent collection, the conduct of an examination of the premises 28

29

30

31 32

33

Residential Tenancies Act 2010 (NSW), s 41; Residential Tenancies Act 1997 (Vic), s 44; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), ss 91–​93; Residential Tenancies Act 1995 (SA), s 55; Residential Tenancies Act 1987 (WA), s 30; Residential Tenancy Act 1997 (Tas), s 20; Residential Tenancies Act 1997 (ACT), ss 64A, 65; Residential Tenancies Act (NT), s 41. Residential Tenancies Act 2010 (NSW), s 44; Residential Tenancies Act 1997 (Vic), ss 45–​ 46; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 92; Residential Tenancies Act 1995 (SA), s 56(1); Residential Tenancies Act 1987 (WA), s 32(1); Residential Tenancy Act 1997 (Tas), s 23; Residential Tenancies Act 1997 (ACT), s 68; Residential Tenancies Act (NT), s 42. The original South Australian legislation was based on the now repealed Excessive Rents Act 1962 (SA). Residential Tenancies Act 2010 (NSW), s 44; Residential Tenancies Act 1997 (Vic), s 47; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 92; Residential Tenancies Act 1995 (SA), s 56(3); Residential Tenancies Act 1987 (WA), s 32(5) (six months only); Residential Tenancy Act 1997 (Tas), s 23; Residential Tenancies Act 1997 (ACT), s 68; Residential Tenancies Act (NT), s 42. Residential Tenancies Act 1995 (SA), s 56(1). Residential Tenancies Act 2010 (NSW), s 44(5); Residential Tenancies Act 1997 (Vic), s 47; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 92; Residential Tenancies Act 1995 (SA), s 56(2); Residential Tenancies Act 1987 (WA), s 32(3); Residential Tenancy Act 1997 (Tas), s 23; Residential Tenancies Act 1997 (ACT), s 68; Residential Tenancies Act (NT), s 42. Residential Tenancies Act 2010 (NSW), s 59; Residential Tenancies Act 1997 (Vic), s 67; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 183; Residential Tenancies Act 1995 (SA), s 65; Residential

768 [15.60]

Housing  Chapter  15

after appropriate notice, the carrying out of repairs or maintenance and showing through prospective tenants or purchasers.34 Even lawful acts of a landlord may be conducted in such a way as to disturb a tenant’s quiet possession. In Worrall v Commissioner for Housing for the Australian Capital Territory [2002] FCAFC 127 the landlord employed contractors to carry out what was accepted to be necessary repairs. However, they rendered the garden unusable and caused mud and noise. The Full Court of the Federal Court held that the actions would breach the covenant for quiet possession if they substantially interfered with the tenant’s enjoyment. Interpretation of the covenant has been more flexible in relation to leases generally recently,35 and it may be that landlords are under a duty, for example, to warn tenants if they know premises have previously been used as a brothel and thus demanding visits are likely to continue or if major roadworks have been scheduled. Furthermore, the landlord is under an obligation to ensure that the tenant has adequate security against intrusion. Neither party may change any lock without the permission of the other. The landlord must provide premises that are reasonably secure. [15.70] The tenant is obliged to refrain from creating any nuisance or interfering with the

peace and enjoyment of neighbours.36 Enforcing compliance with this obligation by one tenant may involve a duty by a landlord towards another tenant.37 The conduct prohibited is that of causing or permitting a disturbance so the tenant has responsibility for the acts of family members and guests on the premises. Control of actions of guests on their way to or from the premises may be more difficult to substantiate. Not all activities of persons on the premises can be said to be caused or permitted by the tenant. A  former domestic partner may be as unwelcome to the tenant as to neighbours; such persons are possible causes of disturbance in refusing to leave on request. The issue of neighbourhood standards is likely to arise in the meaning of “reasonable” enjoyment of neighbours. While nuisance has traditionally involved a course of action, some repetition may be part of interference with reasonable enjoyment. As with other residents, tenants must be allowed a social event from time to time so that neighbours could expect some noise on an occasional basis, but repetition would be unreasonable. [15.75]  Neighbourhood disturbance has become a community concern. Both neighbours and

public authorities are demanding stricter action against those causing a disturbance. It is argued that ring-​leaders have an impact well beyond their individual actions, particularly as an influence upon others as part of neighbourhood gangs. Within more intensive residential

34

35 36

37

Tenancies Act 1987 (WA), s 44; Residential Tenancy Act 1997 (Tas), s 55; Residential Tenancies Act 1997 (ACT), s 8, Sch 1; Residential Tenancies Act (NT), s 66. Residential Tenancies Act 2010 (NSW), s 24; Residential Tenancies Act 1997 (Vic), s 86; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 192; Residential Tenancies Act 1995 (SA), s 72; Residential Tenancy Act 1997 (Tas), s 56; Residential Tenancies Act 1987 (WA), s 46; Residential Tenancies Act 1997 (ACT), Sch 1, cl 82; Residential Tenancies Act (NT), s 68. Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1. Residential Tenancies Act 2010 (NSW), s 23; Residential Tenancies Act 1997 (Vic), s 60; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 184; Residential Tenancies Act 1995 (SA), s 71; Residential Tenancies Act 1987 (WA), s 39; Residential Tenancy Act 1997 (Tas), s 52; Residential Tenancies Act 1997 (ACT), Sch 1, cl 70; Residential Tenancies Act (NT), s 54. The statutory duty may be higher than that under the common law as set out in Malzy v Eichholz [1916] 2 KB 308. [15.75]  769

PART 4 Divided Ownership of Land

buildings these gangs are source of illegal activity and more vulnerable residents, such as the elderly, feel at risk and are reluctant to complain. At the same time, problems with neighbours may arise, not because of anti-​social intent, but because of inability to control behaviour, particularly by those who now live in the community because of deinstitutional policies. As tenants are responsible not only for their own conduct, but also for that of those permitted on the premises, incapacities of children may lead to action under these regimes. In New South Wales public tenants may be required to enter behaviour control agreements.38 Similar agreements may be required in the Northern Territory.39 In the Northern Territory breach of an acceptable behaviour agreement is a ground for termination. In New South Wales special grounds for termination of public housing tenancies were added. In South Australia and the Northern Territory termination of a residential agreement for disruptive behaviour is possible at the instigation of neighbours.40 In South Australia the Tribunal may make a termination order even against the wishes of the landlord. The section repeats the obligations set out earlier, but adds the consequence of termination by interested persons. Special consideration must be given to the position of the landlord. An order may include a prohibition upon residence by the named person, whether or not as tenant, at the subject premises. While “interested person” is defined as a person adversely affected, it is not clear if the adverse effect extends beyond behavioural impact, such as the management concern of a strata or community corporation or public order concern of the police. In the Northern Territory termination by interested parties for disruptive conduct is similarly permitted.41 [15.80]  The legislation imposes for the first time a basic duty on the landlord to repair the

premises.42 The duty is non-​delegable and a landlord will be liable for the acts of tradespersons employed by the landlord.43 The landlord’s duty is subject to a statutory duty on the tenant to ensure that care is taken to avoid damaging the rented premises.44 Thus, the landlord will not be liable to repair any damage caused intentionally, recklessly or negligently by the tenant or his or her invitees. The landlord’s duties are further specified in New South Wales and Tasmania. In New South Wales, premises are declared not to be fit for human habitation unless they are structurally sound, have adequate natural or artificial lighting, adequate ventilation, supplied with electricity or gas and have adequate plumbing and drainage. In Tasmania, smoke alarms must be adequately maintained and premises be waterproof, structurally sound with adequate toilets, bathrooms, cooking facilities and electricity and heating.45

38 39 40 41 42

43 44

45

Residential Tenancies Act 2010 (NSW), s 35A. Residential Tenancies Act (NT), s 99A. Residential Tenancies Act 1995 (SA), s 90. Residential Tenancies Act (NT), s 100. Residential Tenancies Act 2010 (NSW), s 63; Residential Tenancies Act 1997 (Vic), s 65; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 185; Residential Tenancies Act 1995 (SA), s 68(1)(a); Residential Tenancies Act 1987 (WA), s 42(1)(b); Residential Tenancy Act 1997 (Tas), s 32; Residential Tenancies Act 1997 (ACT), Sch 1, cl 54; Residential Tenancies Act (NT), ss 47, 57. Greko v C Gillam Investments Pty Ltd [2005] QCA 184. Residential Tenancies Act 2010 (NSW), s 63(4); Residential Tenancies Act 1997 (Vic), s 61; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 185; Residential Tenancies Act 1995 (SA), s 69(1)(c); Residential Tenancies Act 1987 (WA), s 38(1)(c); Residential Tenancy Act 1997 (Tas), s 53; Residential Tenancies Act 1997 (ACT), Sch 1, cl 63; Residential Tenancies Act (NT), s 51. Residential Tenancies Act 2010 (NSW), s 52(1A); Residential Tenancy Act 1997 (Tas), ss 36B–​36P.

770 [15.80]

Housing  Chapter  15

The landlord’s duty to repair is also subject to an obligation on the tenant to give notice of any damage to the landlord.46 This duty has been held to qualify the landlord’s duty to repair. The requirement for notice to the landlord has been held to apply even to hidden defects. In Northern Sandblasting Pty Ltd v Harris (1997) 188 CLR 313 the earth wire from the stove was not isolated from the active wire carrying the current to the hotplate. The earth wire was connected to water pipes. The tenants’ daughter was severely injured by contact with the water pipe while the hotplate was in use. She was held not to have any right of recovery under residential tenancy legislation because notice of the defect had not been given to the landlord and because she was not a party to the tenancy agreement. Similarly, in Casey v Aldous (1994) 63 SASR 347 a tenant complained of excessive energy bills because of a defective stove installation, but was denied relief because of lack of notice to the landlord. [15.85]  As a basic rule, in the absence of agreement as to the carrying out of maintenance

repairs, the tenant is required to obtain an order for repairs if the tenant believes that the premises are substandard.47 However, in certain circumstances the legislation allows the tenant to undertake urgent repairs and to seek reimbursement from the landlord for the reasonable costs incurred.48 This provision, which was strongly opposed by landlords and developers, is limited in its operation by legislative restrictions on the maximum amount of reimbursement which can be sought and by limitations on the type of repairs which fall within the scope of the “urgent repairs” provision.49 If a tenant alters the premises without permission, the tenant may be liable for the cost of reinstatement. In Maxted v LC Smith and Co Pty Ltd [2008] QSC 165 a tenant removed a fence. Although the fence was in poor condition, the tenant was liable for the cost of replacement. [15.90]  In contrast to the law on repairs, in relation to cleanliness the legislation imposes

the primary duty on the tenant. The legislation requires a tenant to keep the rented premises in a reasonably clean condition.50 However, although the tenant is under a duty to keep the premises in a reasonably clean condition, the tenant is not under a duty to put it in such a 46

47

48

49

50

Residential Tenancies Act 1997 (Vic), s 62; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 217; Residential Tenancies Act 1995 (SA), s 69(1)(b); Residential Tenancy Act 1997 (Tas), s 32; Residential Tenancies Act 1987 (WA), s 38(1)(b); Residential Tenancies Act 1997 (ACT), Sch 1, cl 63; Residential Tenancies Act (NT), s 58. The duty to report is no longer express in New South Wales and the prerequisite of notice to liability may no longer exist. Residential Tenancies Act 2010 (NSW), s 65, both landlords and tenants may seek rectification orders Residential Tenancies Act 2010 (NSW), ss 65B, 65C; Residential Tenancies Act 1997 (Vic), s 74; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 215; Residential Tenancies Act 1995 (SA), s 110(b); Residential Tenancy Act 1997 (Tas), s 32; Residential Tenancies Act 1997 (ACT), Sch 1, cl 55; Residential Tenancies Act (NT), s 59. Residential Tenancies Act 2010 (NSW), s 64; Residential Tenancies Act 1997 (Vic), s 72; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 214; Residential Tenancies Act 1995 (SA), s 68(3); Residential Tenancies Act 1987 (WA), s 43; Residential Tenancy Act 1997 (Tas), ss 33, 34; Residential Tenancies Act 1997 (ACT), Sch 1, cll 59, 60; Residential Tenancies Act (NT), ss 60, 63. Residential Tenancies Act 2010 (NSW), s 64; Residential Tenancies Act 1997 (Vic), ss 72, 99(3); Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 214; Residential Tenancy Act 1997 (Tas), ss 33, 34; Residential Tenancies Act 1997 (ACT), Sch 1, cll 58, 60; Residential Tenancies Act (NT), ss 60, 63. Compare Residential Tenancies Act 1987 (WA), s 43(1). Residential Tenancies Act 2010 (NSW), s 51(2); Residential Tenancies Act 1997 (Vic), s 63; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 188; Residential Tenancies Act 1995 (SA), s 69(1)(a); Residential Tenancies Act 1987 (WA), s 38(1)(a); Residential Tenancy Act 1997 (Tas), s 53; Residential Tenancies Act 1997 (ACT), Sch 1, cl 65; Residential Tenancies Act (NT), s 51. [15.90]  771

PART 4 Divided Ownership of Land

condition at the commencement of the lease. This obligation falls within the statutory duties of the landlord.51

Termination of a tenancy [15.95]  Termination of a tenancy can occur through expiry of a fixed term, notice without

grounds in respect of a periodic tenancy or notice on the basis of breach. During the term of a fixed-​term tenancy normally notice to terminate cannot be served without breach.52 The legislation has not, however, provided tenants with security of tenure in that the landlord may reclaim possession at the end of a fixed term or give notice in the case of a periodic tenancy, even though the tenant has complied with all the obligations under the tenancy agreement. There is no requirement that the landlord provide any proper cause for terminating the tenancy in these cases. To some extent the rights of the tenant with respect to repairs and quiet enjoyment are diminished because the landlord can simply retake possession in this way. Notice to terminate can be given by either landlord or tenant. Although previous mention has been made of the fact that a tenant cannot simply refuse to pay rent or walk out because of lack of repairs, a tenant can invoke termination proceedings. In Weeks v Bond [1999] Qd R 34 a tenant was held to be entitled to termination even without a request to repair where repair problems had been ongoing and significant. The legislation has, however, protected a tenant where the landlord seeks to recover possession because of a breach by the tenant. The most common breach relied upon by landlords is the failure to pay rent. The legislative schemes provide some safeguards to the tenant in rent default in that they firstly require that rent default have continued for a specified period (commonly 14 days) before procedures can be initiated.53 With respect to such non-​ payment, the landlord must provide notice of the breach and an opportunity to make good the default; in the case where the tenant has committed repeated breaches application may be made to the tribunal without prior notice. On application to the tribunal, the landlord has the burden to show that termination is justified; orders may be made conditionally so that the tenant only forfeits possession if rent default is not made good over a specified time. The system in Victoria now allows more generally the landlord to give notice or make application to the tribunal. However, the landlord must follow the chosen procedure carefully. In Bundy v Alberts [2007] VSC 90 the landlord served a notice of termination and simultaneously applied for an order for possession. The application was held to be invalid. If the landlord served a notice, an application must follow such notice. Other procedures could have been used, but a landlord could not intermingle different procedures. Notice of termination may be given for failure to comply with obligations other than rent payment. Causing damage to premises and keeping pets without permission are among the more common breaches relied upon for termination. In such cases notice must be served with 51

52 53

Residential Tenancies Act 2010 (NSW), s 52; Residential Tenancies Act 1997 (Vic), s 65; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 185; Residential Tenancies Act 1995 (SA), s 68(1)(a); Residential Tenancies Act 1987 (WA), s 42(1)(a); Residential Tenancy Act 1997 (Tas), s 53; Residential Tenancies Act 1997 (ACT), Sch 1, cl 54; Residential Tenancies Act (NT), s 48. Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40. Residential Tenancies Act 2010 (NSW), ss 84–​107; Residential Tenancies Act 1997 (Vic), s 246; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 336; Residential Tenancies Act 1995 (SA), s 80; Residential Tenancies Act 1987 (WA), s 62; Residential Tenancy Act 1997 (Tas), s 42; Residential Tenancies Act 1997 (ACT), s 49; Residential Tenancies Act (NT), s 100A.

772 [15.95]

Housing  Chapter  15

an opportunity to remedy the breach. Notices must specify grounds clearly and accurately. In Veitch v Director of Housing [2008] VSC 442 a notice was served on the basis of using or permitting the use of premises for drug trafficking. The notice set out this ground but referred to a non-​existing provision of the Drugs, Poisons and Controlled Substances Act 1981 (Vic). The court held that the notice clearly set out the basis of the termination and the mistake as to the statutory provision did not affect the substance. Termination for objectionable behaviour has been allowed even though the tenant lacked the capacity to control that behaviour.54 [15.100] The landlord must satisfy the appropriate body that termination is justified.

Recovery of possession without the tenant’s consent is prohibited and the appropriate body is given a discretion as to whether or not termination and recovery of possession are justified.55 Even in cases of a serious breach such as the use of the premises to supply prohibited drugs the New South Wales Court of Appeal has sustained a decision to deny possession to the government housing agency. In the case the court considered that the tenant should be given the opportunity to rehabilitate herself and be able not to rely on cannabis for relief of back pain; Cain v NSW Land and Housing Corporation [2014] NSWCA 28. The discretion has also been used to justify a short-​term stay of proceedings in favour of a woman who was a tenant in premises where specialist care for the mentally ill was provided:  Howard v B Miles Womens Foundation Inc [2012] NSWSC 1173. Grounds for review of notices by a landlord may involve inquiry into the bases of the notice, particularly where public tenants are involved. In Director of Housing v Parsons [2019] TASFC 3, a tenant challenged a notice given on the basis of expiry of time for a periodic tenancy because, according to the tenant, the real objection was that the tenant had allowed others to share the premises. The Full Court of the Tasmanian Supreme Court held that review of a notice was not limited to its formal validity. More serious breaches allow for immediate termination on application to the tribunal without prior notice to the tenant, commonly where there is serious damage or threats of injury to the landlord or neighbours. The New South Wales Supreme Court in Crock v Tribunal (2003) 59 NSWLR held that injury involves more than mere distress such as may be caused by abusive language. On the other hand, in Farmer v Residential Tenancies Tribunal [2000] NSWSC 199 immediate termination was justified where a history of violence and further threats made future injury likely. [15.105] Problems of domestic violence have become a matter of increasing community

concern in recent years and impact upon rights and obligations under residential tenancy agreements. South Australia has introduced proposed measures to address some of the problems in the Residential Tenancies (Domestic Violence Protections) Amendment Act 2015 (SA).56 Under this Act, a tenant may apply to South Australian Civil and Administrative Tribunal (SACAT) to terminate a residential tenancy based on domestic abuse. Application may be made where there is a Court issued intervention order in force against a person residing

54 55

56

Simonova v Department of Housing and Public Works [2019] QCA 10. Residential Tenancies Act 2010 (NSW), s 81; Residential Tenancies Act 1997 (Vic), s 322; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 350; Residential Tenancies Act 1995 (SA), s 93; Residential Tenancies Act 1987 (WA), s 74; Residential Tenancy Act 1997 (Tas), s 45; Residential Tenancies Act 1997 (ACT), s 39; Residential Tenancies Act (NT), s 104. The Tribunal powers are set out in s 89A of the Residential Tenancies Act 1995 (SA). [15.105]  773

PART 4 Divided Ownership of Land

at the premises. Application may also be made where a person who resides at the premises has committed domestic abuse against the applicant; evidence of such violence may include a South Australia Police report or report from a domestic violence service provider. Application may be made to terminate the agreement and require a new tenancy agreement be entered into on the same terms and conditions for the remainder of the tenancy between the landlord and the applicant and any co-​tenants, subject to any objections by the landlord or any co-​ tenants. This procedure aims to support the victim to remain in the premises and remove the perpetrator from the residential tenancy. Application may also be made to terminate the agreement and require a new tenancy agreement be entered into on the same terms and conditions for the remainder of the tenancy between the landlord and the perpetrator and any co-​tenants, if the landlord has not indicated that it would be unreasonable to do so. This procedure aims to support the victim to leave the residential tenancy and no longer be liable for any damage caused to the premises. More limited provision is made in New South Wales. Under s 87(1) of the Residential Tenancies Act 2010 (NSW), application may be made by a co-​tenant or occupant for exclusion of an offending party and recognition of the applicant as a party to the agreement.

Administration and dispute resolution [15.110]  Common law principles not only allowed parties freedom to set out the terms of

their agreement as they saw fit, but also left the parties to enforce any breach by action in the courts. The legislation sought to overcome such practices as the throwing of stones on roofs to encourage tenants to vacate. Procedural reform was an emphasis of the early legislation. Consumer agencies were given responsibility to advise landlords and tenants as to their rights and obligations, to undertake research and education into matters affecting landlords and tenants and to assist the resolution of disputes. To assist informal dispute resolution, jurisdiction over residential tenancy matters was taken away from the courts and entrusted to specialist tribunals, in the first instance to Residential Tenancies Tribunals.57 These tribunals emphasised cheap access, personal appearance (no lawyers) and informality with members drawn from a range of backgrounds beyond legal practice.58 In recent years jurisdiction over residential tenancy matters has been conferred mostly on the Civil and Administrative Tribunals and in Western Australia the State Administrative Tribunal.59 Although these tribunals must act expeditiously especially where matters such as the grant of immediate possession is involved, superior courts have held that they must give the parties a reasonable opportunity to present their case:  Streets v Lucas [2013] TASSC 45. The legislation conferring jurisdiction confers extensive powers, including the power to make monetary compensation orders (up to a specified limit), orders for possession, orders 57 58

59

Residential Tenancies Act 1978 (SA), s 4; Residential Tenancies Act 1980 (Vic), s 10. The emphasis on specialist residential tenancy tribunals in the early legislation is discussed in Moore, “Adrian Bradbrook and Residential Tenancy Reform” in Babie and Leadbeter (eds), Law as Change (Uni Adel Press, 2014), pp 150–​151. Residential Tenancies Act 2010 (NSW), s 4; Residential Tenancies Act 1997 (Vic), s 10; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), ss 231, 232; Residential Tenancies Act 1995 (SA), s 24; Residential Tenancies Act 1987 (WA), ss 13, 71; Residential Tenancy Act 1997 (Tas), ss 8, 23, 36A (matters are dealt with in the first instance by the Residential Tenancies Commissioner with a rehearing available before a court); Residential Tenancies Act 1997 (ACT), ss 73, 78; Residential Tenancies Act (NT), s 4.

774 [15.110]

Housing  Chapter  15

requiring either party to undertake designated work, restraining orders, orders reducing rent declared to be excessive, ancillary or incidental determinations, and the power to shorten the term of fixed-​term tenancy agreements in certain circumstances. In Queensland the primary method of dispute resolution is conciliation. Access to the Queensland Consumer and Administrative Tribunal only exists where the mediation process fails to resolve the issue, where one of the parties is alleged to have breached a mediated agreement or in the case of urgent applications.60 The normal first step is to make dispute resolution request.61 The dispute is then handled by a conciliator who is a person appointed for this task by the Chief Executive Officer.62

ROOMING HOUSE RESIDENTS Scope of the legislation [15.115] Protection for residents of rooming houses is a recent extension of residential

tenancies legislation. The original legislation excluded persons who were boarders or lodgers and thus persons who shared premises generally fell outside the legislation. There is now legislative protection for rooming house residents in Victoria, Queensland, South Australia and Tasmania. Protection flows special provisions in the residential tenancy legislation.63 [15.120] A rooming house is a premises where persons occupy a room as a residence and

share some communal facilities. These elements are common to the legislation in all four jurisdictions.64 The minimum number of persons needed to constitute a rooming house varies among the jurisdictions. No minimum number is specified in Queensland or Tasmania, but the necessity for sharing implies at least two residents; furthermore, in Queensland the residence cannot be self-​contained. In Victoria the number of people who may occupy the rooms must be not less than four. In South Australia accommodation must be available for at least three persons on a commercial basis. Not all residencies which may appear to fall within the definition of a rooming house residency are covered. For example, in Victoria rooms situated in premises licensed under the Liquor Control Act 1987 (Vic) are not covered unless the person has occupied the room for at least 60 consecutive days. Certain student accommodation, refuge accommodation and health or residential services are also excluded. In Tasmania a rooming house does not include premises located in a building occupied predominately by tertiary students or students within the meaning of the TAFE Tasmania Act 1997 (Tas). [15.123] In New South Wales, what is essentially a system of licensing of premises and

managers has been introduced. The New South Wales legislation applies where there is

60 61 62 63

64

Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 416. Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 402. Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 400. Residential Tenancies Act 1997 (Vic), ss 100–​127; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), Ch 4; Residential Tenancies Act 1995 (SA), ss 103–​105A; Residential Tenancy Act 1997 (Tas), ss  48A–​48H. Residential Tenancies Act 1997 (Vic), s 3; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 15; Residential Tenancies Act 1995 (SA), s 3; Residential Tenancy Act 1997 (Tas), s 3. [15.123]  775

PART 4 Divided Ownership of Land

provision of beds for fee or reward.65 The number excludes the owner of the premises and members of the owner’s family.66 All boarding houses must be registered; registration involves the entry of particulars on a Register kept by the Commissioner. Details of the arrangements for the premises must be provided to the Commissioner.67 Within 12  months of initial registration, an inspection of the premises must be carried out by the local council.68 The premises must comply with fire and safety requirements.69 The New South Wales system distinguishes between general and assisted boarding houses. Assisted boarding houses provide accommodation for persons with additional needs.70 Additional needs are an age-​related frailty, a mental illness or a disability attributable to an impairment; the condition must be permanent and result in a need for assistance or supervision of daily tasks and personal care.71 Boarding houses must be authorised; authorisation requires an authorised operator who may appoint an approved manager.72 Authorisation involves an application probity check which investigates any criminal history of the applicant.73 [15.125] While Victorian and Tasmanian rooming house residents include those sharing

rooms, the Queensland and South Australian legislation does not appear to cover such persons. The issue of the application of the legislation to shared rooms depends on the scope of the definitions. The Victorian legislation has been amended to reverse an interpretation that excluded persons sharing rooms. The Tasmanian legislation specifically includes persons sharing rooms. In Queensland the limit to persons entitled to at least one room exclusively seems to flow from the definition of a resident as a person entitled to one or more rooms. In South Australia the sole reference is to rooms being available on a commercial basis. The interpretation of the former Victorian legislation perhaps favours a limit to those with one room to themselves. The issue of shared rooms arose in Fisher v Aboriginal Hostels Ltd [1998] VSC 130, where the former Victorian Act was held to apply to residents with a right of exclusive possession of one room.74 Two persons complained of eviction on the basis that it was contrary to the provisions of the then Rooming Houses Act 1990 (Vic). The two persons were to be occupants of a room at the WT Onus Hostel. They were to stay 10 weeks, but stayed longer. There were complaints of their behaviour towards staff, which led to their eviction. Aboriginal Hostels Ltd maintained six categories of hostels: transient hostels, medical and transient hostels, homeless hostels, tertiary education hostels, secondary education hostels and aged care hostels. The

65 66 67 68 69 70 71 72 73 74

Boarding Houses Act 2012 (NSW), s 5. Boarding Houses Act 2012 (NSW), s 5(2). Boarding Houses Act 2012 (NSW), s 9. Boarding Houses Act 2012 (NSW), s 16. Boarding Houses Act 2012 (NSW), s 16(2). Boarding Houses Act 2012 (NSW), s 37. Boarding Houses Act 2012 (NSW), s 36. Boarding Houses Act 2012 (NSW), s 41. Boarding Houses Act 2012 (NSW), s 45. A similar issue arose in a criminal context in R v Tao [1977] QB 141, where an undergraduate at King’s College, Cambridge, lived in a hostel belonging to the college, a room having been allotted to him for the use of which he paid the college. Police investigating a small fire that occurred in the room detected a strong smell of burning cannabis. He was charged with an offence against a statute prohibiting “the occupier” of premises to permit them to be used for the purpose of smoking cannabis. His licence for exclusive occupation made him the occupier for the purposes of the statute.

776 [15.125]

Housing  Chapter  15

applicants had been given a right to occupy a bed. They were held to be outside the protection of the Rooming Houses Act 1990. The court considered that an important clue to the scope of the Rooming Houses Act 1990 was derived from an examination of the rights it gives to a resident –​one who takes up occupancy of a room as a place to live. The nature of protections in the Act suggested an intention to confer on a resident a right akin to that of quiet enjoyment that is inconsistent with a shared occupancy. Although some contrary indications existed, the court gave paramountcy to those protections. Furthermore, the court recognised that the contemplation by the Act of exclusive occupancy may be subject to an exception when joint occupiers consent to their joint occupancy of a room being, for example, a married couple or a family. [15.130]  In Victoria and Tasmania the possibility of shared rooms raises issues of increased

room capacity. In Tasmania the matter is essentially one of notice to the residents. In Victoria detailed rules are in place; the consent of each existing resident of a room is required before a rooming house owner may increase the capacity of a room.75 The owner must seek consent by giving each resident of the room a notice of the proposed increase in the form approved by the Director. The form must specify the total number of people proposed to be accommodated in the room; state the existing rent paid by the resident and the new reduced rent payable if the resident consents to the increase in the room capacity; and state that any consent must be in writing and the resident may withdraw that consent at any time within a three-​day cooling-​off period following the giving of consent. If consent is given, the rooming house owner will choose the other resident(s) and the resident will not be notified before another resident takes up occupancy of the room. The proposed room capacity must exceed the lawful capacity currently specified by the Health (Prescribed Accommodation) Regulations 2001 (Vic). If consent is not given by the resident(s) after 14 days, the notice ceases to have effect. The three-​day cooling-​off period applies to all previously existing shared rooms (in seeking to increase capacity) and all proposed shared rooms. Any revocation within the three-​day period must be in writing.

Rights and obligations [15.135] The legislation specifies the general duties of residents. A rooming house resident

must pay the rent when it falls due; observe any applicable house rules; not use the rooming house, or cause or permit the rooming house to be used, for an illegal activity; not keep an animal on the rooming house premises without the rooming house proprietor’s consent; keep the resident’s room in a condition that does not give rise to a fire or health hazard; notify the rooming house proprietor of damage to the rooming house or to property provided by the rooming house proprietor for use by the resident; and allow the rooming house proprietor reasonable access to the resident’s room.76 [15.140] Similarly, the legislation specifies the general duties of rooming house owners.

A rooming house proprietor must not unreasonably interfere with the quiet enjoyment of a room or facilities by the rooming house resident or the reasonable peace, comfort or privacy 75 76

Residential Tenancies Act 1997 (Vic), s 94D. Residential Tenancies Act 1997 (Vic), ss 110–​119; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), Ch 4; Residential Tenancies (Rooming House) Regulations 1999 (SA), Sch 2; Residential Tenancy Act 1997 (Tas), s 5. [15.140]  777

PART 4 Divided Ownership of Land

of the resident. The proprietor must ensure that the rooming house resident has reasonable access to the resident’s room, and to the toilet and bathroom facilities, and take reasonable steps to ensure the security of personal property of each resident of the rooming house. An owner must maintain the rooming house and any fixtures, furniture or equipment provided to the residents in good repair.77 [15.145]  Life in a rooming house is subject to house rules A rooming house owner may make

rules relating to the use of the rooming house and its facilities. A copy of the house rules must be displayed prominently in each resident’s room. An owner must give the resident notice of any change to the house rules. Procedures are established whereby a resident may object to an unreasonable house rule or change.78 [15.150]  Procedures for the termination of a resident’s continued right to occupy and for

eviction generally follow those applicable to residential tenants. Termination normally requires notice to the resident or in more urgent or extreme situations direct application to the relevant tribunal. If a resident does not voluntarily yield up possession, eviction cannot proceed without a tribunal order.79

RESIDENTIAL PARK DWELLERS Scope of the legislation [15.155]  Legislation governing residential parks (or in popular language, caravan parks) is

now in force in all jurisdictions except Tasmania and the Australian Capital Territory. There is specific legislation relating to residential parks in New South Wales, South Australia, Western Australia and the Northern Territory.80 In New South Wales, the Residential (Land Lease) Communities Act 2013 (NSW) applies to site agreements where homes are erected or installed for the use of individuals in a community and includes caravan parks (s 6). In the Northern Territory the Caravan Parks Act (NT) applies to caravan park agreements which may be either for a caravan park site or a caravan and park site provided they are for residential purposes (s 6). Regulation of residential parks is included in the residential tenancy legislation in Victoria and Queensland. .In Victoria, there are detailed provisions for residential parks in ss  143–​ 206A of the Residential Tenancies Act 1997 (Vic). In Queensland the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) has extensive provisions for residential parks. However, in that State situations where a dweller has a right to a site on which the person constructs a temporary form of accommodation are separately regulated by the Manufactured 77

78

79

80

Residential Tenancies Act 1997 (Vic), ss 120–​123; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), ss 249–​250, 257–​265; Residential Tenancies (Rooming House) Regulations 1999 (SA), Sch 2; Residential Tenancy Act 1997 (Tas), s 48B–​48F. Residential Tenancies Act 1997 (Vic), ss 124–​127; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), ss 266–​275; Residential Tenancies (Rooming House) Regulations 1999 (SA), reg 7; Residential Tenancy Act 1997 (Tas), s 48H. Residential Tenancies Act 1997 (Vic), ss 269–​270; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), ss 368–​377; Residential Tenancies Act 1995 (SA), s 105A; Residential Tenancy Act 1997 (Tas), ss  48A–​48H. Residential (Land Lease) Communities Act 2013 (NSW); Residential Parks Act 2007 (SA); Residential Parks (Long-​ stay Tenants) Act 2006 (WA); Caravan Parks Act (NT).

778 [15.145]

Housing  Chapter  15

Homes (Residential Parks) Act 2003 (Qld). That Act will apply if the premises comprises an improvement that cannot be used on the roads. In Monte Carlo Caravan Park Pty Ltd v Curyer [2007] 2 Qd R 57; [2006] QCA 363 the dweller sought an order under the 2003 legislation. Jurisdiction was disputed on the basis that the premises had once been a caravan. The argument was rejected because the item had been altered so that it could not be used on the roads. The existence of jurisdiction meant that the park owner could be compelled to offer a site agreement. Without express provision, residential tenancy legislation protected residents of a residential or caravan park if the resident had control over defined premises. Many long-​term residents satisfy this condition and in jurisdictions without specific residential park legislation can rely on the normal protections for residential tenants. However, there are particular problems associated with caravan parks. Necessarily, caravan park residents form a community which can be large and they rely on community facilities and services. Secondly, there may be three distinct parties: the park owner, the caravan owner and the resident. There are no predominant arrangements. In general, caravan park residents may be provided simply with a site or with a site plus a dwelling Residents provided with a site may use their own dwelling or rent a dwelling. Consequently, there are three combinations of residence arrangements: 1.

rent both the caravan and the site from the caravan park owner;

2.

rent the site and own their own caravan; or

3.

rent the site and hire the caravan from a person who is not the park owner.

[15.160]  Not all residential or caravan park residents protected by the legislation. Problems

of definition occur, particularly to distinguish permanent residents from short-​term visitors.81 The clearest approach is that in Western Australia, where the legislation is on its face confined to long-​stay residents. It employs the concept of long-​stay agreements which are fixed term agreements for three months or more or periodic agreements which have continued for three months or more. South Australia and Victoria have similar provisions. The South Australian Act does not apply to agreements for holiday purposes and creates a presumption the agreements lasting beyond 60 days are not for holiday purposes. In Victoria, a caravan park resident is defined as a person who occupies a site in a caravan park as the person’s only or main place of residence. The person must also have either obtained the park owner’s written consent to occupy as a resident or have lived in the caravan park for at least 90 consecutive days. In New South Wales the Residential (Land Lease) Communities Act 2013 (NSW) applies to communities on land occupied as a caravan park or a manufactured home estate.82 Long-​ term casual occupation is subject to the Holiday Parks (Long-​term Casual Occupation) Act 2002 (NSW). Exemptions from the 2013 legislation apply to agreements covered by the 2002 legislation and agreements for holiday purposes and arrangements for occupation by an itinerant worker.83 In Queensland a distinction is drawn between short and long tenancies. If the tenancy is for not more than 42 days, a short tenancy statement may be made before or

81 82 83

Residential (Land Lease) Communities Act 2013 (NSW), s 4; Residential Parks Act 2007 (SA), s 5; Residential Tenancies Act 1997 (Vic), s 3; Residential Parks (Long-​stay Tenants) Act 2006 (WA). Residential (Land Lease) Communities Act 2013 (NSW), s 4. Residential (Land Lease) Communities Act 2013 (NSW), s 4. [15.160]  779

PART 4 Divided Ownership of Land

when the tenancy commences.84 The Northern Territory legislation applies only to agreements for the prescribed period which defined as 12 months.85 [15.165]  There are special rules as to the formation of caravan park residency agreements.

A park owner must provide a written agreement and prescribed information to a resident.86 Detailed requirements as to the content and form of the agreement are set out in the legislation. [15.170]  A caravan park resident is given rights similar to those given to a residential tenant.87

A caravan park resident has the right to reside on the resident’s site and to occupy the caravan on that site. A resident and the park owner may enter into a written agreement specifying the terms and conditions of the resident’s use of the caravan park or the caravan. Any term of an agreement that is inconsistent with the Act, or attempts to restrict or modify the resident’s rights under the Act, is void. There are some rights and obligations peculiar to caravan park residents. The most significant is a right of access for the resident and nominated visitors. Electricity supply may be through the park operator who deals with the commercial suppliers and this supply can give rise to disputes: Remely v O’Shea [2008] QCA 78. Furthermore, residents may be entitled to conduct a sale of a dwelling on the site. Residents are also given the right to form a committee. [15.175]  Caravan park residents are subject to park rules. The legislation itself provides in

some instances for eviction of disruptive residents. More generally, park rules cover the details of park life. The legislation sets out the matters that can be subject to park rules.88 They include noise levels, motor vehicle speed limits, parking of motor vehicles, disposal of refuse, keeping of pets, playing games and other sports activities, the use and operation of common areas and communal facilities, maintenance standards for the individual premises, and responsibilities for guests and visitors. Procedures to challenge unfair rules are established.

RETIREMENT VILLAGES Scope of legislative protection [15.180]  Every Australian jurisdiction today has separate legislation concerning retirement

villages.89 Retirement villages essentially comprise a group of dwellings in which occupation is restricted to persons who are above a particular age or not actively employed. Such dwelling groups became more common from the 1970s and by world standards are today 84 85 86

87

88

89

Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 45. Caravan Parks Act (NT), s 6. Residential (Land Lease) Communities Act 2013 (NSW), ss 21, 26, 27; Residential Tenancies Act 1997 (Vic), s 144; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 61; Residential Parks Act 2007 (SA), s 114; Residential Parks (Long-​stay Tenants) Act 2006 (WA), s 11. Residential (Land Lease) Communities Act 2013 (NSW), Pt 5; Residential Tenancies Act 1997 (Vic), ss 146–​148; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), Ch 2; Residential Parks Act 2007 (SA), ss 50, 66; Residential Parks (Long-​stay Tenants) Act 2006 (WA), ss 21–​54; Caravan Parks Act (NT), Pts 4–​8. Residential (Land Lease) Communities Act 2013 (NSW), Pt 8; Residential Tenancies Act 1997 (Vic), ss 185–​187; Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 228; Residential Parks Act 2007 (SA), s 6(2); Residential Parks (Long-​stay Tenants) Act 2006 (WA), ss 59–​61; Caravan Parks Act (NT), Pt 13. Retirement Villages Act 1999 (NSW); Retirement Villages Act 1986 (Vic); Retirement Villages Act 1999 (Qld); Retirement Villages Act 2016 (SA); Retirement Villages Act 1992 (WA); Retirement Villages Act 2004 (Tas); Retirement Villages Act 2012 (ACT); Retirement Villages Act (NT).

780 [15.165]

Housing  Chapter  15

widespread throughout Australia. Persons are drawn to such establishments not only through the commonality of interests and outlook but because of the prospect of particular services –​ especially nursing care and security protection –​those services require an ongoing management role. The legal issues associated with residence in retirement villages have been regarded as sufficiently different from those of other group dwellings (such as strata title units or leasehold units) to merit distinct legislation. Legislation was first introduced in the late 1980s in Victoria and South Australia on a parallel with initiatives relating to residential tenancies.90 Other jurisdictions followed over the next 20 years. Most recently new legislation has been passed in South Australia in 2016 and significant amendments made in New South Wales in 2015 and Western Australia in 2018. New South Wales, Queensland and the Australian Capital Territory have enacted more extensive and more interventionist legislation. In these jurisdictions, current legislation replaces earlier versions and now includes further protection for residents with respect to involvement in internal rule making and financial interests and stipulates more strictly the conduct of the village, rather than laying down procedures and guidelines which may be varied. The least extensive legislation is that in the Northern Territory. The Northern Territory legislation concentrates almost exclusively on protection for residents from eviction. This legislation is supplemented by a Code of Practice which governs disclosure of information to prospective residents, management of the village and processes for the adoption of budgets. [15.190]  Retirement village developers may choose both different tenure forms and different

physical forms. Tenure forms can be broadly divided between owner and non-​owner rights of residents. This division is formally adopted in New South Wales, Queensland and the Australian Capital Territory with respect to financial rights on termination.91 Differences in physical form relate in essence as to the degree of separation between living spaces. Different physical forms may determine the application of retirement villages legislation and may affect the application of planning laws. Western Australia has provided for a strata title retirement village by specifically allowing alienation of a strata interest to be subject to the condition that occupation is limited to retired persons.92 [15.195]  A retirement village scheme may be structured so that residents have a freehold or

strata title to their units. In the case of separate dwelling units, occupants may be granted a freehold title to their units. Occupation divisions within buildings and a management role for an operator can be more readily achieved through a strata or community title scheme. Matters relating to the physical upkeep of the property can be set out in the articles of the strata or community title corporation. If the developers plan to maintain an ongoing role in the provision of services, a separate service agreement between the developers and the strata title corporation is needed. A retirement village scheme may be able to restrict alienability of units even where ownership rights have been conferred on residents. In Bondi Beach Astra Retirement Village

90

91 92

Retirement Villages Act 1986 (Vic); Retirement Villages Act 1987 (SA); these Acts are discussed in Moore, “Retirement Villages –​Victoria and South Australia” [1989] NZCL 312. A detailed account of the retirement villages legislation is provided in Moore, Commercial and Residential Tenancies (Thomson Reuters, Sydney, 2008), pp 451–​497 and The Laws of Australia (Thomson Reuters, Sydney), Title 28 Real Property, Subtitle 12 Retirement Villages. Retirement Villages Act 1999 (NSW), s 181; Retirement Villages Act 1999 (Qld), s 114; Retirement Villages Act 2012 (ACT), s 12. Retirement Villages Act 1992 (WA), s 6A. [15.195]  781

PART 4 Divided Ownership of Land

Pty Ltd v Gora (2011) 82 NSWLR 665, the New South Wales Court of Appeal upheld a restraint on alienation on the basis of public interest. The strata village scheme restrained any purchaser of a unit from disposing of a unit without offering the transferor to that purchaser an option to buy back the unit at the price at which the unit had been sold to the purchaser. In the case that figure was well below market value. The court held that a restraint on alienation could be imposed for a valid collateral purpose. In the particular case the court held, more on its own judgment than on evidence that the restraint assisted in the provision of affordable accommodation for aged persons. If ownership remains with the developer or a subsequent operator, residents may be granted leasehold interests or some lesser rights. Status as a tenant depends on the grant of control over a specific dwelling-​unit.93 Control may be absent because of the ongoing management role of the operator, or simply because a resident may be moved from one unit to another. Moreover, the provision of services normally indicates that an occupant is not a tenant, but a boarder. Traditionally a distinction has been drawn between provision of a cup of tea and provision of a full breakfast: the former being insufficiently significant to alter the legal classification of the relationship, the latter effecting a change.94 Presumably, provision of medical or nursing services beyond a minimal or insignificant level would also result in the status of a boarder, rather than a tenant. Generally, retirement village contracts have framed rights of residents as licences. The developer or a transferee has adopted a significant responsibility for village management. In many cases residents pay a substantial entry fee, but have limited rights to the proceeds from subsequent entry fees. [15.200]  The application of the retirement villages legislation depends on differing definitions

of a “retirement village”. The definition of a “retirement village” in each Act has a different focus. The broadest definitions are those in New South Wales, the Australian Capital Territory and the Northern Territory. In those jurisdictions the legislation applies wherever there is a complex of units to be occupied predominantly by older or retired persons.95 In Queensland, South Australia, Tasmania, Victoria and Western Australia an initial charge must be imposed for the village to constitute a retirement village subject to the legislation. In Queensland and Victoria a regulated village is one in which services are provided in addition to accommodation. In Queensland, South Australia, Tasmania and Western Australia a village in which a permanent interest is granted to residents without any restriction on disposition would not be subject to the legislation.96 In Victoria a “retirement village” is defined by reference to a community. In the legislation of the other jurisdictions, it is defined by reference to a physical structure.97 [15.205] Retirement villages can include a complex of rooms or units or dwellings. The

physical form of accommodation occupied by residents can vary considerably in terms of independence and still fall within the definition of premises which constitute a retirement

93 94 95 96 97

Radaich v Smith (1959) 101 CLR 209; Street v Mountford [1985] 2 WLR 877. Holiday Flat Co v Kuczera [1978] SLT 47; Bradbrook, MacCallum and Moore, Residential Tenancy Law and Practice –​Victoria and South Australia (Law Book Co, Sydney, 1983), p 86. Retirement Villages Act 1999 (NSW), s 5; Retirement Villages Act 2012 (ACT), s 10; Retirement Villages Industry Code of Practice 1999 (ACT), s 1; Retirement Villages Act (NT), s 3. Retirement Villages Act 1999 (Qld), ss 5, 7; Retirement Villages Act 2016 (SA), s 45; Retirement Villages Act 1992 (WA), s 3; Retirement Villages Act 2004 (Tas), s 3. Retirement Villages Act 1986 (Vic), s 3.

782 [15.200]

Housing  Chapter  15

village. It is possible, at one extreme, that residents occupy self-​contained and separated dwellings and, at the other, single rooms supported by shared facilities. In Queensland, South Australia, Western Australia and the Northern Territory the definition of premises includes hostel units. In Brown v Commonwealth (1993) 63 SASR 188 such units were held to include single rooms with supporting shared facilities. A similar result has been reached in relation to a comparable definition in English legislation where the familiar bedsit, even without cooking facilities, was held to be a unit.98

Establishment and disclosure [15.210] In all jurisdictions, the status of a retirement village must be formally recorded

on the title to the land. The formal record on title often protects the interests of residents. In Queensland the establishment documents are lodged with the Chief Executive, who must inform the Land Titles Office of the village’s existence.99 In the other jurisdictions, the person establishing the village must notify the appropriate titles office registrar of the village’s existence.100 The registrar must record the existence of the village on the title. In most jurisdictions any right of a resident to a refund of any ongoing contribution or premium, among other rights, is given force as a charge in priority over other charges on the land: see [15.330].101 In Tasmania, while a resident’s right to full or partial repayment of an entry fee is deemed to be a charge on the land, there is no provision conferring priority.102 [15.215]  Administering authorities are required to provide written contracts and to disclose

certain information to prospective residents of retirement villages. In all jurisdictions a residence contract must be in writing and must be accompanied by the required information. This information includes arrangements about services, rules governing conduct within the village and commonly a checklist of questions most frequently asked by prospective residents. In all jurisdictions except Queensland this information must be provided prior to the signing of the residence contract. In Queensland the information must be part of the material lodged with the Registrar to obtain approval of a proposed retirement village scheme. In all jurisdictions there is a cooling-​off period after the signing of the contract which varies from three to 15 days.103 [15.220] Prohibitions upon deceptive, misleading and unconscionable conduct under

the Australian Consumer Law and the Fair Trading Acts of the States and Territories (see

98 99 100

101

102 103

Uratemp Ventures Ltd v Collins [2002] 1 AC 301. Retirement Villages Act 1999 (Qld), s 116. Retirement Villages Act 1999 (NSW), s 24A; Retirement Villages Act 1986 (Vic), s 9(1); Retirement Villages Act 2016 (SA), s 56; Retirement Villages Act 1992 (WA), s 15(3); Retirement Villages Act 2004 (Tas), s 38; Retirement Villages Act 2012 (ACT), s 35; Retirement Villages Act 1995 (NT), s 36. Retirement Villages Act 1999 (NSW), s 182B; Retirement Villages Act 1986 (Vic), s 31; Retirement Villages Act 1999 (Qld), s 120; Retirement Villages Act 2016 (SA), s 27; Retirement Villages Act 1992 (WA), s 21; Retirement Villages Act 2012 (ACT), s 42; Retirement Villages Act (NT), s 12(6). Retirement Villages Act 2004 (Tas), s 10(4). Retirement Villages Act 1999 (NSW), s 18; Retirement Villages Act 1986 (Vic), s 19; Retirement Villages Act 1999 (Qld), s 43; Retirement Villages Act 2016 (SA), s 21(3); Retirement Villages Act 1992 (WA), s 13; Retirement Villages Act 2004 (Tas), s 6; Retirement Villages Act 2012 (ACT), s 53; Retirement Villages Industry Code of Practice 1999 (ACT), ss 16, 18; Retirement Villages Act (NT), Sch 2. [15.220]  783

PART 4 Divided Ownership of Land

[9.45]ff) will apply to offers to the public of interests in retirement villages.104 Section 18 of the Retirement Villages Act 1986 (Vic) specifically provides that services or goods provided under a residence contract are to be regarded as contracts for the supply of services or goods, even though the services or goods are provided under a contract of service. In New South Wales, s 13 of the Retirement Villages Act 1999 (NSW) provides that nothing in that Act is to be construed as being in derogation of any other law of the State. An example of relief under the former Trade Practices Act 1974 (now the Australian Consumer Law) is provided in relation to misleading statements as to ongoing commitments. In Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 retirement village residents claimed that obligations with respect to outgoings were greater than they had been led to expect. This inaccurate belief was held to have resulted from misleading conduct by the administering authority. The residents were compensated for the extra amount they had had to pay as loss or damage under ss 232, 236 and 243 of the Australian Consumer Law. [15.225]  In New South Wales a disclosure statement must be provided to any prospective

resident.105 This statement must include information about charges, fees and services and village rules. Information about the retirement village industry and physical and financial features of the village must also be available.106 An emergency plan must be prepared, an annual evacuation exercise for residents conducted and safety information displayed.107 An operator must not enter into a village contract earlier than 14 days after the provision of a disclosure statement. After entry into a village contract, a resident has a cooling-​off period of seven days.108 In Victoria documents relating to the retirement village must be given to a prospective resident at least 21  days before a resident enters into a residence contract.109 Residence documents include the residence contract, the management contract, the undertaking to observe by-​laws and to pay any service charge, a disclosure statement, a checklist in a prescribed form and the by-​laws.110 The checklist contains a number of questions and the owner is obliged to answer them if asked.111 The owner must also provide all information about the village reasonably required by the resident.112 Any failure to respond or provision of inaccurate information confers a right to rescind.113 The resident is entitled to rescind a residence contract without any ground within three business days after the signing of the contract.114 The existence of this right must be conspicuously notified in the residence contract.115

104 The grant of an interest in a retirement village constitutes a supply of “services” pursuant to the definition in s 2 of the Australian Consumer Law. 105 Retirement Villages Act 1999 (NSW), s 18. 106 Retirement Villages Act 1999 (NSW), ss 19–​20. 107 Retirement Villages Act 1999 (NSW), ss 58A, 58B. 108 Retirement Villages Act 1999 (NSW), ss 18(5), 32. 109 Retirement Villages Act 1986 (Vic), s 19. 110 Retirement Villages Act 1986 (Vic), s 3. 111 Retirement Villages Act 1986 (Vic), s 20(2). 112 Retirement Villages Act 1986 (Vic), s 20(3). 113 Retirement Villages Act 1986 (Vic), s 22. 114 Retirement Villages Act 1986 (Vic), s 24(2). 115 Retirement Villages Act 1986 (Vic), s 24(5). 784 [15.225]

Housing  Chapter  15

In Queensland no invitation to any person to reside in a retirement village may be made until a scheme for the village has been registered.116 To be registered, a scheme must fulfil requirements set out in the legislation.117 A residence contract may be rescinded during the cooling-​off period.118 In South Australia listed documents must be given at least 10 business days prior to the signing of a residence contract.119 The documents include the residence rules and a checklist in the prescribed form. The administering authority warrants the accuracy of the information.120 The cooling-​off period is 10 business days.121 In Western Australia the requirements are simply that the residence contract must be in writing and a notice of rights and a copy of the residence rules must be provided to the prospective resident.122 The cooling-​off period is five days.123 In Tasmania specified documents must be provided before entry into a retirement village contract. The documents include a notice of residents’ rights and most recent financial statements. A cooling-​off period of five business days after the contract applies.124 In the Australian Capital Territory all information must be clear and in plain language. The operator must provide a general inquiry document, a disclosure statement which must be attached to the contract and a written contract.125 The resident must be given time to read the contract and must not be restricted as to advice sought.126 The residence contract must provide a cooling-​off period of at least seven working days.127 In the Northern Territory extensive disclosure is required. The administering authority must provide full financial information, a budget for annual expenses, a checklist of resident questions, a copy of residence rules and a full statement of entitlement to a refund.128 All services and facilities to be provided must be detailed.129 A cooling-​off period of 10 days is provided.130

Retirement village management [15.230]  The statutory framework specifies few rights or obligations of residents in relation

to their enjoyment of their unit. These matters are left to be determined by the contract between each resident and the village operator. The legislation does extend normal contractual enforcement so that residents’ rights are binding on successive owners and operators of

116 117 118 119 120 121 122 123 124 125 126 127 128 129 130

Retirement Villages Act 1999 (Qld), s 27. Retirement Villages Act 1999 (Qld), s 43. Retirement Villages Act 1999 (Qld), s 48. Retirement Villages Act 2016 (SA), s 20(1). Retirement Villages Act 2016 (SA), s 20(3). Retirement Villages Act 2016 (SA), s 24. Retirement Villages Act 1992 (WA), s 13. Retirement Villages Act 1992 (WA), s 14. Retirement Villages Act 2004 (Tas), s 6(3). Retirement Villages Act 2012 (ACT), ss 23, 24, 25, 41. Retirement Villages Act 2012 (ACT), ss 47, 48. Retirement Villages Industry Code of Practice 1999 (ACT), s 16. Code of Practice (NT), cl 17. Code of Practice (NT), cl 23. Code of Practice (NT), cl 21. [15.230]  785

PART 4 Divided Ownership of Land

the village:  see [15.310]. Residents are given statutory rights to constitute committees and participate in the formulation of budgets. Life within the village involves relationships with other residents and these relationships are generally subject to village rules. In most cases residents can participate in the formulation and change of these rules. In all jurisdictions residents will enter a residence contract which governs the financial arrangements and rights of tenure and agree to residence rules or by-​laws which govern the general quality of life within the village. In New South Wales, Victoria and Queensland residents are given a statutory right to alter the by-​laws by a special resolution of a meeting of residents.131 Such a resolution must be notified in advance and carried by a three quarters majority. In the Northern Territory resident input into the formulation or alteration of residence rules is required.132 In the Australian Capital Territory any amendment to the rules must be approved by a special resolution of the residents; an operator must formulate a proposed amendment if requested by 10% of the residents or by the residents’ committee.133 In Tasmania residents may request the administering authority to amend the residence rules.134 In South Australia residence rules are defined as those with which residents of a village are expected by the administering authority to comply.135 This definition implies that the rules are set by the administering authority; no power of alteration by the residents’ committee is mentioned in the Act. However, in New South Wales, South Australia and the Northern Territory harsh or unconscionable rules may be set aside by the relevant tribunal.136 Only in Western Australia are there no overriding provisions with respect to residence rules or the courts. In all jurisdictions except Western Australia residents are given a statutory entitlement to establish residents committees.137 Election to the committee is carried out by the residents and membership is confined to residents. The committees are empowered to determine their own procedures and to appoint subcommittees. In New South Wales, if there is no committee, the administrator must call a meeting of residents if requested by a majority of residents.138 The Code of Practice in the Northern Territory provides a general obligation on the administering authority to establish structures for resident input into all decisions affecting life within the village. [15.235]  The New South Wales and Australian Capital Territory legislation does impose some

obligations on the administrator with respect to village management. The administrator must establish written safety and emergency procedures. The administrator must take reasonable steps to ensure that residents and staff are familiar with these procedures. A safety inspection 131 132 133 134 135 136 137

138

Retirement Villages Act 1999 (NSW), s 51(3); Retirement Villages Act 1986 (Vic), s 37; Retirement Villages Act 1999 (Qld), s 130. Retirement Villages Industry Code of Practice 1999 (ACT); Code of Practice (NT), cl 37. Retirement Villages Act 2012 (ACT), s 83. Retirement Villages Act 2004 (Tas), s 23. Retirement Villages Act 2016 (SA), s 3. Retirement Villages Act 1999 (NSW), s 54; Retirement Villages Act 2015 (SA), s 41; Retirement Villages Act (NT), s 13(6). Retirement Villages Act 1999 (NSW), s 70; Retirement Villages Act 1986 (Vic), s 36; Retirement Villages Act 1999 (Qld), s 127; Retirement Villages Act 2016 (SA), s 33; Retirement Villages Industry Code of Practice 1999 (ACT), s 13; Code of Practice (NT), cl 37. Retirement Villages Act 1999 (NSW), s 73.

786 [15.235]

Housing  Chapter  15

must be held once a year. Emergency and home-​care personnel must have unimpeded safety access to residents.139

Ongoing financial matters [15.240] Substantial sums are often demanded for the right to enter a retirement village;

these sums may be equivalent to the market value of the unit with some allowance for the insecurity of title. The issues that arise in relation to those sums are, first, their use prior to entry into residence, secondly, the rights to a refund on leaving the village or on death and, thirdly, the relationship with financial investors in the village. The dissipation of ingoing contributions or premiums on building or other costs without the capacity to provide the residential unit is sought to be avoided by the placement of such funds in a form of trust. In Victoria the money must be held by an estate agent or solicitor as stakeholder until the happening of the listed events.140 These events are the satisfying of any preconditions to the right or entitlement to enter the village, completion of any building work and a refund to any previous resident entitled to a refund. In Queensland payment into a trust account where work is incomplete may be required as part of the conditions for approval of a village scheme.141 In New South Wales deposits must be held in trust until a prospective resident has entered a residence contract.142 In that state the administering authority must provide an asset management plan. In South Australia the money must be held in trust in a bank or trustee investment.143 The money must be held until entry into occupation by the resident. In Western Australia the money must be placed in a trust account.144 In the Australian Capital Territory entry money must be held in trust by a trustee until entry into a village contract.145 [15.245] A primary concern of residents of a retirement village is liability for charges for

services provided. These services will commonly extend beyond the property maintenance services associated with most multiple-​dwelling-​unit buildings to meals, nursing and medical care. Central to the regulation of charges for these services is the annual meeting which must be convened by the manager or administering authority.146 The manager must present a financial statement to that meeting setting out performance for the past year and a budget for the year ahead. The statement of performance must set out income by way of charges for the provision of goods and services and expenditure of that income. Future expenditure may include provision for major works.

139 140 141 142 143 144 145 146

Retirement Villages Act 1999 (NSW), s 58A; Retirement Villages Act 2012 (ACT), ss 90–​98. Retirement Villages Act 1986 (Vic), s 25(2). Retirement Villages Act 1999 (Qld), s 46. Retirement Villages Act 1999 (NSW), s 23. Retirement Villages Act 2016 (SA), s 20(1). Retirement Villages Act 1992 (WA), s 18(1). Retirement Villages Act 2012 (ACT), s 39. Retirement Villages Act 1999 (NSW), s 73; Retirement Villages Act 1986 (Vic), s 33; Retirement Villages Act 1999 (Qld), s 131; Retirement Villages Act 2016 (SA), s 26(1)(b); Retirement Villages Industry Code of Practice 1999 (ACT), s 13(2); Code of Practice (NT), cl 37. There is no requirement for an annual meeting in Western Australia.

[15.245]  787

PART 4 Divided Ownership of Land

Increases in maintenance charges for retirement villages are restricted.147 In the Northern Territory the facilitation of resident input into all aspects of budgetary decisions is required. In the case of disagreement, in the Northern Territory, the matter may be referred to the internal disputes committee. In New South Wales recurrent charges may be varied only in accordance with a fixed formula or with the approval of a meeting of residents. An administering authority may seek a tribunal order authorising an increase. In Queensland the contribution to the maintenance reserve fund must conform to a budget based on a quantity surveyor’s report and the general services fee may not be increased beyond the all groups consumer price index for Brisbane for the preceding year or as approved by a residents’ meeting. In the Australian Capital Territory maintenance charges may be increased by a fixed formula or according to the Consumer Price Index; otherwise an increase must by approved by the residents or by order of the Civil and Administrative Tribunal. In South Australia and Tasmania maintenance charges must be justified by estimates of expenditure presented to a residents’ meeting. In Victoria a maintenance charge may not exceed the adjusted maintenance charge. The adjusted charge is one indexed in accordance with regulations. An increase above the index may be approved by the majority of residents and may be justified by increases in rates and taxes or award wages.

Property responsibilities [15.250] The distinction between capital and maintenance costs can be difficult to draw.

In New South Wales, Queensland and the Australian Capital Territory, the distinction has statutory consequences as to the liabilities of the administrator and residents.148 In other jurisdictions it is commonly the basis of contractual divisions; the usual situation is that the administering authority must bear capital costs and residents must pay for maintenance as part of the recurrent charge. The distinction is similar to that drawn between the responsibilities of life tenants and remaindermen in respect of traditional settlements. Even recurrent charges must be subjected to appropriate procedures. In Arton Retirement Villages (Newcastle) Pty Ltd (t/​as Jenny Macleod Retirement Village) v Allen [2001] NSWRT 77 the administering authority challenged a resident rejection of the proposed recurrent charge. The Residential Tribunal of New South Wales pointed out that the administering authority was not obliged by the legislation to pay for maintenance or insurance so that disputed insurance, pest control and external painting had to be borne by residents. However, in the particular case, external painting costs had been covered in a previous budget and an increase in electricity costs had not been explained, so the authority’s budget on these items was rejected. As a matter of interpretation, courts have limited residents’ liability for capital costs even if clauses seem overlapping. In Carisfield Estate Pty Ltd v Douglas [1998] SASC 7003 the Full Supreme Court held that a right to claim capital costs from residents was limited to cases where capital revenue was inadequate. In Stockdale v Charles Sturt (2000) 76 SASR 225 a general clause for resident payment of capital costs was read subject to a clause for the authority’s responsibility for replacement of specified capital items.149

147

148 149

Retirement Villages Act 1999 (NSW), ss 103–​107; Retirement Villages Act 1986 (Vic), s 38; Retirement Villages Act 1999 (Qld), ss 98, 99; Retirement Villages Act 2016 (SA), s 26(8); Retirement Villages Act 2004 (Tas), s 14; Retirement Villages Industry Code of Practice 1999 (ACT), s 14; Code of Practice (NT), cl 40. Retirement Villages Act 1999 (NSW), s 93; Retirement Villages Act 1999 (Qld), ss 90A, 90B; Retirement Villages Act 2012 (ACT), s 137. Retirement Villages Act 2016 (SA), s 27(8).

788 [15.250]

Housing  Chapter  15

[15.255]  In New South Wales, Queensland and the Australian Capital Territory, administering

authorities must bear capital replacement costs.150 The administering authority must maintain capital items and bear the costs of doing so. Various exceptions are outlined in each jurisdiction, for example, if premises are owned by the resident, damage is caused by the wilful act or neglect of the resident, residents specifically request a particular capital improvement, or no entry fee is payable by residents. In New South Wales the administration must carry out an annual safety inspection,151 and has a responsibility to ensure that the premises are safe and secure.152 Additional property works or exceptional building upgrading require special levies in Victoria, South Australia, Tasmania and the Northern Territory.153 In Victoria a special levy can only be imposed if it is authorised by a special resolution of residents or if the expenditure is required by a legislative or judicial pronouncement or is provided for pursuant to the residence contract or management contract or by-​laws. Further, a special levy may only be imposed once a year. In South Australia and Tasmania special levies may only be imposed if authorised by a special resolution and, even then, it seems only if they are provided for by the residence contract. In the Northern Territory the Code of Practice requires consultation with respect to all property works and, in the case of disagreement, for the matter to go to the internal disputes committee.

Protection of residence [15.260]  In all jurisdictions security of tenure for residents of retirement villages is obtained

by restrictions on eviction. Termination of residence can only occur on grounds specified in the Acts. In all jurisdictions except Victoria a court or tribunal order is necessary or a challenge available. [15.265]  In New South Wales, South Australia, Western Australia, the Australian Capital

Territory and the Northern Territory, termination other than by the resident can only occur pursuant to an order of the Administrative and Civil Tribunal. In Queensland and Tasmania a threatened eviction can be challenged before the tribunal. [15.270] In New South Wales, application to the Administrative and Civil Tribunal for

termination may be made on the grounds of frustration of the residence contract, physical or mental incapacity, breach, serious damage or injury or an upgrade or change of use. In the case of termination for incapacity the Tribunal must be satisfied that the premises are unsuitable because of the resident’s physical or mental incapacity and that termination is otherwise appropriate.154 In the case of termination for breach the Tribunal must be satisfied that the breach or breaches justify termination.155 In the case of termination because of serious damage

150 151 152 153 154 155

Retirement Villages Act 1999 (NSW), ss 92, 93, s 58(1); Retirement Villages Act 1999 (Qld), s 90; Retirement Villages Act 2012 (ACT), s 137. Retirement Villages Act 1999 (NSW), s 58B. Retirement Villages Act 1999 (NSW), ss 58, 58A. Retirement Villages Act 1986 (Vic), s 38(6); Retirement Villages Act 2015 (SA), s 27(8); Retirement Villages Act 2004 (Tas), s 14(11); Retirement Villages Regulations (NT), Sch 2, cl 37(2)(d). Retirement Villages Act 1999 (NSW), s 133. Retirement Villages Act 1999 (NSW), s 134. [15.270]  789

PART 4 Divided Ownership of Land

or injury, the Tribunal must be satisfied that the resident has caused, or is likely to cause, serious damage to the premises or injury to the operator, or an employee, or to a resident.156 Termination may be granted because of the operator’s intention to carry out substantial works in the village, such as to require vacant possession, or where it is appropriate that the land on which the village is situated be used for a purpose other than a retirement village.157 If a resident is an owner of a unit, a residence contract only terminates if the resident sells the unit.158 [15.275]  In Victoria termination can be effected by notice on the basis of breach, incapacity or

expiration of the term of a periodic tenancy. Notice on the basis of breach involves two notices. The first notice must require that within 28 days of service the resident remedy the breach or, if the breach is not capable of being remedied, the resident cease committing the breach.159 If this notice is not complied with and the breach is substantial, the owner may serve notice requiring the resident to leave by a date not earlier than 60 days from the second notice.160 In Victoria notice on the basis of incapacity may be served requiring the resident to leave within 14 days.161 This notice must include a certificate signed by two legally qualified medical practitioners stating that the resident needs care of a kind not available at the village. One of the doctors must be nominated or agreed to by the resident. Notice on this basis is only available if provided for by the residence contract. Notice on the basis of expiration of the term may be given where the right of residence is conferred by way of a periodic tenancy.162 The notice must be not less than six months and must not cut short the period of the tenancy. Nothing appears to forbid even weekly tenancies and thus residence terminable on six months notice can apparently be created. If a fixed-​term tenancy were created, there appears to be no power to terminate at the end of that term. [15.280]  In Queensland a resident must be given two months’ notice of a proposed termination

of residence by the administering authority. That notice may be based on breach of contract, abandonment by the resident or the unsuitability of the accommodation for the resident. A resident threatened with removal may apply to the Administrative and Civil Tribunal for an injunction.163 The tribunal may grant an injunction preventing removal if it is satisfied that the removal would be in breach of the residence contract and not in the interests of the resident or is not justified for any adequate reason.164 The tribunal may have regard to the rights and interests of all persons affected. [15.285]  In South Australia termination may be granted only by the South Australian Civil

and Administrative Tribunal and only after notice on the basis of breach or incapacity.165 An administering authority may give notice of termination on the basis of any breach of the residence contract or the residence rules or if the resident acts in a manner which 156 157 158 159 160 161 162 163 164 165

Retirement Villages Act 1999 (NSW), s 135. Retirement Villages Act 1999 (NSW), s 136. Retirement Villages Act 1999 (NSW), s 129. Retirement Villages Act 1986 (Vic), s 16(2). Retirement Villages Act 1986 (Vic), s 16(2). Retirement Villages Act 1986 (Vic), s 16(5). Retirement Villages Act 1986 (Vic), s 16(4). Retirement Villages Act 1999 (Qld), s 168. Retirement Villages Act 1999 (Qld), s 190. Retirement Villages Act 2016 (SA), s 46.

790 [15.275]

Housing  Chapter  15

adversely affects others or disturbs other residents. The administering authority must then make application to the tribunal and satisfy it that the breach is sufficiently serious to justify termination of the right of occupation. If the tribunal is satisfied, it must fix a period within which the resident must leave and may grant an order for ejectment of the resident at the expiration of that period. Alternatively, the authority may give notice of termination on the basis that the premises have become an unsuitable place of residence for the resident because of the resident’s mental or physical incapacity. Again the administering authority must satisfy the tribunal that proper grounds for termination exist. Whereas termination on the basis of breach is likely to involve issues of conduct determinable by hearing the accounts of the parties in the normal manner of the tribunal, applications on the basis of mental or physical incapacity may well involve detailed and conflicting expert evidence. [15.290]  In Western Australia a right of residence can only be terminated by a resident or by

order of the State Administrative Tribunal.166 The grounds on which the tribunal may make an order are the physical or mental incapacity of a resident, breach of a residence contract or rules, serious damage to the premises or injury to an employee of the administering authority or another resident, or where the continuation of the contract would cause undue hardship to the administering authority.167 The tribunal may suspend an order for termination for a period of time.168 [15.295]  In Tasmania the administering authority must inform the resident of the reason for

termination. If the notice is challenged, the Civil and Administrative Tribunal and Fair Trading must be satisfied that the breach justifies termination.169 [15.300] In the Australian Capital Territory termination must follow notice of intent to

apply to the Civil and Administrative Tribunal. Application may be made by the operator or a resident.170 The grounds may include that the premises have become uninhabitable by reasons other than breach by the operator, that the premises have become unsuitable because of the resident’s physical or mental incapacity, a breach of agreement by the resident or if the operator seeks to upgrade the premises.171 The tribunal may make an order where it considers that it is desirable to do so or may suspend an order.172 [15.305]  In the Northern Territory a right of residence can only be terminated by a resident or

by an order of the court.173 The grounds on which the court may make an order are the same as those in Western Australia: see [15.290].174 Termination may be suspended.175 Enforcement of an order for termination is by a warrant for attendance by the bailiff.176

166 167 168 169 170 171 172 173 174 175 176

Retirement Villages Act 1992 (WA), s 17. Retirement Villages Act 1992 (WA), ss 58–​63. Retirement Villages Act 1992 (WA), s 64. Retirement Villages Act 2004 (Tas), ss 8, 32. Retirement Villages Act 2012 (ACT), s 184. Retirement Villages Act 2012 (ACT), ss 185–​190. Retirement Villages Act 2012 (ACT), s 192. Retirement Villages Act (NT), s 14. Retirement Villages Act (NT), ss 15–​20. Retirement Villages Act (NT), s 21. Retirement Villages Act (NT), s 23. [15.305]  791

PART 4 Divided Ownership of Land

[15.310] The protection of retirement village residents from eviction extends not only to

the administering authority who signed the residence contract, but also to the administering authority’s successors in title. In many cases this protection exists even if the required noting of the village’s existence on the title (see [15.210]) has not occurred. In Tasmania, the Australian Capital Territory and the Northern Territory no qualification is expressed to the right of continued possession unless one of the specified grounds discussed at [15.285], [15.300] and [15.305] is made out. In Western Australia the rights of residents are expressed without reservation to bind the administering authority’s successors in title.177 In South Australia the right of a mortgagee to possession is protected where the mortgage existed at the commencement of the Retirement Villages Act 2016 (SA),178 but otherwise, priority is not dependent on registration of the village although the existence of the village must be noted on title. In Brown v Commonwealth Bank of Australia (1994) 63 SASR 188, the Supreme Court held that despite non-​recording of the existence of the village a resident’s rights were enforceable against a mortgagee. Those rights overrode the protection the mortgagee would normally gain from indefeasibility under the Torrens system. This result has now been confirmed by s 21(8) of the Retirement Villages Act 2015 (SA). In New South Wales, Victoria and Queensland, enforcement of residents’ rights against successors in title is dependent on proper recording of the village’s existence on the title to the land. In New South Wales and Victoria protection of resident rights is expressly dependent on the official notification of the existence of the village.179 In Queensland the Chief Executive must notify the Registrar of Titles of the registration of any retirement village scheme and the existence of the scheme must be recorded on the title to the land. Residents’ rights are then protected as a charge over the land with priority over any other security whether that security was registered before the retirement village charge.180

Recovery of entry fees [15.315]  Entry fees are often payable by residents for admission into a retirement village.

Where those entry fees are for a right less than a fee simple or strata or community title interest, the resident has no interest which can be transferred to a third party. To some extent a resident whose rights are by way of a tenancy is protected by the proprietary status as a tenant, but even tenancy rights can be terminated and any transfer of the interest by the tenant may be restricted. [15.320]  Recovery of any entry fee depends on the terms of the residence contract and they

may unequivocally restrict the amount to be recovered. In Williams v Carlyle Villages Pty Ltd [2009] QCA 301 the parties to the retirement village contract entered into a lease of a unit in a village. The resident paid an ingoing contribution of $150,649. The lease terminated in 2007 and resident gave up possession. The unit was re-​let to a party who paid $245,000 for the residence right. The original contract provided for a refund of the entry fee less certain

177 178 179 180

Retirement Villages Act 1992 (WA), s 15(3). Retirement Villages Act 2015 (SA), s 50(4). Retirement Villages Act 1999 (NSW), s 182B; Retirement Villages Act 1986 (Vic), s 38. Retirement Villages Act 1999 (Qld), s 116.

792 [15.310]

Housing  Chapter  15

charges. The former resident argued that he was entitled to the capital appreciation of the unit. The court limited the right to a refund on termination to those in the contract. Neither the rights under the lease nor the provisions of the legislation guaranteed any payment on termination beyond that specified. The position of a licensee is even more strongly dependent on the terms of the contract. [15.325]  Construction by the courts of limits on recovery of entry fees has favoured rights of

residents to capital appreciation. In Bondi Beach Astra Retirement Village Pty Ltd v Hohman [2010] NSWCA 38 a clause in a retirement village agreement specified when the entitlement to reside ceased and gave the administrator an option to purchase the unit at the initial price. The court pointed out that the practical effect of the clause was to allow the administrator to claim any capital appreciation, but let any depreciation fall on the resident. However, the option had to be exercised when the entitlement to reside ceased. In that case the resident left the village in December 2004 and died a year later. Section 167 of the Retirement Villages Act 1999 (NSW) provides that any option to buy back had to be exercised within 28 days or it lapsed. The court held that the resident’s estate held rights free of the option. Section 167 applied even though any purchase pursuant to the option might not occur until a significantly later date. [15.330]  Different protections for the recovery of entry fees are given in each jurisdiction.

In New South Wales, residents of a retirement village unit are given protections for a refund of any entry fee. Where a resident holds a registered interest, any refund payable is due on receipt of payment from a succeeding resident or the time that successor takes possession. Non-​owners are guaranteed a refund of entry fees within 14 days of receipt of payment by a new occupant, or earlier reoccupation of the premises. In Victoria legislation gives effect to any oral representation of a right to a refund of a retirement village entry fee in precedence to any provision of the formal written agreement. In Queensland some protection is given to a resident’s right to a refund. The protection does not apply if the resident holds a freehold or leasehold interest; in such a case the right to a refund is left to the scope of the proprietary interest. Otherwise a resident has a charge over the land which secures the right of occupation, the use of facilities and any entitlement to a refund; the charge has priority over other interests. In South Australia, the legislation protects any right to a refund and provides for repayment of an entry contribution to a retirement village where health concerns require a move. Where an entry fee is refundable, it is a debt due from the administering authority and is a charge over the land with priority over any other charges. In Western Australia, the retirement village residence contract must specify if there is to be a refund. The provisions also require full specification of the method of calculation, the time for payment and relevant conditions. In Tasmania, the legislation specifies when a due refund must be paid and provides for repayment of an entry contribution to a retirement village where health concerns require a move. Any refund to which a resident is entitled is repayable within six months of the resident’s death or receipt of a notice to vacate or 30 days of resale or reoccupation. If a resident has to pay an entry fee when moving to an institution providing a higher level of care and the resident does not have ready or easy access to that amount, the resident can apply to the administering authority for a refund of their entry fee to the retirement village. In the Australian Capital Territory, the retirement village residence contract must specify if there is to be a refund. The details covering matters such as full specification of the method of calculation, the time for payment and relevant conditions must be set out in the disclosure statement. In the Northern Territory, the retirement village residence contract must specify if there is to be a refund. The [15.330]  793

PART 4 Divided Ownership of Land

provisions also require full specification of the method of calculation, the time for payment and relevant conditions.181 [15.335] In Victoria, Queensland, South Australia and the Australian Capital Territory

required processes are designed to assist recovery of an entry fee.182 In Victoria the parties must co-​operate through the reselling process. A  real estate agent may be appointed by agreement between the administering authority and the resident if the resident advises that he or she wishes to engage an agent to sell their unit. The resident may dictate the price, or price range, for which offers may be invited and must agree to the final purchase price; the resident must not unreasonably refuse to agree on a price. In Queensland, if a unit is not sold in six months, a resident may engage a real estate agent. In South Australia duties are placed on administering authorities by the Code of Practice, which are designed to assist residents to recover entry fees and in some circumstances recover part or all of the entry fees earlier than they would otherwise be entitled to them. The administering authority is under a duty to re-​ market a unit once a resident has given notice of an intention to vacate and must consult the resident over marketing efforts. Where a resident is required by a medical or other circumstance to move to accommodation providing a higher level of care, a resident may demand early payment of a refund. The right to early payment occurs where the charge for entry to the new accommodation could not be met without serious impact on the resident’s personal finances and the amount is limited to a reasonable estimate of what the resident would ultimately be entitled to.

Administration and dispute resolution [15.340] Administrative responsibility for the retirement village legislation has been

generally linked with consumer legislation. In Victoria, Western Australia, Tasmania and the Northern Territory responsibility is entrusted to the Commissioner for Consumer Affairs.183 In New South Wales the Director-​General of the Department of Fair Trading has general administrative responsibilities and may appoint investigators to assist enforcement.184 In Queensland administration is entrusted to the Chief Executive.185 In South Australia the legislation is entrusted to the administration of the Minister for the Ageing with support from a Registrar.186 The most extensive powers given to administering authorities are in New South Wales, Western Australia and the Northern Territory. In those jurisdictions the Director-​General of the Department of Fair Trading, or Commissioner for Consumer Affairs, is given powers 181

182

183 184 185 186

Retirement Villages Act 1999 (NSW), ss 180–​181; Retirement Villages Act 1986 (Vic), s 26; Retirement Villages Act 1999 (Qld), ss 114, 116; Retirement Villages Act 2016 (SA), s 27; Code of Fair Practice for Retirement Villages 2006 (WA), cl 4.6(b) (contained in Fair Trading (Retirement Villages Code) Regulations 2006 (WA), Sch 1); Retirement Villages Act 2004 (Tas), ss 8, 12, 13; Retirement Villages Act 2012 (ACT), s 237; Retirement Villages Regulations 1995 (NT), Sch 2, cl 24 (Code of Practice). Retirement Villages (Contractual Arrangements) Regulations 2006 (Vic), Sch 1, Items 1–​7; Retirement Villages Act 1999 (Qld), ss 64, 68; Retirement Villages Act 2016 (SA), s 32 (this section provides for the Code of Practice which sets out the duties with respect to sales); Retirement Villages Act 2012 (ACT), s 223. Retirement Villages Act 1986 (Vic), s 3; Retirement Villages Act 1992 (WA), ss 3, 9; Retirement Villages Act 2004 (Tas), Pt 5; Retirement Villages Act (NT), s 3. Retirement Villages Act 1999 (NSW), s 193, Pt 12A. Retirement Villages Act 1999 (Qld), s 134. Retirement Villages Act 2016 (SA), s 6.

794 [15.335]

Housing  Chapter  15

to conduct research into matters affecting retirement villages, to disseminate information, to investigate complaints by residents and administering authorities, to attempt to resolve complaints, to undertake prosecutions and (in defined circumstances involving the public interest) to represent residents in legal proceedings.187 In Queensland the Chief Executive is responsible for the approval of retirement village schemes and the appointment of inspectors.188 The inspectors have extensive powers to investigate conduct by administering authorities of retirement villages, but not to assist residents with complaints or legal action.189 The South Australian Registrar has the administrative functions of gathering information and advising and reporting to the Minister.190 The Tasmanian Director of Consumer Affairs and Fair Trading has broad powers to hear, investigate and determine retirement village disputes and power to make various orders.191 The Victorian Director of Consumer Affairs has the powers generally conferred by the Fair Trading Act 1985 (Vic).192 [15.345]  Jurisdiction to resolve disputes between residents and administering authorities of

retirement villages is conferred upon the Administrative and Civil Tribunals or in Western Australia the State Administrative Tribunal.193 These tribunals are also empowered to deal with disputes between retirement village administering authorities and residents.194 In Queensland application to a tribunal must follow attempted mediation unless the dispute is one relating to termination of residence or errors in original documentation or payment of an exit fee.195 In several jurisdictions emphasis is placed on alternative dispute resolution processes. In Victoria procedures for addressing management complaints and mediating resident disputes are to be established by the administering authority.196 In the Australian Capital Territory, the Northern Territory and South Australia the legislation provides for formal internal dispute-​ resolution processes.197 Following these processes, the Northern Territory then relies upon the regular court system for dispute resolution.198 In South Australia the village operator must ensure that a dispute resolution policy is in place.199 In Tasmania disputes are to be resolved by application to the Director of Consumer Affairs and Fair Trading only if the internal dispute resolution methods within the residence rules have been exhausted.200

187 188 189 190 191 192 193

194 195 196 197 198 199 200

Retirement Villages Act 1999 (NSW), s 193; Retirement Villages Act 1992 (WA), ss 3, 9; Retirement Villages Act (NT), s 3. Retirement Villages Act 1999 (Qld), s 134. Retirement Villages Act 1999 (Qld), ss 135–​151. Retirement Villages Act 2015 (SA), s 6. Retirement Villages Act 2004 (Tas), ss 31–​33. Retirement Villages Act 1986 (Vic), ss 6, 31. Retirement Villages Act 1999 (NSW), s 123; Retirement Villages Act 1986 (Vic), ss 38E–​38G; Retirement Villages Act 1999 (Qld), ss 167–​171; Retirement Villages Act 2016 (SA), s 45; Retirement Villages Act 1992 (WA), ss 56–​ 59; Retirement Villages Act 2012 (ACT), s 176; Retirement Villages Regulations (NT), Sch 2, cll 39, 40. Retirement Villages Act 1999 (NSW), s 123; Retirement Villages Act 1999 (Qld), ss 167–​171; Retirement Villages Act 2016 (SA), s 40; Retirement Villages Act 1992 (WA), ss 52–​74. Retirement Villages Act 1999 (Qld), s 167. Retirement Villages Act 1986 (Vic), ss 38E–​38G. Retirement Villages Industry Code of Practice 1999 (ACT), ss 33, 34; Retirement Villages Regulations (NT), Sch 2, cll 39, 40; Retirement Villages Act 2016 (SA), s 45. Retirement Villages Act (NT), s 13(1). Retirement Villages Act 2016 (SA), s 45. Retirement Villages Act 2004 (Tas), ss 28–​34. [15.345]  795

PART 4 Divided Ownership of Land

[15.350] Except in New South Wales and the Australian Capital Territory, internal resolution

of retirement village disputes is favoured over resorting to the tribunals or courts. Victoria does not even allow further mechanisms for dispute resolution in a court or tribunal pending failure of internal resolution procedures.201 In Queensland, South Australia, Western Australia and the Northern Territory the tribunal is either required or has a discretion to decline to hear any application unless it is satisfied that internal mechanisms for the resolution of disputes have been exhausted.202 The Tasmanian legislation specifies that internal procedures for dispute resolution specified in the village rules must be exhausted before an application may be made to the tribunal.203 The management rules of retirement villages should provide procedures by which administering authorities are to attempt to reconcile residents’ grievances. The tribunals may inquire as to what efforts have been made to use these mechanisms before hearing any application. New South Wales is the only jurisdiction without provisions favouring internal dispute resolution, although the legislation does allow for residents and administering authorities of retirement villages to establish internal dispute resolution procedures.204

201 202 203 204

Retirement Villages Act 1986 (Vic), s 38E; Retirement Villages Act 2012 (ACT), ss 33, 34; Retirement Villages Act (NT), s 13. Retirement Villages Act 1999 (Qld), s 154; Retirement Villages Act 2016 (SA), s 40(3), (5); Retirement Villages Act 1992 (WA), s 52; Retirement Villages Act (NT), s 13. Retirement Villages Act 2004 (Tas), s 33. Retirement Villages Act 1999 (NSW), ss 122–​128.

796 [15.350]

PART V

RELATIONS BETWEEN NEIGHBOURING LANDHOLDERS

CHAPTER 16

The Scope and Meaning of Real Property [16.05] INTRODUCTION......................................................................................................... 800 [16.10] FIXTURES..................................................................................................................... 800 [16.10] Introduction................................................................................................. 800 [16.15] The relevant tests......................................................................................... 801 [16.50] Recent cases................................................................................................. 805 [16.55] The effect of the doctrine of fixtures on various relationships............................ 808 [16.55] Vendor and purchaser of land.............................................................. 808 [16.60] Mortgagor and mortgagee................................................................. 808 [16.65] Devisee and personal representative...................................................... 809 [16.70] Disputes involving third parties............................................................ 809 [16.75] Modified rules affecting landlords and tenants................................................ 809 [16.75] Installation of fixtures........................................................................ 809 [16.80] Removal of fixtures............................................................................ 809 [16.120] OWNERSHIP OF AIRSPACE........................................................................................... 814 [16.145] OWNERSHIP OF MINERALS......................................................................................... 819 [16.145] Overview..................................................................................................... 819 [16.150] The common law position............................................................................. 819 [16.155] Statutory reservation of minerals................................................................... 820 [16.155] Overview........................................................................................ 820 [16.160] New South Wales............................................................................. 820 [16.165] Victoria.......................................................................................... 821 [16.170] Queensland..................................................................................... 822 [16.175] South Australia................................................................................ 822 [16.180] Western Australia............................................................................. 823 [16.185] Tasmania........................................................................................ 823 [16.190] Australian Capital Territory................................................................. 824 [16.195] Northern Territory............................................................................. 824 [16.200] Petroleum and helium................................................................................... 824 [16.205] Atomic substances........................................................................................ 825 [16.210] LAND BOUNDARIES.................................................................................................... 826 [16.210] Land adjoining the seashore.......................................................................... 826 [16.240] Land adjoining tidal navigable rivers.............................................................. 829 [16.245] Land adjoining non-​tidal rivers...................................................................... 829 [16.260] Land adjoining lakes and pools...................................................................... 831 [16.265] Land adjoining artificial watercourses............................................................. 832 [16.270] Land adjoining public roads.......................................................................... 832 [16.275] Incorrect description of boundaries................................................................. 833 [16.280] ENCROACHMENTS..................................................................................................... 833 [16.280] Buildings erected under mistake of title........................................................... 833 [16.295] Encroachment by buildings onto adjoining land.............................................. 835 [16.315] Other encroachments................................................................................... 837 [16.320] FENCING OBLIGATIONS............................................................................................. 838 [16.320] Common law............................................................................................... 838 [16.325] Dividing fences legislation –​construction........................................................ 839 [16.350] Dividing fences legislation –​repair................................................................. 841 [16.365] Miscellaneous fencing legislation................................................................... 842

 

799

PART 5 Relations between Neighbouring Landholders

INTRODUCTION [16.05]  This chapter examines a number of miscellaneous legal doctrines which separately

consider the limits to land. First, we consider the doctrine of fixtures, which determines when and in which circumstances an item of personal property which is attached to land loses its identity as a chattel and merges with the land. This is followed by a discussion of the rules relating to the ownership of airspace and minerals. The traditional common law estates and interests in land are concerned primarily with legal rights in respect of the land surface; rights vested in a person in relation to the surface do not always extend to the airspace above the surface or the minerals below the surface. A discussion of land boundaries then follows. This investigates, inter alia, the rights of a landowner adjoining a river or road to the river bed or the soil under the highway, rules as to the ownership of the seashore, and the legal effects of the advance or retreat of the sea or rivers over adjacent or riparian land over the years. This discussion leads logically to a consideration of the common law and statutory rules relating to the encroachment of buildings across boundary lines. Finally, consideration is given to the State and Territory legislation concerning the rights and duties of neighbouring landowners concerning the construction and maintenance of boundary fences.

FIXTURES1 Introduction [16.10] The issue as to the circumstances in which personal property becomes part of the

realty to which it is attached pursuant to the doctrine of fixtures is relevant in the following relationships: 1.

landlord and tenant;

2.

vendor and purchaser of land;

3.

mortgagor and mortgagee;

4.

life tenants and remaindermen or reversioners;

5.

devisees and personal representatives; and

6.

assessment of stamp duty on land transfer under state and territory stamp duty legislation.

In each of these situations a dispute may arise as to the ownership of particular chattels. For example, there may be a dispute between a vendor and purchaser of land as to whether certain curtains or objects in the house at the time of the signing of the contract of sale remain the property of the vendor or pass to the purchaser. Similarly, disputes as to ownership may arise between landlords and tenants in respect of items attached to the property by the tenant during the lease. In each situation the issue is one of fact2 and the answer will depend on the

1

2

For critiques of the law of fixtures, see Griggs, “The Doctrine of Fixtures: Questionable Origin, Debatable History, and a Future that is Past!” (2001) 9 APLJ 51; Abbs, “The Law of Fixtures: Informed Principle or Independent Predilection?” (2004) 11 APLJ 31. NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241; [1980] ANZ ConvR 300 (NSWCA); Agripower Barraba Pty Ltd v Blomfield (2015) 317 ALR 202 at 218 [89] (NSWCA). Also see Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 701, 711. Contrast Reynolds v Ashby & Son [1904] AC 466 (HL).

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The Scope and Meaning of Real Property  Chapter  16

application of the doctrine of fixtures. The effect of the operation of the doctrine on each of the relationships identified above is considered at [16.55]ff after a discussion of the general law of fixtures. While the issue is fundamental, there has been a frustrating lack of certainty in the development of the relevant law. One commentator has recently referred to the law of fixtures as “out-​of-​date and archaic”, “tattered and torn” and “an unprincipled metamorphosis”.3

The relevant tests [16.15] Based on normal contractual principles, if a dispute involving the ownership of

fixtures arises between two persons who are parties to a contract, the question of ownership may be determined by an express term of the contract. In such cases the court’s first duty is to examine any such term and to apply it if the normal laws of contract are satisfied.4 The following discussion presupposes that no such express term exists and that the general law will therefore be applicable. The starting point is the common law maxim, quicquid plantatur solo, solo cedit (whatever is attached to the land forms part of the land).5 Thus, a chattel, once attached to the land, becomes a fixture and is classed as real property. If the fixture is later detached from the land, it reverts to its status as a chattel.6 Like most legal maxims, however, this is a gross over-​ simplification of the state of the law. The two factors regarded at common law as relevant to the resolution of disputes over fixtures have been identified in the cases as the degree of annexation and the object of annexation.7 [16.20]  The “degree of annexation test” looks to the manner in which the chattel is attached

to the land. There appear to be two relevant legal presumptions. First, if a chattel is attached to the land other than by its own weight (eg, by screws or bolts), prima facie it is a fixture.8 This presumption applies even if the degree of attachment is very slight.9 The greater the degree of attachment, the stronger the presumption appears to be.10 Secondly, if a chattel is only attached by its own weight, prima facie the chattel is not a fixture even if it has become 3

4 5 6

7 8

9 0 1

Griggs, “The Doctrine of Fixtures: Questionable Origin, Debatable History and a Future that is Past!” (2001) 9 APLJ 51. See also Svedala Australia Ltd v Pegasus Gold Australia Ltd (2001) 16 NTLR 35; 165 FLR 59 at 67 (FLR). Dixon Investment Co Pty Ltd (in liq) v Woakwine Industries Pty Ltd [2002] SASC 161; Montague v Long (1972) 24 P & CR 240; Simmons v Midford [1969] 2 Ch 415; Murphy v Hudson (1995) 6 BPR 14,061. See Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd [2009] FCA 742 at [50]; Minshall v Lloyd (1837) 2 M & W 450; 150 ER 834 at 459 (M & W), 838 (ER) (Exch). Commissioner of State Revenue (WA) v TEC Desert Pty Ltd (2009) 40 WAR 344; [2009] WASCA 128 at [202] (reversed by the High Court on other grounds: TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576). TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 at 585–​586 [24], quoting Conti J in National Australia Bank Ltd v Blacker (2000) 104 FCR 288 at 293 [10]. See, for example, May v Ceedive Pty Ltd [2006] NSWCA 369; Commissioner of Taxation v Metal Manufacturers Ltd (2001) 108 FCR 150; Metal Manufacturers Ltd v Federal Commissioner of Taxation (1999) 43 ATR 375 at 411; Jordan v May [1947] KB 427 (CA); Australian Provincial Co Ltd v Coroneo (1938) 38 SR (NSW) 700 (FC); Lockwood Buildings Ltd v Trust Bank Canterbury Ltd [1995] 1 NZLR 22 (CA). Compare, however, McIntosh v Goulburn City Council (1985) 3 BPR 9367; Yallingup Beach Caravan Park v Valuer-​General (1994) 11 SR (WA) 355. Holland v Hodgson (1872) LR 7 CP 328 at 335. Spyer v Phillipson [1931] 2 Ch 183 (CA).

[16.20]  801

PART 5 Relations between Neighbouring Landholders

embedded in the soil.11 An illustration of the first presumption is Buckland v Butterfield (1820) 2 Brod & B 54; 129 ER 878 (CP), where a verandah attached to a house was held to be a fixture. Examples of the second presumption are Elwes v Maw (1802) 3 East 38; 102 ER 510 (KB),12 where a Dutch barn attached to the land by wooden upright posts inset into the ground was held not to be a fixture, and Hulme v Brigham [1943] KB 152, where a printing press attached merely by its own weight was similarly held not to be a fixture. Factors to be taken into account when determining the degree of annexation of a chattel to land or a building include the mode and structure of the annexation, whether the removal of the chattel would cause damage to the land or building or to the chattel itself, and whether the cost of renewal would exceed the value of the chattel.13 [16.25]  Originally, the doctrine of fixtures consisted solely of the degree of annexation test.

However, by the beginning of the 20th century the so-​called “object of annexation test” had been added by the courts as an additional relevant consideration on the ground that the degree of annexation test was unnecessarily rigid.14 Pursuant to the object of annexation test, the courts will examine whether the object was affixed to the land, on the one hand, as a temporary measure or for the purpose of displaying it as a chattel, or, on the other hand, in order to benefit the real estate.15 In the former case the chattel will be held not to be a fixture even if it is attached to the building other than by its own weight.16 In National Australia Bank Ltd v Blacker (2000) 104 FCR 288,17 Conti J listed the following considerations that the court should generally have regard to when determining the object of annexation: • whether the attachment was for the better enjoyment of the item generally, or for the better enjoyment of the land and/​or buildings to which it was attached; • the nature of the item affixed; • whether the item was to be in position either permanently or temporarily; • the function to be served by the annexation of the item (eg, to steady it while it is in operation).18

11

12 13 14 15 16

17 18

Hamp v Bygrave (1983) 266 EG 720; Monti v Barnes [1901] 1 KB 205 (CA); HE Dibble Ltd v Moore [1970] 2 QB 181 (CA); Australian Provincial Co Ltd v Coroneo (1938) 38 SR (NSW) 700; 55 WN (NSW) 246; Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd [2009] FCA 742 at [54]. See also Wiltshear v Cottrell (1853) 1 El & Bl 674; 118 ER 589 (KB). National Australia Bank Ltd v Blacker (2000) 104 FCR 288 at 295 [14]. See Re De Falbe [1901] 1 Ch 523 at 534–​535 (CA) per Vaughan Williams LJ. Reid v Smith (1905) 3 CLR 656; Metal Manufacturers Ltd v Federal Commissioner of Taxation (1999) 43 ATR 375 at 411 (Fed Ct). See, for example, Westpac Banking Corporation v Rabaiov [1991] ANZ ConvR 560; Bradshaw v Davey [1952] 1 All ER 350; Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74; Hamp v Bygrave (1983) 266 EG 720. For a recent survey of this issue, see Graw, “Fixtures and the ‘Purpose of Annexation’ Test” (2000) 21 Qd L 32. National Australia Bank Ltd v Blacker (2000) 104 FCR 288 at 294–​295 [13]. In Metal Manufacturers Ltd v Federal Commissioner of Taxation (1999) 43 ATR 375 at 411 [165] (Fed Ct), Emmett J enumerated the following factors to be considered in determining the object of annexation: whether removal would destroy the attached property; whether the cost of removal would exceed the value of the attached property; whether removal would occasion significant damage to the land or buildings to which the property is attached; whether the attachment was for the better enjoyment of the property or for the better enjoyment of the land or buildings to which it was attached; the nature of the property itself; the contemplated use of the property; the period of time for which the property was to be in position; and

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The Scope and Meaning of Real Property  Chapter  16

The New South Wales Court of Appeal in Agripower Barraba Pty Ltd v Blomfield (2015) 317 ALR 202 at 217 [80]–​[81] stated that these factors were “useful guides”, although neither exhaustive nor definitive. [16.30]  The traditional opinion is that the courts will infer the object of annexation from the

surrounding circumstances and the nature of the chattel and will apply an objective test. Thus the test is what the reasonable person would consider to be the reason for attaching the object to the land19 and the actual intention of the parties is merely one piece of relevant evidence.20 Kaye  J stated in Belgrave Nominees Pty Ltd v Barlin-​Scott Airconditioning (Aust) Pty Ltd [1984] VR 947 at 951:21 Whether the intention of the party fixing the chattel was to make it a permanent accession to the freehold is to be inferred from the matters and circumstances including the following: the nature of the chattel; the relation and situation of the party making the annexation vis-​a-​vis the owner of the freehold or the person in possession; the mode of annexation; and the purpose for which the chattel was fixed.

Another relevant factor might be the nature of the estate or interest held in the land by the owner of the chattel. Thus, for example, the court is less likely to infer an intention to benefit the real estate by a person with only a limited interest in the real estate (such as a tenant). [16.35]  The seminal case on the object of annexation test is Leigh v Taylor [1902] AC 157

(HL). In this case the tenant for life attached valuable tapestries to the wall of the drawing room of a house. The tapestries were attached to canvas by tacks, the canvas was nailed to wooden supports and the supports were nailed to the wall. The House of Lords held that the tapestries were not fixtures and could be removed by the executors of the life tenant. The case was determined on the basis that the affixing of the tapestries by nails to the wall was the only method by which the tapestries could be effectively displayed as chattels and that there was no intention to benefit the real estate by attaching the tapestries. A similar conclusion was reached by the English Court of Appeal in Spyer v Phillipson [1931] 2 Ch 183 (CA) in relation to oak panelling nailed by a tenant to the walls of the rented premises. A decision going the other way is Re Starline Furniture Pty Ltd (1982) 6 ACLR 312. In this case joinery machines bolted to the cement floor of a factory and wired into the electrical system, which could be detached without causing damage, were nevertheless held to be fixtures because they were installed and affixed for the better use and enjoyment of the land and premises as a furniture factory. Before a chattel will escape the classification as a fixture under the object of annexation test, if it is attached to the land, it must be shown that the annexation was “absolutely necessary”.22

19

20 21 22

the function to be served by the annexation of the property. His Honour did not see this list as exhaustive, nor believe that any single factor would be conclusive. Hobson v Gorringe [1897] 1 Ch 182 (CA); Re De Falbe [1901] 1 Ch 523; London CC v Wilkins [1957] AC 362 (HL); Melluish v BMI (No 3) Ltd [1996] AC 454 (HL); Metal Manufacturers Ltd v Federal Commissioner of Taxation (1999) 43 ATR 375 at 411 (Fed Ct). Emmanuel (Rundle Mall) Pty Ltd v CS (SA) (1986) 39 SASR 582; 17 ATR 307; Love v Bloomfield [1906] VLR 723; London CC v Wilkins [1957] AC 362 (HL). See also Reid v Smith (1906) 3 CLR 656 at 667 per Griffith CJ. Re De Falbe [1901] 1 Ch 523 at 537 (CA). [16.35]  803

PART 5 Relations between Neighbouring Landholders

[16.40] It is sometimes stated that the doctrine of fixtures turns on both the application

of the degree of annexation and the object of annexation tests. This, however, appears to be misleading as the object of annexation test has assumed far greater significance than the degree of annexation test in recent times.23 Illustrative of this approach is Yallingup Beach Caravan Park v Valuer-​General (1994) 11 SR (WA) 355, which concerned the question whether permanent, on-​site homes in a caravan park constituted fixtures. In holding in the negative, the Land Valuation Tribunal (at 357) stated that: the more recent authorities indicate a further decline in the comparative importance of the degree of annexation … with a greater emphasis upon the purpose or object of annexation. Associated with this shift is a greater reliance upon the individual surrounding circumstances of each case.

The degree test is still relevant in a negative sense in that if a chattel is only attached by its own weight it is most unlikely to be a fixture.24 It is also relevant in that, if a chattel is affixed to land, the onus of proof will shift to the person who affixed it to prove on the balance of probabilities why the object should not be regarded as a fixture. [16.45]  In the most recent Australian cases the courts appear to be shying away from referring

to and applying the degree and object of annexation tests. In Goulburn CC v McIntosh (1985) 3 BPR 9367 Carruthers  J decided that when determining whether an item had become a fixture, the court must have regard to all the circumstances, including the intention with which the item was installed, the degree of annexation and the relationship which existed between the parties when the item was installed. In May v Ceedive Pty Ltd [2006] NSWCA 369 at [68] the Court of Appeal held that the original affixer’s subjective intention may have some limited relevance, although the court emphasised that the greatest weight is attached to the intention as determined objectively.25 In Farley v Hawkins [1997] 2 Qd R 361; [1996] Q ConvR 54-​483 (CA) Fitzgerald P stated that all circumstances must be considered in deciding whether or not an object is a fixture, with varying degrees of emphasis upon different factors from case to case, and that a common sense perspective must be adopted. In National Australia Bank Ltd v Blacker [2000] FCA 1458 Conti J of the Federal Court stated that each case turns on its facts and there is no single test which is sufficient to determine the issue; the court must have regard to all the circumstances of the case in making its determination, and no particular factor has primacy. In National Dairies WA Ltd v Commissioner of State Revenue (2001) 24 WAR 70; 47 ATR 31 Malcolm CJ reiterated that the issue of fixtures is a question of fact to be determined having regard to all of the relevant circumstances, which include the purpose or object of annexation and the mode or degree of annexation. This new approach was also adopted by the House of Lords in Elitestone Ltd v Morris [1997] 2 All ER 513; [1997] 1 WLR 68726 in justifying its decision that a bungalow, which 23

24 25 26

See also Pricewaterhouse Coopers Legal v Perpetual Trustees Victoria Ltd [2007] NSWCA 271 at [59]; Commissioner of Taxation v Metal Manufacturers Ltd (2001) 108 FCR 150 at 162; National Dairies WA Ltd v Commissioner of State Revenue (2001) 24 WAR 70; 47 ATR 31; McDonald’s Australia Ltd v Chief Commissioner of State Revenue (NSW) (2005) 58 ATR 260; [2005] NSWSC 6; Ball-​Guymer v Livantes (1990) 102 FLR 327 (ACT Sup Ct); Palumberi v Palumberi (1986) 4 BPR 9106; [1986] ANZ ConvR 593 at 596 (ANZ ConvR) per Kearney J; Adele Holdings Ltd v Westpac Finance Ltd [1988] ANZ ConvR 20 at 21 per Doogue J. Berkley v Poulett (1976) 242 EG 39; HE Dibble Ltd v Moore [1970] 2 QB 181. Compare Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd [2009] FCA 742 at [56], where Lindgren J stated that the subjective intention of the affixer is irrelevant. Discussed in Butt, “Conveyancing Column: ‘What is a Fixture?’ ” (1997) 71 ALJ 820.

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The Scope and Meaning of Real Property  Chapter  16

rested on concrete foundation blocks in the ground, was a fixture despite the fact that it was not attached other than by its own weight.27 The lack of attachment was stated to be irrelevant. Lord Lloyd stated (at 517) that, rather than adopt the traditional twofold distinction between chattels and fixtures, a better approach is to classify an object under one of three broad categories: a chattel, a fixture or part and parcel of the land itself. Objects in the second and third categories are treated as being part of the land. In Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd [2009] FCA 742 Lindgren J stated (at [51]) that the issue of whether the third category identified in Elitestone Ltd v Morris [1997] 2 All ER 513; [1997] 1 WLR 687 represents good law in Australia has not yet been resolved.

Recent cases [16.50]  Despite the application of the rules detailed at [16.15]–​[16.45], cases on fixtures largely

depend on their facts and are often difficult to reconcile. The following are a representative sample of recent cases on this area of law.28 National Dairies WA Ltd v Commissioner of State Revenue (2001) 24 WAR 70; 47 ATR 31. The Full Supreme Court of WA held that plant and equipment attached to a dairy business was a fixture and attracted stamp duty. Malcolm CJ stated that although it would have been possible at any time to remove the equipment in question, it had been placed on the land in order to incorporate it into the factory system. The fact that there was no physical annexation of the relevant equipment to the land was held to be irrelevant in light of the interconnection of the various items in the plant into an interconnected whole. Commissioner of State Revenue v Uniqema Pty Ltd (2004) 9 VR 523; [2004] VSCA 82. A  steam and electricity plant was brought onto the premises by the tenant. The plant was bolted to the concrete foundations of the building, but had design features such as lifting lugs, skid-​based enclosures and a general lack otherwise of permanent attachment to the site which made it possible to be removed. The plant was held not to be a fixture. Forge Group Power Pty Ltd (in liq) (recs and mgers apptd) v General Electric International Inc (2016) 305 FLR 101. In the Supreme Court of New South Wales, Hammerschlag J held that four mobile gas turbine generators worth US$44 million which had been leased and installed on the land of another in Port Headland, Western Australia, remained chattels and had not become fixtures. The turbines were used in the operation of a temporary power station and were intended to remain in place for two years with the possibility of extension. They were mounted on trailers which retained their wheels and could be easily moved to an alternative site at a cost modest in comparison to their value. The attachment of the turbines to the land via a Seismic and Wind Kit was for the purpose of protecting the turbines from damage in cyclones and was thus for the better enjoyment of the turbines themselves, rather than for the better enjoyment of the land. His Honour’s conclusion that the turbines were not fixtures was upheld by the Court of Appeal in Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (recs and mgers apptd) (2017) 93 NSWLR 765. The Court noted at 796 [144]–​[155] that in addition to being connected to the land by the Kits, the turbines were also

27 28

See also Auckland City Council v Ports of Auckland Ltd [2000] 3 NZLR 614 at [74]ff (CA); Wessex Reserve Forces & Cadets Association v White [2005] EGLR 127. See also Waige & Co Constructions Pty Ltd v Suburban Timbers Pty Ltd [1976] ACLD 387 (NSWCA); Chateau Douglas Hunter Valley Vineyards Ltd v Chateau Douglas Hunter Valley Winery & Cellars Ltd [1978] ACLD 258 (NSW Sup Ct). [16.50]  805

PART 5 Relations between Neighbouring Landholders

connected by pipeline/​fuel connections. Although some of the latter type of connections were clearly for the better use of the turbines (eg, by supplying the turbines with the electrical power needed for their operation), other connections of this type were for the better enjoyment of the land (by delivering electricity generated by the turbines to the power station). However, the connections for the better enjoyment of the land were not so substantial as to render the turbines fixtures as they were reversable and detachable. Agripower Barraba Pty Ltd v Blomfield (2015) 317 ALR 202. The New South Wales Court of Appeal held that certain plant and machinery located outside a shed were fixtures. The items had been bolted and welded to steel and concrete bases and metal frames, not for the purpose of stabilisation, but to form an integrated diatomite processing and bagging facility. By contrast, items inside the shed were held to be chattels. All but one of these items could be removed fairly easily, and although they were connected to the plant and equipment outside the shed they were physically separated from it and used for the last stage of the bagging process to meet customer requirements. Park v Lasrado [2005] QSC 211. Byrne J of the Queensland Supreme Court held that a large chandelier attached to the ceiling of a house by a pulley system was not a fixture, but retained its character as a decorative chattel. Macrocom v City West Centre Pty Ltd [2001] NSWSC 374. A 4.6 metre diameter satellite dish was held to be a fixture based on its position on the roof, its weight, its method of connection to the building and the fact that additional steel support to the roof was necessary prior to its installation. Downing v WIN Television (NSW) Pty Ltd [2010] NSWSC 1132. A 42 metre television transmission tower was held to be chattel because the purpose of its slight attachment was to stablise the tower rather than improve the land. Borg v Cehner [2001] VSC 438. A sewerage pipe running under a footpath and an attached inspection shaft were held to constitute a fixture and thus form part of the freehold of the footpath. Ball-​Guymer v Livantes (1990) 102 FLR 327. Miles CJ of the Australian Capital Territory Supreme Court affirmed a decision of a Magistrates’ Court holding that an office with partition walls and a ceiling, which had been erected by a licensee, was not a fixture. This decision was reached despite the fact that the partition walls were fixed to the floor with masonry nails and bolted to the side walls of the warehouse building. His Honour reasoned that the licensee caused the office to be erected for a temporary purpose. He also noted that the licence agreement was determinable by a week’s notice and drew the conclusion that the licensees would be unlikely to effect an improvement under these circumstances without an expectation that they would not lose the whole of the benefit of the improvements upon ceasing occupation. Re Cancer Care Institute of Australia Pty Ltd (admin apptd) (2013) 16 BPR 31,529; [2013] NSWSC 37. Two linear accelerators, used for radiotherapy in the treatment of cancer and worth approximately $9 million, were installed in a private medical centre by their owner, a tenant at will of part of the centre. The accelerators were bolted to steel frames firmly attached to the floor of the premises. The accelerators could be easily removed from the frames and attached to similar frames located elsewhere, and other accelerators could be attached to the remaining frames. The court found that the accelerators had a separate identity from the frames and that the accelerators were chattels. The value of the accelerators, the ability to use them elsewhere, and the limited interest of the tenant in the 806 [16.50]

The Scope and Meaning of Real Property  Chapter  16

premises, meant that the objective intention of the tenant was that they should not become the property of the lessor. Attorney-​General (Cth) v R T Co Pty Ltd (No 2) (1957) 97 CLR 146. The High Court held that two printing presses were not fixtures even though they were attached to the building by nuts and bolts, since the sole purpose of the annexation was to hold the presses steady so that they could be used properly. Berkley v Poulett [1977] EGD 754. Large paintings screwed into the wall of a building were held by the English Court of Appeal not to be fixtures as the purpose of their attachment was to enjoy them as paintings and not to complement the architectural design of the room. NH Dunn Pty Ltd v LM Ericsson Pty Ltd (1979) 2 BPR 9241; [1980] ANZ ConvR 300 (NSWCA). A  private automatic branch telephone exchange hired to a tenant and installed by him in the rented premises was held by the New South Wales Court of Appeal not to be a fixture. Wellesmore v Ratford (1973) 23 FLR 295 (ACT Sup Ct). A fibreglass house was installed at a building materials exhibition centre. It was annexed to the land by steel spikes inserted into the ground and welded to steel base plates on the legs which supported the house. Despite the fact that the building was only intended to remain at the exhibition centre for one year, the house was held to be a fixture. Anthony v Commonwealth (1973) 47 ALJR 83. Water pipelines from Manton Dam to Darwin were held to be fixtures. The pipelines, which were partly below and partly above the land, consisted of concrete-​lined steel pipes supported on cradles set in concrete. Belgrave Nominees Pty Ltd v Barlin-​Scott Airconditioning (Aust) Pty Ltd [1984] VR 947.29 Airconditioning plants, together with chillers, were installed on the roofs of two buildings. The chillers stood by their own weight on a platform specially constructed to hold them. The chillers were connected by bolts to the water reticulation system, and water pipes were connected to water pumps which were affixed to the platforms on which the chillers rested. Kaye J of the Victorian Supreme Court held that the airconditioning plant was a fixture. Royal Bank of Canada v Saskatchewan Telecommunications (1985) 20 DLR (4th) 415. Various buildings, which were designed to house diesel engines and radio equipment, were either bolted to timber embedded in the ground or were constructed on treated skids which could be affixed to the ground by anchor rods. The Saskatchewan Court of Appeal held that the buildings were not fixtures as the degree of annexation was slight and the intention was that the buildings could be moved if the need arose. Dean v Andrew, The Times, 25 May 1985. The English Court of Appeal held that a large prefabricated greenhouse which was bolted to a concrete plinth which rested on the ground by its own weight was not a fixture. Hynes v Vaughan (1985) 50 P & CR 444 (Ch D). Scott J held, inter alia, that seven piles of rubbish consisting mostly of soil, rotting vegetation and bonfire residue merged with and became part of the real property by virtue of the law of fixtures. AAT Case 10,709 (1996) 31 ATR 1379. The Administrative Appeals Tribunal held that the operating plant installed within the structural element of a car-​washing facility was not a fixture. The operating plant included a pressure pump and pressure tank; a reverse osmosis system; a manifold for low-​pressure functions; a hot water heat pump system; a water softener;

29

Compare Pan Australian Credits (SA) Pty Ltd v Kolim Pty Ltd (1981) 27 SASR 353; [1981] ACLD 398 (SA Sup Ct). [16.50]  807

PART 5 Relations between Neighbouring Landholders

a spares kit; a reclaim system (comprising a system of filters and pumps); a banknote changer; stainless steel vacuum cleaners; a carpet shampoo machine; and a fragrance machine. Farley v Hawkins [1997] 2 Qd R 361. The Queensland Court of Appeal held that a built-​in dishwasher and a shed constituted fixtures. The shed was found to be a substantial structure which was bolted into substantial concrete blocks in the ground. In relation to the dishwasher the court found that while the electric connection was not a secure affixation, the plumbing connections did meet that description. The court also found to be significant that the kitchen cabinets and tiling would be damaged or left incomplete by the removal of the dishwasher.30

The effect of the doctrine of fixtures on various relationships Vendor and purchaser of land [16.55]  The relevant time for the consideration of the issue of fixtures is the date of the contract

of sale.31 All fixtures attached to the land at that date pass with the land to the purchaser32 unless they are expressly exempted in the contract of sale or unless the court is satisfied that the purchaser bought with notice (whether in writing or orally) that specified fixtures would not pass with the land.33 Legislation in most jurisdictions designed to shorten conveyances uniformly specifies that a conveyance of land is deemed to include fixtures;34 for this reason there need be no express mention of fixtures in the conveyance. Mortgagor and mortgagee [16.60] All fixtures annexed to land subject to mortgage are automatically included within the scope of the mortgage and form part of the security.35 This rule applies to both legal and equitable mortgages.36 The mortgagor has no right to remove any fixtures (in the absence of express agreement to the contrary) installed either before or after the date of the mortgage37 and cannot take advantage of exceptions admitted in favour of tenants: see [16.80]ff.38

30

Contrast Segal v Osborne [2016] NSWSC 941 at [81]–​[84], where a dishwasher was held not to be a fixture, in part because its removal would not leave a gap as unsightly as that the one left in Farley v Hawkins [1997] 2 Qd R 361. 31 Phillips v Lamdin [1949] 2 KB 33; Colegrave v Dias Santos (1823) 2 B & C 76; 107 ER 311 (KB). 32 Phillips v Lamdin [1949] 2 KB 33; Gibson v Hammersmith and City Rwy Co (1863) 32 LJ Ch 337; 62 ER 748; Meehan v NZ Agricultural Co Ltd (1907) 26 NZLR 766. 33 Isaacs v Lord [1920] VLR 274. 34 Conveyancing Act 1919 (NSW), s 67; Property Law Act 1958 (Vic), s 62; Property Law Act 1974 (Qld), s 239; Law of Property Act 1936 (SA), s 36; Property Law Act 1969 (WA), s 41; Conveyancing and Law of Property Act 1884 (Tas), s 6. There is no equivalent legislation in the Australian Capital Territory or Northern Territory. 35 See the legislation in n 34. A mortgage classes as a “conveyance” for the purposes of this legislation:  Conveyancing Act 1919 (NSW), s 7(1); Property Law Act 1958 (Vic), s 18(1); Property Law Act 1974 (Qld), s 3; Law of Property Act 1936 (SA), s 7; Property Law Act 1969 (WA), s 7; Conveyancing and Law of Property Act 1884 (Tas), s 2. See also Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74; Cockburn v Cockburn [1921] NZLR 652; Adele Holdings Ltd v Westpac Finance Ltd [1988] ANZ ConvR 20. 6 3 Meux v Jacobs (1875) LR 7 HL 481. 7 3 Longbottom v Berry (1869) LR 5 QB 123; Re New South Wales Co-​operative Ice & Cold Storage Co (1891) 12 LR (NSW) Eq 87; Australian Joint Stock Bank v Colonial Finance, Mortgage, Investment & Guarantee Corporation (1894) 15 LR (NSW) 464 (FC). 8 3 Climie v Wood (1869) LR 4 Ex 328 (Exch Ch); Monti v Barnes [1901] 1 KB 205. 808 [16.55]

The Scope and Meaning of Real Property  Chapter  16

Devisee and personal representative [16.65]  In the case of a bequest of land, at common law all fixtures pass with the devise and

the testator’s personal representatives have no right to remove them.39 This rule also applies in the case of intestacies.40 Disputes involving third parties [16.70]  At common law, despite the maxim nemo dat quod non habet, title to chattels may

be lost if they are attached to real property by someone other than the owner of the chattels.41 As stated by Megarry and Wade,42 if X steals Y’s bricks and builds them into a house on Z’s land, Z not Y becomes the owner of the bricks. Y’s remedies (if any) will lie against X in tort. An interesting problem arises where chattels subject to a chattel mortgage or hire-​purchase agreement are attached to real property and repossession is sought by the original owner following a repayment default. At common law, the problem would be resolved in the following manner. If A  hires goods to B and B installs them in his own property which is subject to mortgage to C, the goods will become subject to the mortgage.43 However, A will be regarded as having an equitable interest in the land if the hire-​purchase agreement entitles A to enter B’s property and seize the goods on default. This is referred to as a “right of entry” and, like other equitable interests in land, prevails against every person except a bona fide purchaser of a legal estate for value without notice.44 In some circumstances this problem would now be resolved by legislation regulating personal property securities and consumer credit. For the application of this legislation, see [7.30] and [17.275]–​[17.315].

Modified rules affecting landlords and tenants Installation of fixtures [16.75] At common law, there is no implied covenant prohibiting a tenant from installing

fixtures in the rented premises. However, a tenant who installs fixtures without the landlord’s consent, in a manner that reduces the value of the rented premises will have committed voluntary waste and will be liable in damages to the landlord: see [14.200]. Removal of fixtures [16.80] Public policy appears to demand that tenants be given a limited right to remove

chattels which they have attached to the rented premises during the lease even though the

39 40 41 42 43 44

Re Whaley [1908] 1 Ch 615; Re Lord Chesterfield’s Settled Estates [1911] 1 Ch 237. Norton v Dashwood [1896] 2 Ch 497. See, for example, Crossley Bros Ltd v Lee [1908] 1 KB 86; Gough v Wood & Co [1894] 1 QB 713 (CA). See also Reliance Corporation Ltd v Swindon Nominees Pty Ltd [1989] ACLD 41 (WA Sup Ct). Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), p 1030. Reynolds v Ashby & Son [1904] AC 466; Holland v Hodgson (1872) LR 7 CP 328; Hobson v Gorringe [1897] 1 Ch 182. See, for example, Kay’s Leasing Corporation Pty Ltd v CSR Provident Fund Nominees Pty Ltd [1962] VR 429; Re Morrison, Jones and Taylor Ltd [1914] 1 Ch 50 (CA); Sanwa Australia Leasing Ltd v National Westminster Finance Australia (1988) 4 BPR 9514. See Edgeworth, Butt’s Land Law (7th ed, Lawbook Co, Sydney, 2017), pp 83, 84. [16.80]  809

PART 5 Relations between Neighbouring Landholders

objects may class as fixtures under ordinary common law principles.45 This policy is based in part on the harshness of the operation of the law of fixtures in the landlord-​tenant context.46 As stated in 1801 by Lord Kenyon CJ:47 The old cases upon this subject leant to consider as realty whatever was annexed to the freehold by the occupier: but in modern times the leaning has always been the other way in favour of the tenant, in support of the interests of trade which has become the pillar of the State. What tenant will lay out his money in costly improvements of the land, if he must leave everything behind him which can be said to be annexed to it. Shall it be said that the great gardeners and nurserymen in the neighbourhood of this metropolis, who expend thousands of pounds in erection of greenhouses and hothouses, etc are obliged to leave all these things upon the premises, when it is notorious that they are even permitted to remove trees, or such as are likely to become such, by the thousand, in the necessary course of their trade. If it were otherwise, the very object of their holding would be defeated.

A tenant’s fixture is one that is fixed to or placed upon the rented premises at the cost of the tenant and for the purposes of the conduct of the tenant’s business. Although forming part of the realty, such a fixture must be able to be severed from the rented premises by the tenant. It must not be intended to be a permanent addition to the structure of the premises.48 [16.85]  Based on such considerations, modified rules have been adopted by common law in

respect of tenants’ fixtures. Chattels annexed by a tenant to the rented premises may become fixtures under ordinary principles and legal title will vest in the landlord. However, in certain circumstances (subject to express agreement to the contrary) the tenant is given a limited right to remove the fixtures he or she has installed.49 In these circumstances, during the term of the lease the landlord is treated as the owner of the fixture subject to the tenant’s right of removal. Legal title will not revert to the tenant unless and until the tenant actually exercises his or her right of removal and severs the object from the rented premises.50 The right to remove tenant’s fixtures only applies to articles brought onto the land and affixed by the tenant or by the tenant’s predecessor-​in-​title.51 The right does not extend to fixtures already forming part of the land at the commencement of the tenancy.52 The tenant is only entitled to remove certain categories of fixtures. At common law, the tenant may only remove trade, ornamental and domestic fixtures.53 In certain jurisdictions the tenant is also permitted by legislation to remove agricultural fixtures: see [16.100].

45

46 47 48 49

50 51 52 53

In the case of trade fixtures, the rationale is to encourage industry: Poole’s Case (1703) 1 Salk 368; 91 ER 320 (KB). The issue is discussed generally in Kodilinye, “Time for Removal of Tenant’s Fixtures” [1987] Conv 253. Also see Hepburn and Jaynes, “The Nature and Scope of Rights of Removal” (2013) 2 Property Law Review 123 at 126–​130. Metal Manufacturers Ltd v Federal Commissioner of Taxation (1999) 43 ATR 375 at 413 (Fed Ct). Penton v Robart (1801) 2 East 88; 102 ER 302 at 91 (East), 303 (ER) (KB). Vesco Nominees Pty Ltd v Stefan Hair Fashions Pty Ltd [2001] QSC 169 at [25]ff. See, for example, Commissioner of State Revenue (WA) v TEC Desert Pty Ltd (2009) 40 WAR 344; [2009] WASCA 128 (reversed by the High Court on other grounds: TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576). Crossley Bros Ltd v Lee [1908] 1 KB 86; Bain v Brand (1876) LR 1 App Cas 762 (HL). Eye Corp Australia Pty Ltd v Goliath Investments Pty Ltd [2006] NSWSC 159. Cottee Dairy Products Pty Ltd v Minad Pty Ltd (1997) 8 BPR 15,611. Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd [2009] FCA 742 at [67]; Re Cancer Care Institute of Australia Pty Ltd (admin apptd) (2013) 16 BPR 31,529 at 31,538–​31,359; [2013] NSWSC 37 at [36].

810 [16.85]

The Scope and Meaning of Real Property  Chapter  16

[16.90]  There are numerous cases concerning the scope of trade fixtures. This exception has

been held to include petrol pumps installed at a garage,54 salt pans,55 saw milling machinery,56 engines and boilers,57 shelves and counters,58 a milking plant with oil engine and accessories,59 the fittings of a public house,60 a balcony,61 a three-​room wooden structure with an added verandah attached to the soil,62 a corrugated iron shed,63 a commercially valuable sign on a roof64 and shrubs planted by a market gardener.65 Ornamental and domestic fixtures have been held to include ranges and ovens,66 ornamental chimney-​pieces,67 looking glasses,68 panelling69 and blinds.70 In all cases, before a chattel can class as a tenant’s fixture, in addition to proving that it falls within one of the recognised categories, the tenant must also prove that the object was affixed temporarily and was not intended to be a permanent improvement.71 It is unclear from the authorities whether the tenant is permitted at common law to remove trade fixtures if significant damage is caused to the rented premises by the removal.72 In such cases the tenant will be liable to repair the damage caused by the removal pursuant to the doctrine of waste and the implied covenant to use the premises in a tenant-​like manner.73 Ornamental and domestic fixtures have been held to be removable only if they can be removed without substantial injury to the premises.74 [16.95]  The basic common law rule is that the tenant must exercise his or her right of removal

prior to the termination of the tenancy agreement (unless a term in the tenancy agreement

54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72

73

74

Smith v City Petroleum Co Ltd [1940] 1 All ER 260. Earl of Mansfield v Blackburne (1840) Bing NC 426; 133 ER 165 (CP). Dixon Investment Co Pty Ltd (in liq) v Woakwine Industries Pty Ltd [2002] SASC 161. Climie v Wood (1869) LR 4 Ex 328; Lawton v Lawton (1743) 3 Atk 13; 26 ER 811 (Ch). Harding v National Insurance Co (1871) 2 AJR 67. Booth v Goodwin [1923] NZLR 703; Johnson v International Harvester Co (NZ) Ltd [1925] NZLR 529 (CA). Elliott v Bishop (1854) 10 Exch 496; 156 ER 534. Vesco Nominees Pty Ltd v Stefan Hair Fashions Pty Ltd [2001] QSC 169. Mackrell v Hall and Parker (1913) 32 NZLR 740. Webb v Frank Bevis Ltd [1940] 1 All ER 247. Eye Corp Australia Pty Ltd v Goliath Investments Pty Ltd [2006] NSWSC 159. Eye Corp Australia Pty Ltd v Goliath Investments Pty Ltd [2006] NSWSC 159. Winn v Ingilby (1822) 5 B & Ald 625; 106 ER 1319 (KB). Leach v Thomas (1835) 7 C & P 327; 173 ER 145 (NP). Beck v Rebow (1706) 1 P Wms 94; 24 ER 309 (Ch). Spyer v Phillipson [1931] 2 Ch 183. Colegrave v Dias Santos (1823) 2 B & C 76; 107 ER 311. See, for example, Spyer v Phillipson [1931] 2 Ch 183. Bridge, Cooke and Dixon, Megarry and Wade: The Law of Real Property (9th ed, Sweet and Maxwell, London, 2019), pp 1027–​1028 (contrasting the position of trade fixtures with ornamental and domestic fixtures). But see Fisher v Dixon (1845) 12 Cl & Fin 312; 8 ER 1426 (HL); Climie v Wood (1869) LR 4 Ex 328; Re Cancer Care Institute of Australia Pty Ltd (admin apptd) (2013) 16 BPR 31,529 at 31,538–​31,539; [2013] NSWSC 37 at [36] (referring to Butt, Land Law (6th ed, Lawbook Co, Sydney, 2010), pp 430, 431); Edgeworth, Butt’s Land Law (7th ed, Lawbook Co, Sydney, 2017), pp 429–​431. See, for example, Mancetter Developments Ltd v Garmanson Ltd [1986] QB 1212; [1986] 1 All ER 449 (CA); discussed in Williams, “Fixtures and Fittings in Landlord and Tenant Law” (1986) 83 Law Society’s Gazette 3661. Spyer v Phillipson [1931] 2 Ch 183; Martin and Coles v Roe (1857) 7 El & Bl 237; 119 ER 1235 (KB). [16.95]  811

PART 5 Relations between Neighbouring Landholders

states otherwise).75 However, a number of modifications to this rule have been recognised. Thus, the tenant under a fixed-​term lease whose agreement has expired by the effluxion of time (rather than forfeiture or surrender) is allowed a reasonable time after the termination of the lease to remove the fixtures.76 A similar extension may also be granted to tenancies of uncertain duration (tenancies at will and periodic tenancies) where the court considers that the tenant has not had a reasonable time to remove the fixtures.77 There is no extension, however, where the lease is determined by a surrender78 or forfeiture.79 The validity of the proposition that a tenant has the right to remove trade fixtures within a reasonable time after the determination of the lease in all cases regardless of the manner of the determination is uncertain.80 These latter propositions must be reassessed in light of two later decisions. In Concepts Property Ltd v McKay [1984] 1 NZLR 56081 the status of the defendant tenant had been in doubt as the tenant claimed the benefit of a fixed-​term tenancy pursuant to a disputed equitable assignment. The plaintiff landlord regarded the defendant as merely a monthly periodic tenant and served a notice to quit, which had duly expired by the time of the trial. At the trial the landlord was successful in proving that the claimed equitable assignment was ineffective. The landlord also sought an injunction to prevent the removal of the fixtures by the tenant, arguing that the tenant should have removed the fixtures at the end of the periodic tenancy. The court refused to grant the injunction and stated that a tenant should have the right to remove fixtures wherever he or she remained in possession under a genuine colour of right to remain there as a tenant; in such cases, the tenant would be allowed a reasonable time to remove his fixtures after the legal issue was resolved. This decision is consistent with New Zealand Government Corporation v HM & S Ltd [1982] QB 1145 (CA),82 where the English Court of Appeal held that a tenant remains entitled to remove “tenant’s fixtures” in all situations so long as he or she remains in possession. The common law rules discussed at [16.85]–​[16.90] relating to trade, ornamental and domestic fixtures no longer apply in Victoria, where the tenant’s right of removal is now codified by s 154A of the Property Law Act 1958 (Vic). This section reads in part:

75

76 77 78 79 80 81 82

(1) A tenant who at his or her own cost or expense has installed fixtures on, or renovated, altered or added to, a rented premises owns those fixtures, renovations, alterations or additions and may remove them before the relevant agreement terminates or during any extended period of possession of the premises, but not afterwards.

Commissioner of State Revenue (WA) v TEC Desert Pty Ltd (2009) 40 WAR 344; [2009] WASCA 128 at [218] (reversed by the High Court on other grounds: TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576); Geita Sebea v Territory of Papua (1941) 67 CLR 544 at 553; Hooper v Rawson [1920] NZGLR 476; D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317. Ex parte Brook; Re Roberts (1878) 10 Ch D 100 (CA); Vopak Terminal Darwin Pty Ltd v Natural Fuels Darwin Pty Ltd [2009] FCA 742 at [65]. Smith v City Petroleum Co Ltd [1940] 1 All ER 260; Braidwood v Dunn [1917] NZLR 269; D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317. Leschallas v Woolf [1908] 1 Ch 641; Re British Red Ash Collieries Ltd [1920] 1 Ch 326 (CA); Slough Picture Hall Co Ltd v Wade (1916) 32 TLR 542. Pugh v Arton (1869) LR 8 Eq 626; Ex parte Brook; Re Roberts (1878) 10 Ch D 100. See Clarke v Tresider (1867) 4 WW & A’B (L) 164; Bacchus Marsh Brick & Pottery Co Ltd (in liq) v Federal Building Society (in liq) (1895) 22 VLR 181. See also Weeton v Woodcock (1840) 7 M & W 14; 151 ER 659 (Ex). See also D’Arcy v Burelli Investments Pty Ltd (1987) 8 NSWLR 317.

812 [16.95]

The Scope and Meaning of Real Property  Chapter  16

The section goes on to require the tenant to restore the landlord’s property to its original condition if damage is caused by the removal of a fixture. [16.100]  Common law did not permit the tenant to remove agricultural fixtures.83 This rule

still applies in South Australia, Western Australia, the Australian Capital Territory and the Northern Territory. In the remaining jurisdictions the position has been altered by legislation.84 The position differs slightly from State to State. Except in New South Wales, it is provided85 that the tenant of farm lands who installs specified categories of farm equipment shall retain title to the equipment and is entitled to remove it for such time as he or she retains possession of the premises86 provided that the removal does not damage the landlord’s property or, if it does, that the tenant restores the property to its original condition. Pursuant to this legislation, the tenant’s right of removal cannot be exercised until the landlord has been given one month’s written notice of removal. At any time prior to the expiry of the notice the landlord may elect to purchase the equipment at a value determined by two referees. Section 10 of the Agricultural Tenancies Act 1990 (NSW) does not expressly provide that a tenant shall retain title of any equipment attached to the premises. Rather, it sets out a procedure by which the tenant may remove any fixture. Provided that the tenant gives notice to the owner and any occupier of the farm of his or her intention to remove a fixture, the tenant may remove a fixture within a reasonable time after he or she leaves the farm.87 Before this notice expires, the owner may decide to purchase the fixture. In this case the fixture becomes the property of the owner of the farm, who must pay fair compensation to the tenant.88 No damage must be done to the farm or any other fixture by the removal; any damage that is caused by the removal must be immediately made good.89 In New South Wales the provision extends only to land of a minimum size of one hectare which is used or intended to be used wholly or mostly for agricultural purposes.90 In this State farms outside the scope of the legislation are subject to common law rules. In New South Wales and Queensland the legislation allows the tenant a limited right to claim fair compensation at the termination of the tenancy from the landlord for certain specified types of improvement.91 [16.105]  If a fixture is classed as irremovable according to the rules discussed at [16.15]–​

[16.45], but the tenant removes the fixture illegally, the landlord may sue the tenant for damages under the doctrine of waste.92 If the landlord anticipates an illegal act of removal by the tenant, the landlord may obtain an injunction to restrain such removal.

83 84 85 86

87 88 89 90 91 92

Elwes v Maw (1802) 3 East 38; 102 ER 510; [1802] All ER Rep 320. Agricultural Tenancies Act 1990 (NSW); Property Law Act 1974 (Qld); Landlord and Tenant Act 1935 (Tas). Property Law Act 1958 (Vic), s 154A; Property Law Act 1974 (Qld), s 155; Landlord and Tenant Act 1935 (Tas), s 26. In New South Wales the property is removable by the tenant within a reasonable time after the termination of the tenancy (Agricultural Tenancies Act 1990 (NSW), s 10(1)) and in Queensland the property is removable within two months after the termination of the tenancy: Property Law Act 1974 (Qld), s 155. Agricultural Tenancies Act 1990 (NSW), s 10(1)(2). Agricultural Tenancies Act 1990 (NSW), s 10(4). Agricultural Tenancies Act 1990 (NSW), s 10(5). Agricultural Tenancies Act 1990 (NSW), s 4. Agricultural Tenancies Act 1990 (NSW), ss 15–​19A; Property Law Act 1974 (Qld), ss 153–​167. Hitchman v Walton (1838) 4 M & W 413; 150 ER 1489 (Ex); Smith v Render (1857) 27 LJ Ex 83. [16.105]  813

PART 5 Relations between Neighbouring Landholders

[16.110] The rules concerning tenants’ fixtures presupposes that the tenant wishes to

remove all fixtures he or she has installed during the lease. What if this is not the case? Traditionally, the tenant has been held not to be under a legal obligation to remove any of the fixtures.93 This position is now in doubt as a result of the decision of the Full Court of the Supreme Court of South Australia in Wincant Pty Ltd v South Australia (1997) 69 SASR 126.94 In this case the tenant had carried out extensive alterations with the consent of the previous landlord. At the end of the lease, the tenant vacated the premises without removing the fixtures and reinstating the premises to its original condition. The premises were untenantable in this condition. The Full Court, by a 2–​1 majority, upheld the decision of the District Court awarding the landlord damages for the cost of the reinstatement of the premises. Doyle CJ stated (at 128) that although there is no general obligation on a tenant to remove fixtures at the end of a lease, there may be an obligation to do so if their presence means that the premises are out of repair. [16.115]  Except for agricultural fixtures, tenants for life have the same rights in this area of

law as enjoyed by tenants of leasehold estates. Thus, on the death of a life tenant, the personal representatives may remove trade, ornamental and domestic fixtures within a reasonable time of the death.95

OWNERSHIP OF AIRSPACE [16.120]  Two issues regarding airspace arise for consideration: first, can airspace be regarded

in its own right as real property or “land” and be conveyed separately from the soil; and, secondly, does the owner of the land surface have a sufficient proprietary interest in the airspace above the land to ground an action for trespass or nuisance against any person who infringes the airspace? The most common example of the conveyance of airspace is the subdivision and sale of strata title units. This practice is sanctioned and regulated by legislation in each State:  see Chapter  15. Can airspace be conveyed in other circumstances? There appear to have been objections to this in medieval times, but by the time of Coke, the right of a person to dispose of his or her holding by horizontal subdivision in a similar manner to vertical subdivision was entrenched at common law. As stated by Coke:  “A man may have an inheritance in an upper chamber though the lower buildings and soil be in another, and seeing it is an inheritance corporeal it shall pass by livery”.96 This dictum has been cited with approval by both Australian and English courts.97

93 94 95 96

97

Never-​Stop Rly (Wembley) Ltd v British Empire Exhibition (1924) Inc [1926] Ch 877. Discussed in Aitken, “Applications in Equity: Removal of Tenant's Fixtures?” (1999) 73 ALJ 834. Registrar of Titles (WA) v Spencer (1909) 9 CLR 641; Leigh v Taylor [1902] AC 157 (HL); Chateau Douglas Hunter Valley Vineyards Ltd v Chateau Douglas Hunter Valley Winery & Cellars Ltd [1978] ACLD 258. Coke, Coke on Littleton (17th ed, W Clarke & Sons, C Hunter and S Brooke, London, 1817); Shepherd, The Touch-​Stone of Common Assurances, or, A Plain and Familiar Treatise, Opening the Learning of the Common Assurances or Conveyances of the Kingdom (W. Lee, London, 1651), p 541. See, for example, Re Lehrer and the Real Property Act (1961) 61 SR (NSW) 365 at 369; Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 at 91.

814 [16.110]

The Scope and Meaning of Real Property  Chapter  16

In Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd [1970] 1 NSWR 137; (1969) 91 WN (NSW) 52198 an easement of carriage way was granted: together with all buildings at present erected on said road or gateway and the right to pull down such buildings and to rebuild others at a height of not less than 12  feet from the ground … and for any of such purposes to use and to build upon the walls to the extent aforesaid.

It was argued, inter alia, that these various rights could not constitute an easement because they purported to confer on the dominant owner the exclusive use of part of the servient tenement. McLelland CJ in Eq (at 525) rejected this argument on the ground that no rights were granted in respect of the land beneath the surface of the soil, and held that a valid easement to maintain an existing building had been created. On appeal, the High Court varied in part the decision of the trial judge and held by a two to one majority (Menzies J dissenting) that the transfer and grant in respect of the buildings was not of an easement but of a fee simple estate in the defined stratum occupied by the building. This decision turned on the construction of the instrument of transfer and clearly indicates the implicit acceptance by the court of the possibility at law of conveying airspace outside the scope of the strata titles legislation. Re Lehrer and the Real Property Act (1961) 61 SR (NSW) 365 is further authority for this proposition. In this case Jacobs J held that the airspace contained within the upper floor of a building can be conveyed separately at common law from the soil on which the building stands and classes as real property. His Honour stated (at 369): It has not been argued on behalf of either the Registrar-​General or any of the applicants for registration of the leases now being considered that there cannot be a good conveyance or transfer in fee simple of air space or of the upper floor of a building. It would appear that the possibility of such a fee has long been stated in English law … It appears that there could be a feoffment of such a part of a building; but the part of a building could be regarded as a tenement and hereditament at common law and could be dealt with in the same manner as could the actual soil upon which the building rested. There have not been many occasions upon which this question has been dealt with directly in the cases, but the little authority that there is appears to be all the one way.

Reference should also be made to Resumed Properties Department v Sydney MC (1937) 13 LGR (NSW) 170,99 where Roper J stated that “land” may be defined by horizontal as well as vertical boundary and that an estate in fee simple may exist in respect of land so defined where it is held by a private person. [16.125] The issue arises whether a person who claims title to airspace may apply to the

Registrar of Titles to bring his or her interest under the Torrens system. The issue is not expressly dealt with by the Torrens legislation in each State and Territory, but the wording of the enactments strongly suggests that such a right exists. The legislation states that “land” already alienated in fee by the Crown and not under the operation of the Act may be brought under the operation of the Act on the application, inter alia, of the person claiming to be the

98 99

(McLelland CJ in Eq); Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73 (HC). The case is discussed in (1971) 45 ALJ 157 and (1972) 46 ALJ 39. See also Glentham Pty Ltd v City of Perth [1986] WAR 205; Harris v Ryding (1839) 5 M & W 60; 151 ER 27 (Exch); Reilly v Booth (1890) 44 Ch D 12 (CA); Batten Pooll v Kennedy [1907] 1 Ch 256.

[16.125]  815

PART 5 Relations between Neighbouring Landholders

owner of the fee simple either at law or in equity.100 “Land” is described in the various Torrens enactments as including any estate or interest in land.101 As (except in New South Wales) this definition is not exhaustive, the general definition of “land” in the interpretation of legislation enactments would also apply. The New South Wales enactment states that “land” shall include messuages, tenements, hereditaments, corporeal and incorporeal, of any tenure or description and whatever may be the estate or interest therein.102 In other jurisdictions the statutory definition is similar, although not identical.103 Based on this legislation, it is submitted that a person claiming title to airspace may claim registration. This conclusion is consistent with Re Lehrer and the Real Property Act (1961) 61 SR (NSW) 365, where Jacobs  J held that the lease or conveyance of an upper chamber of a building would undoubtedly come within the wide definition of “land” contained within s 21(e) of the Interpretation Act 1987 (NSW). Note, however, that this conclusion only applies if the person claiming title to airspace has complied with the terms of local government legislation concerning the subdivision of land. In Re Lehrer the applicant for registration had not lodged a plan of subdivision in accordance with the Local Government Act 1919 (NSW). Jacobs  J held that the Registrar-​General is not bound to register an instrument which, although otherwise classing as a registrable document, effects an unapproved subdivision. [16.130]  The ancient maxim, cujus est solum ejus est usque ad coelum et ad inferos, is the

starting point for determining the circumstances in which the owner of the land surface has a cause of action against persons who infringe his or her airspace.104 Loosely translated, the maxim means that the person who owns the surface of the land also owns both the skyspace above the surface stretching to the limits of the atmosphere and the soil beneath the surface down to the centre of the earth. The maxim is commonly attributed to Coke, although its real origin is lost in history and may have emanated from Roman law or Jewish law.105 Its earliest reference in English law is in Bury v Pope (1586) Cro Eliz 118; 78 ER 375 (KB), a case involving a claimed prescriptive easement of light. There is considerable doubt whether the wide application of the maxim represents the current position at common law. The major case in recent times supporting the wide application

100

Real Property Act 1900 (NSW), s 14(2); Transfer of Land Act 1958 (Vic), s 10(1); Real Property Act 1886 (SA), s 27; Transfer of Land Act 1893 (WA), s 20; Land Titles Act 1980 (Tas), s 11(1); Land Titles Act 1925 (ACT), s 18. 101 Real Property Act 1900 (NSW), s 3(1); Transfer of Land Act 1958 (Vic), s 4(1); Real Property Act 1886 (SA), s 3; Transfer of Land Act 1893 (WA), s 4(1); Land Titles Act 1980 (Tas), s 3(1); Legislation Act 2001 (ACT), Dictionary Pt 1. The Queensland and Northern Territory legislation gives no definition of “land”. 102 Interpretation Act 1987 (NSW), s 21(1). 103 Interpretation of Legislation Act 1984 (Vic), s 38; Acts Interpretation Act 1954 (Qld), s 36; Acts Interpretation Act 1915 (SA), s 4; Interpretation Act 1984 (WA), s 5; Acts Interpretation Act 1931 (Tas), s 46; Legislation Act 2001 (ACT), s 2; Interpretation Act 1978 (NT), s 17. Note that the definition of “land” in South Australia has been amended by the Native Title (South Australia) Act 1994 (SA) to include airspace over land. 104 On this subject, see also Grattan, “Judicial Reasoning and the Adjudication of Airspace Trespass” (1996) 4 APLJ 128; Morgan, “The Law Relating to the Use of Remote Sensing Techniques in Mineral Exploration” (1982) 56 ALJ 30; McKendrick, “Trespass to Air Space and Property Development” (1988) 138 NLJ 23. 05 See F.A.L, “CUIUS EST SOLUM EUS EST USQUE AD COELUM USQUE AD INFEROS” (1931) 47 LQR 14; 1 McNair, The Law of the Air (3rd ed, Stevens, London, 1964), App 1; Borcardo SA v Star Energy UK Onshore Ltd [2010] 3 WLR 654; [2010] 3 All ER 975 at 661–​663 (WLR), 985–​986 (All ER). 816 [16.130]

The Scope and Meaning of Real Property  Chapter  16

is Kelsen v Imperial Tobacco Co (Great Britain & Ireland) Ltd [1957] 2 QB 334.106 In this case the plaintiff sought an injunction based on a claim of trespass to airspace to require the defendant to remove an advertising sign which projected into the airspace above the plaintiff’s shop. McNair J held that the plaintiff, as tenant, had the right to use the airspace and that the interference by the sign constituted a trespass. His conclusion was influenced by the terms of the former s 40(1) of the Civil Aviation Act 1949 (UK) (now Civil Aviation Act 1982 (UK), s 76(1)), which states: “No action shall lie in respect of trespass or in respect of nuisance, by reason only of the flight of an aircraft over any property or height above the ground, which, having regard to wind, weather and all the circumstances of the case is reasonable”. His Lordship reasoned that the enactment of this legislation implies that the legislature considered that the maxim applies in respect of all aircraft or else such legislation would be unnecessary. As there is legislation in the Australian jurisdictions similar (although not identical) to the s  76(1)of the Civil Aviation Act 1982 (UK),107 Kelsen’s case is a highly persuasive authority in this country and was recently applied in Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd (2007) 20 VR 311; [2007] VSCA 311. [16.135]  Other authorities, however, suggest a different result. The best-​known case limiting

the scope of the maxim is Lord Bernstein of Leigh v Skyviews & General Ltd [1978] QB 479. In this case the defendants had flown over the plaintiff’s land and had taken an aerial photograph of it with the intention of selling it to him. The plaintiff unsuccessfully sued the defendants in trespass on the basis of his alleged unrestricted ownership of the airspace above his land. Griffith J distinguished the earlier cases in favour of the broad application of the maxim on the ground that they concerned the rights in the airspace immediately adjacent to the surface of the land. His Honour rejected the claim that a landowner’s rights extend to an unlimited height and stated (at 488): The problem is to balance the rights of an owner to enjoy the use of his land against the rights of the general public to take advantage of all that science now offers in the use of air space. This balance is in my judgment best struck in our present society by restricting the rights of an owner in the air space above his land to such height as is necessary for the ordinary use and enjoyment of his land and the structures upon it and declaring that above that height he has no greater rights in the air space than any other member of the public.

A further authority in favour of a narrow scope for the maxim is Graham v KD Morris & Sons Pty Ltd [1974] Qd R 1.108 In this case the jib of a crane infringed the airspace of the neighbouring property at certain times when the wind blew from the north. On these occasions the jib was suspended 20 metres over the neighbour’s house. On these facts Campbell J held that there was a trespass to land. Although purporting to apply Kelsen v Imperial Tobacco Co (Great Britain & Ireland) Ltd [1957] 2 QB 334, his Honour stated (at 4) that the plaintiff

106

107 108

See also Gifford v Dent [1926] WN 336. Note, however, that Morgan, “The Law Relating to the Use of Remote Sensing Techniques in Mineral Exploration” (1982) 56 ALJ 30 at 36 argues that Kelsen v Imperial Tobacco Co (Great Britain & Ireland) Ltd [1957] 2 QB 334 was decided on the basis that the defendant had deliberately exploited the airspace above the plaintiff’s land and had derived a material benefit for himself by the occupation of the airspace. There is a dictum by Stamp J in Woollerton and Wilson Ltd v Richard Costain Ltd [1970] 1 WLR 411 at 413 supporting this view. See, for example, Civil Liability Act 2002 (NSW), s 72(1); Wrongs Act 1958 (Vic), s 30; Damage by Aircraft Act 1964 (WA), s 4; Damage by Aircraft Act 1963 (Tas), s 3. Trespass was assumed by the court to exist in similar circumstances in Lang Parade Pty Ltd v Peluso [2006] 1 Qd R 42; [2005] QSC 112. [16.135]  817

PART 5 Relations between Neighbouring Landholders

succeeded because the defendant “interfere[d]‌with that part of the airspace above her land which is requisite for the proper use and enjoyment of that land”. The judge indicated that the proper use and enjoyment was affected inasmuch as the overhanging of the jib could adversely affect the market value of the property. By inference, the judgment suggests that there would be no trespass if the infringement of the airspace did not adversely affect the use and enjoyment of the land. A more recent authority on this issue is Anchor Brewhouse Developments Ltd v Berkley House (Docklands Development) Ltd (1987) 284 EG 625.109 The issue in this case was whether trespass to airspace was committed by the boom of a crane oversailing the plaintiff’s land. The defendants, although admitting that oversailing regularly occurred both when the crane was operational and when left free-​swinging, denied liability on the basis that the operations complained of constituted nuisance, rather than trespass, and did not cause actual damage. Scott J held for the plaintiffs and granted an injunction to restrain the continuing trespass. His Lordship stated (at 629): A landowner is entitled, as an attribute of his ownership of the land, to place structures on his land and thereby to reduce into actual possession the air space above his land. If an adjoining owner places a structure on his (the adjoining owner’s) land that overhangs his neighbour’s land, he thereby takes into his possession air space to which his neighbour is entitled. That, in my judgment, is trespass. It does not depend upon any balancing of rights.

This appears to represent a shift in judicial thinking from other recent authorities and a return to a wide view of the cujus est solum doctrine. Scott  J referred to the view in the Bernstein case that the critical question is whether the invasion of airspace interfered with the ordinary use and enjoyment of land, and stated that he was not satisfied that this represents a permissible application of Griffiths J’s approach in Bernstein case, nor that it would be workable in practice. His Lordship then proceeded to distinguish cases of trespass to airspace caused by structures from trespass to airspace as a result of other cases. He continued (at 629): The difficulties posed by overflying aircraft or balloons, bullets or missiles seem to me to be wholly separate from the problem which arises where there is invasion of air space by a structure placed or standing upon the land of a neighbour. One of the characteristics of the common law of trespass is, or ought to be, certainty. The extent of proprietary rights enjoyed by landowners ought to be clear. It may be that, where aircraft or overflying missiles are concerned, certainty cannot be achieved. I do not wish to dissent at all from Griffiths J’s approach to that problem in the Bernstein case. But certainty is capable of being achieved where invasion of air space by tower cranes, advertising signs and other structures are concerned. In my judgment, if somebody erects on his own land a structure, part of which invades the air space above the land of another, the invasion is trespass. [16.140]  The matter awaits a definitive ruling from the High Court. The most recent single instance decisions seem to favour the approach adopted in Lord Bernstein of Leigh v Skyviews & General Ltd [1978] QB 479. In both Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464 and LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1989) 24 NSWLR 490; Aust Torts Reports 80-​269 the Supreme Court of New South Wales held that the test for determining whether activities and an incursion above the surface of land constitute a trespass to land is whether they are of a nature and at a height which may interfere

109 Discussed in Wilkinson, “Trespass to Air Space” (1988) 138 New Law Journal 385. 818 [16.140]

The Scope and Meaning of Real Property  Chapter  16

with any ordinary uses of the land which the occupier may see fit to undertake.110 This appears to be at variance with the decision in Anchor Brewhouse Developments Ltd v Berkley House (Docklands Development) Ltd (1987) 284 EG 625. The law must be considered to be unsettled.

OWNERSHIP OF MINERALS Overview [16.145]  In order to determine whether the owner of the land surface also owns the minerals

beneath the land, it is first necessary at common law to examine the terms of the original Crown grant and also any subsequent conveyance to determine whether the right to minerals has been reserved in favour of the Crown or any other party. Even if there is no reservation at common law in favour of the Crown, pursuant to State legislation many mineral rights over private land today are vested in the Crown by statutory authority: see [16.160]–​[16.195]. Thus, having examined the common law position, it is always necessary to examine the extent to which the common law minerals regime has been affected by State legislation.

The common law position [16.150] Based on the maxim, cujus est solum ejus est usque ad coelum et ad inferos (see

[16.130]), at common law the owner in fee simple of the land surface owns all the subsoil, including minerals,111 down to the centre of the earth.112 However, it has always been possible to exclude minerals from the scope of a conveyance, either by express grant or reservation,113 and common law has always recognised the possibility of separate ownership of the subsoil and/​or any minerals lying beneath the surface.114 Separate title to minerals is recognised under the Torrens system. In each jurisdiction except Queensland the Torrens statute defines “land” widely as including, inter alia, all corporeal and incorporeal hereditaments and/​or any estate or interest in land.115 In Chirnside v Registrar of 110

111

112

113 114 115

LJP Investments Pty Ltd v Howard Chia Investments Pty Ltd (1989) 24 NSWLR 490; Aust Torts Reports 80-​269 at 68,671, per Hodgson J; Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464 at 470 per Bryson J. Where the affected land is a residence, its ordinary use would logically include the ability to occupy the house free from the fear that the crane may come crashing down in high winds: Janney v Stellar Works Pty Ltd (2017) 53 VR 677 at 687 [33] (Riordan J). It has been held at common law to be a question of fact in each case whether a substance is a mineral: Waring v Foden [1932] 1 Ch 276 (CA). On this issue, see also Forbes and Lang, Australian Mining and Petroleum Laws (2nd ed, Butterworths, Sydney, 1987) at [407]; Bradbrook, “The Relevance of the Cujus Est Solum Doctrine to the Surface Landowner’s Claims to Natural Resources Located Above and Beneath the Land” (1988) 11 Adel L Rev 462. Wade v NSW Rutile Mining Co Pty Ltd (1969) 121 CLR 177; Wilkinson v Proud (1843) 11 M & W 33; 152 ER 704 (Exch). See Badenhorst, “Towards a Theory on Publically-​Owned Minerals in Victoria” (2014) 22 APLJ 157 at 159–​163. For a consideration of the entitlement of a landowner to sue in trespass in relation to subsoil encroachments, see [16.315]. The position in Tasmania is different. Under the Crown Lands Act 1976 (Tas), s 54 owners’ rights generally extend only 15 metres below the surface: see Griggs and Snell, “Property Boundaries and Incidental Rights Attached to the Ownership of Land in Tasmania” (1991) 10 University of Tasmania Law Review 256 (1991) at 258–​259. Williamson v Wootton (1855) 3 Drew 210; 61 ER 883 (V-​C). Cox v Glue (1848) 5 CB 533; 136 ER 987 (CP). See also Re Haven Gold Mining Co (1882) 20 Ch D 151 (CA). Real Property Act 1900 (NSW), s 3(1)(a); Transfer of Land Act 1958 (Vic), s 4(1); Real Property Act 1886 (SA), s 3; Transfer of Land Act 1893 (WA), s 4(1); Land Titles Act 1980 (Tas), s 3(1); Legislation Act 2001 (ACT), Dictionary, Pt 1. The exact wording of the legislation differs slightly between the jurisdictions. [16.150]  819

PART 5 Relations between Neighbouring Landholders

Titles [1921] VLR 406 the registered proprietor of the land transferred the land surface to a third party but expressly reserved all minerals beneath the land. The Full Court of the Supreme Court of Victoria held that the transfer was registrable and that the transferor was entitled to have issued a separate certificate of title in respect of the minerals. The Court relied on the wide definition of “land” contained in s 4 of the Transfer of Land Act 1915 (Vic). The only common law exception to the rule that the owner in fee simple of the land surface owns the minerals beneath the surface relates to precious metals (ie, gold and silver). The Case of Mines (1568) 1 Plow 310; 75 ER 472 (KB)116 established that precious metals lying beneath private land belong to the Crown, together with the right to enter, dig and remove the ores and such other powers as are necessary to effect this purpose. Such minerals were held to pass into private ownership only where “apt and precise words” were contained in the original Crown grant. The Royal Mines Act 1688 (IMP) modified the effect of the decision in the Case of Mines by excluding from the royal prerogative base-​metal mines where cooper or other metals were intermingled with gold or silver in the same mine. Initial doubts as to whether the Crown’s prerogative mineral right applies in Australia were resolved in Woolley v Attorney-​General (Vic) (1877) LR 2 App Cas 163, where the Privy Council held that the prerogative extends to Victoria as part of the common law. The Privy Council stated (at 167–​168) that it is open to the legislature to curtail or abolish this prerogative right by statute, but this could be achieved only by express words or necessary implication. This position has recently been affirmed by the High Court in Cadia Holdings Pty Ltd v New South Wales (2010) 242 CLR 195, where French CJ analysed the history of the common law on this point in depth.

Statutory reservation of minerals Overview [16.155]  The general pattern regarding minerals which developed in each jurisdiction was to

progressively reserve various minerals from Crown grants by legislation. In most cases, such legislation does not apply retrospectively. Thus, the dates of the original Crown grant and the various enactments assume great significance in determining in each instance whether a landowner owns a particular mineral beneath his or her land. It is necessary to consider each jurisdiction separately: see [16.160]–​[16.195]. New South Wales [16.160]  Pursuant to the Crown Lands Alienation Act 1861 (NSW), land could be purchased

from the Crown either at two pounds per acre, in which case the only reservation was in favour of gold, or at one pound per acre, where all minerals were reserved. “Minerals” were left undefined pursuant to this Act. Regulations dated 13 October 1865 made pursuant to the 1861 Act permitted purchasers to convert their holdings into mineral purchases on payment of the greater amount. A general policy in favour of mineral reservation to the Crown was introduced by the Crown Lands Act 1884 (NSW), which states that all grants of land issued under the Act shall contain a reservation of all minerals.

116

See also Attorney-​General v Morgan [1891] 1 Ch 432 (CA); Attorney-​General v Great Cobar Copper Mining Co (1900) 21 LR (NSW) 351 (FC).

820 [16.155]

The Scope and Meaning of Real Property  Chapter  16

The 1884 Act was replaced by a series of Crown Lands statutes, most recently by the Crown Land Management Act 2016, which continues the policy in favour of reservation of all minerals.117 Section 3(1) of the 2016 Act states: “mineral” means:

(a) a mineral (as defined in the Mining Act 1992), or



(b) any other substance prescribed by the regulations for the purposes of the provision.

Under s 4 and the Dictionary of the Mining Act 1992 (NSW), “mineral” means any substance prescribed by the regulations as a mineral for the purposes of this definition and includes coal and oil shale, but does not include petroleum. Presumably any regulations made under these Acts only apply to grants made after their respective dates and have no retrospective application. The overall position in New South Wales is that private ownership of minerals will only exist if the Crown grant was dated prior to the Crown Lands Act 1884 and minerals were not expressly exempted prior to that date by the terms of the express grant or the Crown Lands Alienation Act 1861.118 An illustration of privately owned minerals was recognised recently in Cadia Holdings Pty Ltd v New South Wales (2010) 242 CLR 195. Two exceptions have recently been created to this position. First, s 5 of the Coal Acquisition Act 1981 (NSW) vests all coal in the State in the Crown and abolishes private ownership of this mineral.119 Secondly, s 45(2) of the Aboriginal Land Rights Act 1983 (NSW) states that, notwithstanding any other Act, where land is transferred to an Aboriginal land council or where a council otherwise acquires land, any mineral resources which were previously vested in the Crown shall become vested in the Aboriginal land council. Victoria [16.165]  A scheme of progressive reservation of minerals in favour of the Crown similar to

the New South Wales scheme (see [16.160]) was applied in Victoria. However, the effect of the Mines (Amendment) Act 1983 (Vic) is that all privately owned minerals in the State have reverted to the Crown on the expiration of 12 months from the date of commencement of s 291 of the Mines Act 1958 (Vic) (30 October 1984).120 The current law is contained in the Mineral Resources (Sustainable Development) Act 1990 (Vic). Section 9(1) states that the Crown owns all minerals except those in respect of which a minerals exemption is current and those in which the property has passed under s 11. The latter exemption concerns minerals recovered pursuant to a licence, miner’s right or tourist fossicking authority. “Mineral” is defined in s 4(1) as: any substance which occurs naturally as part of the earth’s crust –​ (a) including –​

(i) oil shale and coal; and

117

See Crown Land Management Act 2016 (NSW), s 13.2. Miscellaneous provisions reserving minerals were also contained in the Western Lands Act 1901 (NSW). 118 Note that the right of conversion allowed by the 1865 regulations survived despite the introduction of the Crown Lands Act 1884 (NSW) and continued to apply until 1909 to minerals other than coal and 1913 for coal. 19 This Act is to be repealed at a future date by the Coal Acquisition Legislation Repeal Act 2007 (NSW), s 4(a). 1 120 See Badenhorst, “Towards a Theory on Publically-​Owned Minerals in Victoria” (2014) 22 APLJ 157. [16.165]  821

PART 5 Relations between Neighbouring Landholders



(ii) hydrocarbons and mineral oils contained in oil shale or coal or extracted from oil shale or coal by chemical or industrial processes; and (iii) any substance specified in Schedule 4; (b) excluding water, stone, peat or petroleum.121

Queensland [16.170]  Section 8(3) of the Mineral Resources Act 1989 (Qld) states the basic rule that all

minerals (except coal and gold) are vested in the Crown except those contained in grants made under the Crown Lands Alienation Act 1860 (Qld), the Crown Lands Alienation Act 1868 (Qld) and the Mineral Lands Act 1872 (Qld). Section 6 defines “mineral” as: (1) A mineral is a substance –​

(a)

normally occurring naturally as part of the earth’s crust; or



(b)

dissolved or suspended in water on or within the earth’s crust; or



(c)

that may be extracted from such a substance mentioned in paragraph (a) or (b).



(2) Subject to subsection (3), each of the following is a mineral –​



(a)

any type of clay;



(b)

foundry sand;



(c)

coal seam gas;



(d) limestone;



(e) marble;



(f)



(g) peat;



(h)

salt, including brine;



(i)

oil shale;



(j)

silica, including silica sand;



(k)

rock mined in block or slab form for building or monumental purposes.

a product that may be extracted or produced by an underground gasification process for coal or oil shale (mineral (f)) and another product that may result from the carrying out of the process (also mineral (f));

Section  8(1) confirms the Crown prerogative in respect of gold. The ownership of coal is determined by s 8(2), which vests ownership in the Crown in respect of all land alienated after 1 March 1910, plus limited rights in respect of other land. South Australia [16.175]  Pursuant to s 16 of the Mining Act 1971 (SA), property in all minerals belongs to

the Crown. “Minerals” is defined in s 6 as: (a) any naturally occurring deposit of metal or metalliferous ore, precious stones, or any other mineral (including sand, gravel, stone, shell, coal, oil shale, shale and clay);

(b) any metal, metalliferous substance, or mineral recoverable from the sea or a natural water supply; or

121 Schedule 4 specifies the following minerals: bentonite; fine clay; kaolin; lignite; minerals in alluvial form including those of titanium, zirconium, rare earth elements and platinoid group elements; quartz crystals; and zeolite. 822 [16.170]

The Scope and Meaning of Real Property  Chapter  16



(c) any metal, metalliferous ore, or mineral, dumped or discarded –​



(i) in the course of mining operations, or operations incidental to mining operations; or



(ii) in other prescribed circumstances …

The definition goes on to exclude soil and petroleum. Western Australia [16.180]  Pursuant to s  9(1) of the Mining Act 1978 (WA), “all gold, silver and any other

precious metal” belongs to the Crown. Other minerals not alienated in fee simple prior to 1  January 1899 are Crown property. Section  9 of the Act is in identical form to s  138 of the now repealed Mining Act 1904 (WA). However, the definition of “minerals” differs. Section 8(1) of the Mining Act 1978 (as amended) defines “minerals” as meaning: naturally occurring substances obtained or obtainable from any land by mining operations carried out on or under the surface of the land, but does not include –​ (a) soil;

(b) a substance the recovery of which is governed by the Petroleum and Geothermal Energy Resources Act 1967 or the Petroleum (Submerged Lands) Act 1982;

…

(c) any of the following substances if it occurs on private land –​



(i) limestone, rock or gravel; or



(ii) shale, other than oil shale; or



(iii) sand, other than mineral sand, silica sand or garnet sand; or



(iv) clay, other than kaolin, bentonite, attapulgite or montmorillonite.

In contrast, “minerals” are defined in s 3 of the Mining Act 1904 as “all minerals other than gold, and all precious stones”. The issue thus arises whether the 1978 Act has expropriated from Crown grants prior to 1978 the wider range of minerals encompassed within the more modern definition. The issue awaits judicial resolution, but as a matter of statutory interpretation it appears that the 1978 Act has effected an expropriation. Tasmania [16.185] Legislative reservation of minerals from Crown grants date from 14  November

1893. This results from s 25 of the Mining (Amendment) Act 1911 (Tas), which states that all minerals except gold and silver in lands alienated since 14  November 1893 are Crown property. The present legislation is the Mineral Resources Development Act 1995 (Tas). Under s 6, all minerals held in private ownership at the commencement of the Act continue to be so held, and any minerals not held in private ownership vest in the Crown. By s 3, “mineral” means: any metallic mineral, non-​metallic mineral, industrial mineral, inorganic substance, coal, oil, gas, geothermal substance, atomic substance and matter forming part of the crust of the earth, other than –​

(a) the subsoil; or



(b) the layer of soil sustaining vegetation; or



(c) any rock, crushed stone, gravel, sand or clay produced on private land for the private use of the owner; or [16.185]  823

PART 5 Relations between Neighbouring Landholders



(d) mineral water; or



(e) any mineral produced as a by-​product of a mining operation and stored as a waste product on a lease area and not sold or otherwise disposed of to another person.

Section  6(4) states that any gold, silver, atomic substance, helium, geothermal substance, petroleum, hydrogen and oil existing in a natural state on or below the surface of land vests in the Crown. Crown grants made since 1905 are also subject to the Crown Lands Act 1976 (Tas). Section 16(3) reserves to the Crown all “gold, silver, copper, tin, or other metals, ore, mineral, or other substances containing metals, or gems or precious stones, or coal or mineral oil” in any grant, deed or transfer of any Crown land. Pursuant to s 54(1), all Crown land sold shall be deemed to have been sold as regards the surface and to a depth of 15 metres below the surface unless the Minister otherwise determines. The reservation to the Crown in the 1976 Act is copied from the terms of both the Crown Lands Act 1905 (Tas) and the Crown Lands Act 1911 (Tas). Australian Capital Territory [16.190]  Crown grants prior to 1911 are governed by the New South Wales legislation as it

stood at the relevant time. Ownership of minerals underlying land in the Australian Capital Territory vests in the Crown except in respect of land conveyed by Crown grant dated prior to the Crown Lands Act 1884 (NSW), where minerals were not expressly exempted by the terms of the Crown grant or the Crown Lands Alienation Act 1861 (NSW). Northern Territory [16.195]  Section 3 of the Minerals (Acquisition) Act 1953 (NT) states that all minerals are

vested in the Crown in right of the Commonwealth. This section must be read subject to the s  69(4) of the Northern Territory (Self-​Government) Act 1978 (Cth), which states that all interests of the Commonwealth in respect of minerals in the Territory (other than prescribed substances within the meaning of the Atomic Energy Act 1953 (Cth) and its regulations) are, by force of this section, vested in the Territory. “Minerals” is defined by s  2 of the Minerals (Acquisition) Act 1953 (NT) as including all mineral substances, gold, silver, copper, tin and other metals, ores or other substances containing metals or minerals, and gems, precious stones, coal, shale, mineral oils and valuable earths and substances.

Petroleum and helium [16.200] All the jurisdictions (except the Australian Capital Territory) have legislated to

ensure complete Crown ownership over petroleum and helium under private land regardless of when the relevant Crown grant was made. For example, s 6 of the Petroleum (Onshore) Act 1991 (NSW) states:122

122

(1) All petroleum, helium and carbon dioxide existing in a natural state on or below the surface of any land in the State is the property of the Crown, and is taken to have been

See also Petroleum Act 1998 (Vic), s 13; Petroleum Act 1923 (Qld), ss 9, 10; Petroleum and Geothermal Energy Act 2000 (SA), s 5(1); Petroleum and Geothermal Energy Resources Act 1967 (WA), s 9; Mineral Resources Development Act 1995 (Tas), s 6(4); Petroleum Act 1984 (NT), s 6.

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The Scope and Meaning of Real Property  Chapter  16

so always. No compensation is payable by the Crown for any such petroleum, helium or carbon dioxide that was at any time vested in any person other than the Crown.

(2) All Crown grants and leases and every licence and other instrument of title or tenure under any Act relating to lands of the Crown whether granted before or after the commencement of this section, are to be regarded as containing a reservation to the Crown of all petroleum, helium and carbon dioxide existing in a natural state on or below the surface of the land comprised in the instrument concerned.

The legislation in the other States differs slightly in its wording, but is to similar effect. Each statute defines “petroleum”. The following definition in s 3 of the Petroleum (Onshore) Act 1991 (NSW) is typical:123 “Petroleum” means:

(a) any naturally occurring hydrocarbon, whether in a gaseous, liquid or solid state; or

(b) any naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state; or

(c) any naturally occurring mixture of one or more hydrocarbons, whether in a gaseous, liquid or solid state, and one or more of the following, that is to say, hydrogen sulphide, nitrogen, helium, carbon dioxide and water, and includes any substance referred to in paragraph (a), (b) or (c) that has been returned to a natural reservoir, but does not include coal or oil shale or any substance prescribed to be a mineral for the purposes of the Mining Act 1992.

Atomic substances [16.205]  Part I of the Atomic Energy Act 1953 (Cth) reserves to the Commonwealth powers

over “prescribed substances”. Under s 34 of the Act these powers shall only be exercised for: the purposes of international or interstate trade or commerce; or in relation to substances situated, or things done or proposed to be done in or in connection with the Ranger Project Area or a Territory; or for purposes of the Commonwealth other than the defence. All atomic substances situated in the two Territories are the property of the Commonwealth:  s  35. “Prescribed substance” means “uranium, thorium, an element having an atomic number greater than 92 or any other substance declared by the regulations to be capable of being used for the production of atomic energy or for research into matters connected with atomic energy”: s 5(1). Section 41 vests power in the Commonwealth to mine “prescribed substances”. Section 41(1) states: Where it appears to the Minister that a prescribed substance, or minerals from which, in the opinion of the Minister, a prescribed substance can be obtained, is or are present on or under the whole or a part of an area of land in the Ranger Project Area, either in a natural state or in a deposit of waste material obtained from an underground or surface working, the Minister may, by writing under his hand, authorize a person, or 2 or more persons engaged in a joint venture, to carry on, on behalf of or in association with the Commonwealth, operations in accordance with this section on that land.

Pursuant to s 41(3), all prescribed substances and minerals mined pursuant to this power are by force of this section vested in the Commonwealth. Any person who suffers loss or damage

123

See also Petroleum Act 1998 (Vic), s 6; Petroleum Act 1923 (Qld), s 2; Petroleum and Geothermal Energy Act 2000 (SA), s 4(1); Petroleum and Geothermal Energy Resources Act 1967 (WA), s 5(1); Mineral Resources Development Act 1995 (Tas), s 3; Petroleum Act 1984 (NT), s 5. [16.205]  825

PART 5 Relations between Neighbouring Landholders

as a result of the exercise of the powers contained in s 41 or who had a right, title or interest in the prescribed substance or minerals may claim compensation: s 42. Special legislative provisions on this subject exist in Tasmania, where s 6(4) of the Mineral Resources Development Act 1995 (Tas) vests in the Crown any “atomic substance” (defined by s  3 as uranium, thorium and any declared substances) existing in a natural state on or below the land surface.

LAND BOUNDARIES124 Land adjoining the seashore [16.210]  Where there is a Crown grant describing the land conveyed as abutting the seashore,

unless it is expressly stated to the contrary, it is presumed that the boundary line is the mean high water mark.125 Thus the boundary of land adjoining tidal water is ambulatory: in other words, it may shift from time to time due to natural causes.126 The “mean high water mark” is the level reached by the ordinary high tide, which is taken as the medium high tide between the highest tide each lunar month, being the springs, and the lowest tide each lunar month, being the neaps, averaged out over the year.127 The Supreme Court of New South Wales has held in Sunlea Investments Pty Ltd v New South Wales (1998) 9 BPR 16,707128 that this rule applies to Torrens land as well as general law land and applies even if a certificate of title is issued containing a plan marking the boundary.129 In Queensland, Sch 6 of the Land Act 1994 (Qld) has changed the definition of “high-​water mark” to “the ordinary high-​water mark at spring tides”. This means “the long term average of the heights of two successive high waters during those periods of 24 hours (approximately once a fortnight) when the range of tide is greatest at full and new moon”.130 The property in the soil of the seashore below the high water mark belongs to the Crown in right of the State.131 This common law rule is reaffirmed in Queensland by s 9(1) and (2) of the Land Act 1994, which states that all land below a tidal boundary is the property of the State and may be dealt with as unallocated State land, unless the land is inundated land or a registered interest in the land is held by someone else.132 124 See generally Moore, “Land by the Water” (1968) 41 ALJ 532; Jackson, “Alluvio and the Common Law” (1983) 99 LQR 412; Weir, “The Uncertainty of Certain Boundaries” (2001) 9 APLJ 27. 125 Sunlea Investments Pty Ltd v New South Wales (1998) 9 BPR 16,707 (NSW Sup Ct); Hill v Lyne (1893) 14 NSWLR 449 (FC); Attorney-​General v Chambers (1854) 4 De GM & G 206; 43 ER 486 (Ch); Fowley Marine (Emsworth) Ltd v Gafford [1967] 2 All ER 472. 126 Queensland v Beames (2002) 120 LGERA 309; [2002] QCA 209. 127 Attorney-​General v Chambers (1854) 4 De GM & G 206; 43 ER 486; Queensland v Beames (2002) 120 LGERA 309; [2002] QCA 209. 128 See also Verrall v Nott (1939) 39 SR (NSW) 89; Auty v Thompson (1903) 5 NZGLR 541. 129 The principle of indefeasibility of title in the Torrens legislation does not extend to measurements included in a certificate of title. Extrinsic evidence may be adduced to prove the intended land boundaries. See Moore, “Land by the Water” (1968) 41 ALJ 532 at 533. 130 Queensland v Beames (2002) 120 LGERA 309; [2002] QCA 209 at 313 (LGERA) and [16] (QCA). 131 Blundell v Catteral (1821) 5 B & Ald 268; 106 ER 1190 (KB); Attorney-​General v Emerson [1891] AC 649 (HL); Malcolmson v O’Dea (1863) 10 HLC 593; 11 ER 1155 (HL). 132 For an instructive treatment of legislative changes to Queensland law regarding tidal boundaries, see Bell-​ James and Lovelock, “Tidal Boundaries and Climate Change Mitigation –​The Curious Case of Ponded Pastures” (2019) 27 Australian Property Law Journal 114 at 116–​122. 826 [16.210]

The Scope and Meaning of Real Property  Chapter  16

Despite the fact that ownership in the seashore is in the Crown, the public has a right of navigation,133 which extends to the rights of trade and commerce as well as the right of passage, and includes the right to fix moorings and to anchor.134 [16.215] By virtue of the doctrine of accretion, land which is gained gradually and

imperceptibly from the sea is the property of the owner of the adjoining land.135 This applies even where the changes to the land have been assisted by or would never have taken place but for man-​made works, such as the construction of a groyne to prevent erosion or the building of a bridge, provided that the works were not performed with the intention of augmenting the land.136 In this regard the law is different in Queensland. Section 10 of the Land Act 1994 (Qld) states that any land that becomes raised above high-​water mark because of the carrying out of works belongs to the State except where, in accordance with s 127 of the Land Act 1994 (Qld), those works were authorised by legislation and a grant has been made to the person reclaiming the land.137 The doctrine of accretion has been held to apply to cases where the adjacent land is Torrens land, as well as to general law land.138 “Imperceptible” has been held to mean imperceptible in day-​to-​day progress; the fact that the result after a long period of time is clearly perceptible is irrelevant.139 It appears that the doctrine does not operate without qualification and may be excluded by express words contained in the conveyance of transfer document. This might arise, for example, if the conveyance referred to the foreshore as it was from time to time, rather than the foreshore as it was at the time of the conveyance.140 Such a grant is referred to as a “movable freehold”.141 The doctrine is not limited to cases of accretion due to the action of water. Thus, the Privy Council held in Southern Centre of Theosophy Inc v South Australia [1982] AC 706142 that accretion can apply to an increase in land area caused solely by the advance of sand dunes caused by the wind. [16.220]  Where the increase in land is perceptible, pursuant to the doctrine of avulsion, the

land boundary does not change and the land gained is the property of the Crown.143 133 134 135

R v Ward (1836) 4 Ad & El 384; 111 ER 832 (KB). Attorney-​General v Wright [1897] 2 QB 318 (CA). Gifford v Lord Yarborough (1828) 5 Bing 163; 130 ER 1023 (HL). In Queensland, s 10 of the Land Act 1994 (Qld) states that land that becomes raised above high-​water mark, whether gradually and imperceptibly or otherwise, because of the carrying out of works, belongs to the State and may be dealt with as unallocated land. 136 Brighton and Hove General Gas Co v Hove Bungalows Ltd [1924] 1 Ch 372; Pascale v Sutherland Shire Council (1995) 87 LGERA 30. 137 See Queensland v Beames (2002) 120 LGERA 309; [2002] QCA 209. 138 Southern Centre of Theosophy Inc v South Australia [1982] AC 706 (PC); Sunlea Investments Pty Ltd v New South Wales (1998) 9 BPR 16,707. 139 R v Lord Yarborough (1828) 2 Bli NS 147; 4 ER 1087 (HL); Gifford v Lord Yarborough (1828) 5 Bing 163; 130 ER 1023 (HL). 140 See Baxendale v Instow PC [1981] 2 All ER 620; [1981] 2 WLR 1055. 141 This phrase is used by Bailey J in Scratton v Brown (1825) 4 B & C 485; 107 ER 1140 at 498 (B & C), 1145–​ 1146 (ER). See generally Howarth, “The Doctrine of Accretion: Qualifications, Ancient and Modern” [1986] Conv 247; Annand, “Movable Fees” [1982] Conv 208. 42 Discussed in Jackson, “Alluvio and the Common Law” (1983) 99 LQR 412. 1 43 Gifford v Lord Yarborough (1828) 5 Bing 163; 130 ER 1023 (HL); Doe d Seebkristo v East India Co (1856) 10 1 Moo PCC 140; 14 ER 445 (PC). [16.220]  827

PART 5 Relations between Neighbouring Landholders

The fact that the owner of adjoining land contributes to the natural process of accretion by conducting artificial works does not prevent the doctrine of accretion applying provided that there was no intention by the landowner of assisting the natural process.144 However, the doctrine of accretion will not apply where the additional land is formed solely due to artificial reclamation; in this case, the land will belong to the Crown.145 Thus, for example, in Attorney-​ General v Reeve (1885) 1 TLR 675 the Divisional Court of the Queen’s Bench held that land gained from the sea which resulted from harbour works and the removal of sand and shingle authorised by legislation was the property of the Crown. This matter is still governed by common law throughout Australia. The only relevant statutory provision is in Queensland: Land Act 1994 (Qld), s 10. See [16.215]. [16.225]  Where land is gradually and imperceptibly lost as a result of encroachment by the

sea, property in the land covered belongs to the Crown and is lost to the adjoining landowner.146 Property remains in the adjoining landowner, however, where there is an avulsive change and the original marks of ownership remain (eg, where the sea encroaches suddenly as a result of a storm).147 The landowner’s title is not extinguished in these circumstances by the passage of time and he or she may seek at any time to regain the land by reclamation works. The adjoining landowner also has the right at common law to undertake any work necessary to prevent the loss of his or her land by erosion.148 [16.230]  Sudden encroachment by the sea may lead to the formation of islands. Where the

island was part of the mainland at the time of the Crown grant, property in the island will belong to the adjoining landowner.149 Where, however, islands are created by other means (eg, volcanic activity), property vests in the Crown.150 [16.235] The rules set out at [16.215]–​ [16.230] relating to accretion and encroachment

have been justified on the grounds of convenience and fairness. The Privy Council stated in Southern Centre of Theosophy Inc v South Australia [1982] AC 706 at 716:151 Except in cases where a substantial and recognisable change in boundary has suddenly taken place (to which the doctrine of accretion does not apply), it is manifestly convenient to continue to regard the boundary between land and water as being where it is from day to day or year to year. To do so is also fair. If part of an owner’s land is taken from him by erosion, or diluvion (that is, advance of the water) it would be most inconvenient to regard the boundary as extending into the water: the landowner is treated as losing a portion of his land. So, if an addition is made to the land from what was previously water, it is only fair that the landowner’s title should extend to it. The doctrine of accretion, in other words, is one which arises from the

144

Verrall v Nott (1939) 39 SR (NSW) 89; Brighton and Hove General Gas Co v Hove Bungalows Ltd [1924] 1 Ch 372. 145 Attorney-​General (Southern Nigeria) v John Holt & Co (Liverpool) Ltd [1915] AC 599 at 615 (PC); Butcher v Elder Realty Pty Ltd (2002) 55 NSWLR 558; [2002] NSWCA 237 at [11]. 146 Re Hull and Selby Rly (1839) 5 M & W 327; 151 ER 139 (Ex); Humphrey v Burrell [1951] NZLR 262 (CA). 147 Hobday, Coulson and Forbes on the Law of Waters, Sea, Tidal and Inland, and Land Drainage (6th ed, Sweet and Maxwell, London, 1952), p 42. 148 R v Commissioners of Sewers for Pagham (Sussex) (1828) 8 B & C 355; 108 ER 1075 (KB). 149 Moore, “Land by the Water” (1968) 41 ALJ 532 at 535. 50 Secretary of State (India) v Chelikani Rama Rao (1916) LR 43 Ind App 192; 85 LJPC 222. 1 51 See also Re Hull and Selby Rly (1839) 5 M & W 327; 151 ER 139 (Ex); Attorney-​General (Southern Nigeria) v 1 John Holt & Co (Liverpool) Ltd [1915] AC 599. 828 [16.225]

The Scope and Meaning of Real Property  Chapter  16

nature of land ownership from, in fact, the long-​term ownership of property inherently subject to gradual processes of change.

Land adjoining tidal navigable rivers [16.240]  As in the case of land adjoining the seashore, in the case of a Crown grant describing

land as abutting a tidal, navigable river it is presumed in the absence of express words to the contrary that the mean high water mark is the boundary.152 “Mean high water mark” means the same here as it the case of land adjoining the seashore.153 Title to the bed of a tidal, navigable river (the alveus) is treated differently at common law to non-​tidal and tidal but non-​navigable rivers. Whether a particular river is tidal is a question of fact in each case. Presumably “tidal” will be given its normal meaning of waters caused to ebb and flow periodically as a result of the gravitational effect of the moon and the sun.154 Note, however, that tidal rivers have been held not to be limited to salt water, but will include fresh water ponded back.155 There is no exhaustive statutory definition of “tide”, “tidal river” or “tidal water” in any Australian jurisdiction, although s 3 and the dictionary of the Local Government Act 1993 (NSW) define “tidal waters” as including “the waters of the sea or of any lake, estuary, harbour, river, bay or lagoon in which the tide ebbs and flows”. If a river is found to be tidal, it is deemed to be navigable at common law; conversely, non-​tidal rivers, even though navigable in fact, are deemed not to be navigable in law.156 The common law rule is that title to the alveus of a tidal, navigable river vests in the Crown as far as the mean high water mark.157 Crown ownership in the alveus does not affect the common law public rights of fishery and navigation, which apply to all tidal waters unless modified by statute.158 In Queensland the common law rule has been affected by ss 9 and 10 of the Land Act 1994 (Qld) (see [16.210]), which applies equally to tidal rivers and the seashore. The common law rules concerning the effect of accretion, avulsion and encroachment on title to land apply to land adjoining tidal navigable rivers as well as to land adjoining the seashore.

Land adjoining non-​tidal rivers [16.245]  If a non-​tidal river flows through private land, the alveus belongs to the landowner.159

If, however, a non-​tidal river marks the boundary between two blocks of land, there is a presumption at common law that each adjoining landowner separately owns the alveus ad medium filum.160 This presumption applies regardless of the breadth of the river. The middle 152 153 154 155 156 157 158 159 160

Attorney-​General v Chambers (1854) 4 De GM & G 206; 43 ER 486; Sunlea Investments Pty Ltd v New South Wales (1998) 9 BPR 16,707. Queensland v Beames (2002) 120 LGERA 309; [2002] QCA 209. See Earl of Ilchester v Rashleigh (1889) 5 TLR 739. R v Smith (1780) 2 Doug KB 441; 99 ER 283 (KB); Hume v MacKenzie (1839) 6 Cl & Fin 628; 7 ER 834 (HL). Re Waldron (1893) 3 LCC 144 at 159 (NSW Land App Ct). Attorney-​General v Earl of Lonsdale (1868) LR 7 Eq 377. Mayor of Colchester v Brooke (1845) 7 QB 339; 115 ER 518 (KB); Williams v Wilcox (1838) 8 Ad & E 314; 112 ER 857 (KB); Malcolmson v O’Dea (1863) 10 HLC 593; 11 ER 1155. Orr Ewing v Colquhoun (1877) LR 2 App Cas 839 (HL). Hesketh v Willis Cruisers Ltd (1968) 19 P & CR 573 (CA); Blount v Layard [1891] 2 Ch 681n; Micklethwait v Newlay Bridge Co (1886) 33 Ch D 133 (CA). [16.245]  829

PART 5 Relations between Neighbouring Landholders

line will be determined in line with the position of the banks at either side of the river when the river is in its normal condition (ie, not in flood or drought).161 The common law ad medium filum presumption was held to be applicable to Crown grants in New South Wales162 (and presumably elsewhere in Australia) and to land held under the Torrens system. Authority for the latter proposition is Lanyon Pty Ltd v Canberra Washed Sands Pty Ltd (1966) 115 CLR 342, where the High Court held that the ad medium filum rule applied to a certificate of title issued pursuant to the Real Property Act 1925 (ACT), which made no mention of the common law. The argument that the common law rule was inappropriate in respect of Torrens land was rejected.163 [16.250] Gradual and imperceptible changes in the course of a river lead to progressive

alteration of the adjacent land boundaries at common law. However, in the case of avulsive change, the land boundaries are unaffected and the original central point in the river continues to be the boundary, even if the effect of this is that the river runs entirely through the land of one of the original adjoining owners.164 [16.255]  The ad medium filum rule has been either abrogated or restricted in its operation

in many jurisdictions. In Victoria it has been abrogated by s 385 of the Land Act 1958 (Vic): (1) If –​

(a) land is bounded in whole or in part by a watercourse; and



(b) the land was alienated by the Crown before, or is so alienated on or after, the commencement of section 327 of the Water Act 1989 –​



the bed and banks of the watercourse remain, and must be taken always to have remained, the property of the Crown despite the alienation of the land and despite the fact that the same person owned or owns, or holds or obtains a consolidated certificate of title for, the land adjacent to both banks.



(2) This section does not affect any right of –​



(a) *******



(b) *******



(c) *******



(d) the Council of the City of Melbourne; or



(e) the Victorian Ports Corporation (Melbourne);



(f) the Victorian Regional Channels Authority; or



(g) the port of Melbourne operator;



in the bed and banks and soil of the River Yarra and of all other public rivers, creeks and watercourses within the metropolis.



(3) This section does not affect any right of any person in the bed and banks of a watercourse that does not form the boundary or part of the boundary of land that was alienated by the Crown before, or is so alienated on or after, the commencement of section 327 of the Water Act 1989.

161 162 163 164

Kingdon v Hutt River Board (1905) 25 NZLR 145 (SC in banco); Hindson v Ashby [1896] 2 Ch 1 (CA). Lord v Commissioners (Sydney) (1859) 12 Moo PCC 473; 14 ER 991; Attorney-​General v White (1925) 26 SR (NSW) 216. Compare Rotter v Canadian Exploration Ltd (1959) 23 DLR (2d) 136 (BCCA). See, for example, Mayor of Carlisle v Graham (1869) LR 4 Exch 361; Ford v Lacy (1861) 7 H & N 151; 158 ER 429 (Ex). See also Dickinson v Brown [1989] ACLD 144 (Vic Sup Ct).

830 [16.250]

The Scope and Meaning of Real Property  Chapter  16

Similar, although not identical, legislation exists in Queensland, Western Australia and the Northern Territory.165 The legislation in all these jurisdictions gives the owner of the land adjacent to the watercourse access and (except in the Northern Territory) a remedy in trespass.166 In New South Wales, s 13.3(4) (subject to exceptions in s-​s(5)) and s 13.3(6) of the Crown Land Management Act 2016 (NSW) state:

(4) The owner of land transferred under this Act, the Crown Lands Act 1989 or the Crown Lands (Continued Tenures) Act 1989 in either of the following ways is not entitled to any rights of access over, or to the use of, any part of the bed of the river:



(a) as bounded by, by reference to, or by the margin or bank of, a river,



(b) by metes expressed or shown to run to a river or to the margin or bank of a river.



(6) The owner of the land is not entitled to any rights of access over, or to the use of, any part of the bed of a river if, before the commencement of section 172 of the Crown Lands Act 1989:



(a) the bed of the river was reserved from sale or lease under the Crown Land Acts, and



(b) land adjoining the river was subsequently alienated (including alienation under any form of tenure under the Crown Land Acts or any other Act relating to the alienation of land of the Crown):

(i) as bounded by, by reference to, or by the margin or bank of, the river, or



(ii) by metes expressed or shown to run to the river or to the margin or bank of the river.

While these provisions do not directly affect the ad medium filum rule, their overall effect is to remove all practical benefits from the right of ownership of the alveus. There is no relevant legislation in the remaining jurisdictions.167 Thus, the common law ad medium filum rule applies unabated in South Australia and Tasmania.

Land adjoining lakes and pools [16.260]  Lakes and pools in this context mean standing fresh water not subject to a current.

The terms do not extend to salt water lagoons. At common law, the ad medium filum rule determined the ownership of the alveus of lakes and pools equally to that of non-​tidal rivers.168 This rule, however, has been expressly abrogated by legislation in respect of all lakes and pools in New South Wales, Victoria,

165 166 167

168

Land Act 1994 (Qld), s 13A(1) and Survey and Mapping Infrastructure Act 2003 (Qld), ss 63, 99(2); Rights in Water and Irrigation Act 1914 (WA), s 15; Water Act 1992 (NT), s 12. Land Act 1958 (Vic), s 386; Land Act 1994 (Qld), s 13(4); Rights in Water and Irrigation Act 1914 (WA), s 16; Water Act 1992 (NT), s 13. Section 5 of the now-​repealed Control of Waters Act 1919 (SA) stated: “Where any watercourse to which this Act applies forms the boundary, or part of the boundary, of any land which after the date of the passing of this Act is alienated by the Crown, the bed and banks of such watercourse shall, notwithstanding such alienation, remain the property of the Crown and shall not pass with the land so alienated”. This Act was repealed by the Water Resources Act 1976 (SA). Neither that Act, nor its replacements (Water Resources Act 1990 (SA) and Water Resources Act 1997 (SA)) contain any provision relating to title to the alveus. Accordingly, the common law ad medium filum rule appears to apply in South Australia. Hobday, Coulson and Forbes on the Law of Waters, Sea, Tidal and Inland, and Land Drainage (6th ed, Sweet and Maxwell, London, 1952), p 124. [16.260]  831

PART 5 Relations between Neighbouring Landholders

Queensland and Western Australia.169 In these jurisdictions, title to the alveus vests in the Crown. In the remaining jurisdictions the common law continues to vest title in the adjoining landowners. Despite earlier English authority to the contrary,170 the Privy Council held in Southern Centre of Theosophy Inc v South Australia [1982] AC 706 at 715 that the doctrine of accretion is capable of being applied to land adjoining lakes, as well as to land adjoining rivers and the seashore. In this case the doctrine was applied to an inland lake in South Australia in the absence of any State legislation modifying the common law position. This decision will be applicable in all other Australian jurisdictions except New South Wales, where s 172(4) of the Crown Lands Act 1989 (NSW) states that the doctrine of accretion shall not apply and shall be deemed never to have applied to a non-​tidal lake.

Land adjoining artificial watercourses [16.265]  Title to the alveus of artificial watercourses constructed by a private landowner over

his or her own land will remain the property of the landowner. Where such a watercourse is constructed on the land of another person, title to the alveus will depend on the terms of the relevant instrument.171 Where a watercourse is constructed pursuant to legislation (eg, a canal), title to the alveus will be dependent upon the terms of the legislation.

Land adjoining public roads [16.270]  In Australia the common law principle that the owners of land adjoining a public

road own the soil of the road usque ad medium filum viae has not gained judicial acceptance. Authority for this proposition is Garibaldi Mining & Crushing Co v Cravens New Chum Co NL (1884) 10 VLR (L) 233 (FC),172 where Williams J stated at 239–​240: The doctrine of ad medium filum viae is one that is founded in the mother country on the presumption that the fee in the soil of the road belongs to the owners of the adjoining lands on either side. That presumption has arisen in England from the fact of the antiquity of the roads. It is a presumption of convenience on account of the impossibility in a great many cases, and the difficulty in others, of going back through a series of centuries to ascertain the title to the soil of the road, or in many cases the title to the adjoining land … That reason does not apply to the roads in this country. We know that the soil of the roads in Victoria is vested in the Crown, so that the reason for the presumption does not exist here.

The only exception recognised in this country is in respect of roads created by a private individual.173 Legislation enacted in most Australian jurisdictions now affirms that the ownership in the soil of public roads vests in the Crown or local council and that the ad medium filum rule has no application. For example, s 208(1) of the Local Government Act

169

Crown Land Management Act 2016 (NSW), s 13.3(1), (2); Land Act 1958 (Vic), ss 384(1)(2), 385(1); Land Act 1994 (Qld), ss 13A, 13B and Survey and Mapping Infrastructure Act 2003 (Qld), ss 62, 99(1); Rights in Water and Irrigation Act 1914 (WA), s 15 (see definition of “wetland” in s 2). In relation to the position in South Australia, see n 152. 170 Trafford v Thrower (1929) 45 TLR 502. 171 See, for example, Badger v South Yorkshire Rly and River Dun Navigation Co (1858) 28 LJQB 118 (Exch Ch). 72 See also Barker v Adelaide CC [1900] SALR 29 (SC in banco); Tierney v Loxton (1891) 12 LR (NSW) 308 (FC). 1 73 Harris v Sydney MC (1910) 10 SR (NSW) 860 (FC). Also see Casson v Leichhardt Council (2011) 186 LGERA 1 34; [2011] NSWLEC 243. 832 [16.265]

The Scope and Meaning of Real Property  Chapter  16

1999 (SA) states that all public roads in the area of a council are vested in the council in fee simple under the Real Property Act 1886 (SA) (and any land so vested that has not been previously brought under that Act is automatically brought under that Act without further application). Section 208(2) adds that when land vests in a council as a public road under this or another Act, the land is discharged from all mortgages, charges, easements and other encumbrances, and all other rights, privileges, trusts, limitations or restrictions.174

Incorrect description of boundaries [16.275]  In Victoria a margin of error is allowed in the description of boundaries. By virtue

of s  272 of the Property Law Act 1958 (Vic), unless there is an express agreement to the contrary, no action shall be brought if the margin of difference between a boundary line as stated in a document and as measured on the ground is less than 50 millimetres irrespective of its length where its length does not exceed 40.3 metres. Where the length of a boundary exceeds 40.3 metres, the maximum margin is one in five hundred computed on the total length of the boundary line. This rule applies to all land, regardless of whether it is registered under the Torrens system: Property Law Act 1958, s 273. No similar legislation exists in the other jurisdictions.

ENCROACHMENTS Buildings erected under mistake of title [16.280]  The situation may arise that a person builds on land belonging to another person.

The resolution of the questions of ownership and compensation between the builder and the landowner turns on legislation in Queensland, Western Australia and the Northern Territory, but in the remaining Australian jurisdictions is based on common law principles. The position at common law is as follows. If B builds on A’s land, prima facie ownership of the building will vest in A pursuant to the doctrine of fixtures175 and B will be unable to claim compensation. However, in certain circumstances B will be able to raise equitable estoppel or the equity of acquiescence176 (sometimes referred to as the rule in Ramsden v Dyson (1866) LR 1 HL 129) as a defence to prevent A from asserting his title against him. If the equity of acquiescence applies, B will also have a cause of action against A. Fry LJ in Russell v Watts (1883) 25 Ch D 559 at 586 (CA), detailed five essential elements for the application of acquiescence:177 1.

The plaintiff (B) must have made a mistake as to his or her legal rights.

2. The plaintiff must have expended some money, or must have done some act (not necessarily upon the defendant’s land) on the faith of his or her mistaken belief.

174

See also Roads Act 1993 (NSW), s 145; Road Management Act 2004 (Vic), Sch 5; Land Act 1994 (Qld), s 95 and Local Government Act 2009 (Qld), s 60; Land Administration Act 1997 (WA), s 55; Roads and Jetties Act 1935 (Tas), s 8(1); Control of Roads Act 1953 (NT), s 7 and Local Government Act 2008 (NT), ss 185, 186. 175 See [16.10]ff for a discussion of the doctrine of fixtures. 76 For a general discussion of this difficult area of law, see Heydon, Leeming and Turner, Meagher, Gummow 1 and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), pp 519–​528. 77 See also McBean v Howey [1958] NZLR 25 at 29. 1 [16.280]  833

PART 5 Relations between Neighbouring Landholders

3.

The defendant (A), the possessor of the legal right, must know of the existence of his or her own right which is inconsistent with the right claimed by the plaintiff.

4.

The defendant must know of the plaintiff’s mistaken belief of his or her rights.

5.

The defendant must have encouraged the plaintiff in his or her expenditure of money or in the other acts which he or she has done, either directly or by abstaining from asserting his or her legal right.178

If B fails to satisfy all five elements, A  may assert title to the building and is not liable to compensate B for his or her loss. An illustration is Brand v Chris Building Co Pty Ltd [1957] VR 625, where Hudson J of the Supreme Court of Victoria held that this result applies regardless of the seeming injustice and that the doctrine of unjust enrichment has no application in this context. Conversely, if B satisfies all five elements, the court will have a wide-​ranging discretion as to the appropriate remedy; it may choose to vest title in A, subject to the award of full compensation to B or, in exceptional cases, it may vest title in the whole or part of A’s land in B if such a result appears equitable. [16.285] The law relating to adverse possession of land is also applicable in this context.

Thus, if the essential elements of the doctrine (discussed in Chapter  3) are satisfied and A does not assert his or her right to possession of the land occupied by B’s building within the requisite 12-​year statutory period (15 years in Victoria and South Australia), A’s title will be extinguished and B will be entitled to retain possession of the land occupied by his or her building without the need to compensate A. [16.290] Pursuant to the s  196 of the Property Law Act 1974 (Qld), s  123(1) of the

Property Law Act 1969 (WA) and s 13 of the Encroachment of Buildings Act 1982 (NT), in Queensland, Western Australia and the Northern Territory an application may be made to the court for relief where a person makes a lasting improvement on land owned by another in the genuine179 but mistaken belief that such land is his or her property, or such land is the property of a person on whose behalf the improvement is made or intended to be made.180 Where this occurs, if the court believes that it is just and equitable that relief should be granted to the applicant or to any other person, the court may make any of the following orders: (a) an order vesting in any person the whole or any part of the land on which the improvement has been made; (b) an order requiring any person to remove the improvement from the land; (c) an order for the payment of compensation in respect of any land or any improvement; or (d) an order that any person have or give possession of the land or improvement for such period and upon such terms and conditions as the court may specify.181 In making such an order, the court may, inter alia, order any person to execute any instrument or to produce any title deed, instrument or document relating to any land.182 178 Compare McDonald v Peddle (1923) 42 NZLR 987 at 1002 per Reed J. 179 The word “genuine” connotes that the test is essentially a subjective one in determining the existence of the required belief: Ex parte Karynette Pty Ltd [1984] 2 Qd R 211. 180 This is the wording of the Queensland and Northern Territory sections. The Western Australian section refers to a “mistake”, rather than a “genuine but mistaken belief”. 181 Property Law Act 1974 (Qld), s 197(1); Property Law Act 1969 (WA), s 123(2); Encroachment of Buildings Act 1982 (NT), s 14(1). 182 Property Law Act 1974 (Qld), s 197(2); Encroachment of Buildings Act 1982 (NT), s 14(2). Compare Property Law Act 1969 (WA), s 123(5). 834 [16.285]

The Scope and Meaning of Real Property  Chapter  16

Encroachment by buildings onto adjoining land [16.295] The situation where one landowner erects a building which encroaches onto

adjoining land must be analysed separately. In Victoria, Tasmania and the Australian Capital Territory there is no relevant legislation governing this issue. In these jurisdictions the matter will be resolved on the same principles discussed at [16.280]. The result is that if B’s building encroaches onto A’s land, A may assert title provided that he or she has not acquiesced in the encroachment. In this situation the court will have a discretion to award damages and/​or an injunction requiring the part of the building encroaching across the boundary to be removed. However, if B satisfies the essential elements of the equity of acquiescence the court may, in its discretion, vest title to part of A’s land in B or award B compensation if the building is ordered to be removed or modified. Adverse possession may also apply: see [16.280]. In the remaining jurisdictions the situation under discussion is specifically provided for by legislation.183 The legislation enables either an adjacent owner (the owner of land over which an encroachment extends) or an encroaching owner to apply for relief in respect of any encroachment.184 It does not apply where the parties hold only a leasehold estate.185 The legislation is remedial in character.186 Its purpose is to provide a fair means of adjusting rights in the event of an encroachment to avoid blackmail occurring where innocent building or surveying errors arise.187 [16.300] “Encroachment” is statutorily defined (except in Western Australia) as meaning

“encroachment by a building, and includes encroachment by overhang of any part as well as encroachment by intrusion of any part in or upon the soil”.188 A driveway and a fence have been held to be capable of constituting a “building” for the purposes of the legislation.189 The High Court held in the context of the New South Wales legislation in Amatek Ltd v Googoorewon Pty Ltd (1993) 176 CLR 471190 that the right of owners encroached upon to apply to the court for relief in the form of compensation, pursuant to s 3 of the Encroachment of Buildings Act 1922 (NSW), was limited to a case where a building encroached from the land of the encroaching owner and straddled the boundary on to the contiguous land of the adjacent owner. The court thus had no jurisdiction in a case of structures standing wholly within the land alleged to have been encroached upon. Where an application is made, the court may make such orders as it considers just with respect to the payment of compensation to the adjacent owner, the removal of the encroachment, the conveyance, transfer or lease of the subject land to the encroaching owner, or the grant to the encroaching owner of any estate or interest in the subject land or any easement right

183 184 185 186 187 188 189 190

Encroachment of Buildings Act 1922 (NSW); Property Law Act 1974 (Qld), ss 182–​194; Encroachments Act 1944 (SA); Property Law Act 1969 (WA), s 122; Encroachment of Buildings Act 1982 (NT), ss 5–​12. Encroachment of Buildings Act 1922 (NSW), s 3(1); Property Law Act 1974 (Qld), s 184(1); Encroachments Act 1944 (SA), s 4(1); Property Law Act 1969 (WA), s 122(1); Encroachment of Buildings Act 1982 (NT), s 5. Bade v Rural City of Murray Bridge and Davies (2008) 101 SASR 302 (FC). Hardie v Cuthbert (1998) 65 LGRA 5 at 6–​7; Re Melden Homes No 2 Pty Ltd Land [1976] Qd R 79 at 81. Bunney v South Australia (2000) 77 SASR 319; [2000] SASC 141 (affirmed in (2001) 112 LGERA 213; [2001] SASC 18 (FC)); Hardie v Cuthbert (1998) 65 LGRA 5 at 6. Encroachment of Buildings Act 1922 (NSW), s 2; Encroachment of Buildings Act 1982 (NT), s 3; Property Law Act 1974 (Qld), s 182; Encroachments Act 1944 (SA), s 2. Clarke v Wilkie (1977) 17 SASR 134; Knox v Dwyer [2001] SASC 315. Followed in Carlin v Mladenovic (2002) 84 SASR 155 (FC). [16.300]  835

PART 5 Relations between Neighbouring Landholders

or privilege in relation thereto.191 The court is empowered to make such order as it deems proper in the circumstances of the case, and may consider all relevant factors concerning the encroachment and the circumstances surrounding it.192 Despite the breadth of the court’s powers, however, the legislation does not justify the court to order the transfer of land other than that over which the encroachment extends.193 [16.305]  The legislation (except in Western Australia) states that the maximum compensation

to be paid to the adjacent owner in respect of any conveyance, transfer, lease or grant to the encroaching owner shall, if the encroachment was not intentional and did not arise from negligence, be the unimproved capital value of the subject land.194 In other cases the minimum compensation is three times the improved capital value.195 Unless the court orders otherwise, the order for the payment of compensation operates upon registration as a charge upon the land of the encroaching owner in priority to any charge created by him or her or by the predecessor-​in-​title.196 The court may order compensation to be paid even where there is no transfer of any interest to the encroaching owner. Compensation may be paid to the adjoining owner when an encroachment is removed (eg, to compensate for remedial work necessary to the adjoining owner’s land or building).197 [16.310]  The legislation in New South Wales, Queensland, South Australia and the Northern

Territory permits either of the owners of two contiguous parcels of land to apply to the court for the determination of the true boundary wherever any question arises whether an existing

191

Encroachment of Buildings Act 1922 (NSW), s 3(2); Property Law Act 1974 (Qld), s 185(1); Encroachments Act 1944 (SA), s 4(2); Property Law Act 1969 (WA), s 122(2); Encroachment of Buildings Act 1982 (NT), s 6(1). For recent illustrations of the operation of this provision, see Executive Seminars Pty Ltd v Peck [2001] WASC 229; Bunney v South Australia (2001) 112 LGERA 213; [2001] SASC 18 (FC); Lonsdale v Gilbert [2006] NSWLEC 30; Black v Apps [2005] NSWSC 943; Shadbolt v Wise (2005) 143 LGERA 88; [2005] QCA 443; Campbell v Crane (2013) 17 BPR 32,483; [2013] NSWCA 43; Landorf v Wyndam [2017] QSC 198. See Re W H Marsh (1941) 42 SR (NSW) 21; Kostos v Devitt (1979) 1 BPR 9231 (NSW Sup Ct); Ward v Griffiths (1987) 9 NSWLR 458; Llavero v Shearer (2014) 17 BPR 33,381; [2014] NSWSC 1336 for illustrations where the court held that the appropriate order was the granting of an easement. 192 Encroachment of Buildings Act 1922 (NSW), s 3(3); Property Law Act 1974 (Qld), s 185(2); Encroachments Act 1944 (SA), s 4(3); Encroachment of Buildings Act 1982 (NT), s 6(2); cf Property Law Act 1969 (WA), s 122(4). For an illustration of the application of the NSW provision, see Anagnostou v Vinicio (1995) 87 LGERA 232. 193 Tallon v Proprietors of Metropolitan Towers Building Units Plan No 5157 [1997] 1 Qd R 102 (CA). 194 “Unimproved capital value” means the market value of an unencumbered estate in fee simple in the land assuming that there are no improvements upon the land: Bunney v South Australia (2000) 77 SASR 319; [2000] SASC 141 per Debelle J. In Bunney v South Australia and Gladwell v Steen [2000] SASC 141 at 143 Debelle J held that, pursuant to the overall intention of the legislation and the wide discretion vested in the court by s 4(3) of the Encroachments Act 1944 (SA), it is open to the court to order that no compensation be paid. See also Butland v Cole (1995) 87 LGERA 122; Anagnostou v Vinicio (1995) 87 LGERA 232; Morris v Thomas (1991) 73 LGRA 164; Llavero v Shearer (2014) 17 BPR 33,381; [2014] NSWSC 1336. 95 Encroachment of Buildings Act 1922 (NSW), s 4(1); Property Law Act 1974 (Qld), s 186(1); Encroachments Act 1 1944 (SA), s 5(1); Encroachment of Buildings Act 1982 (NT), s 7(1). In Western Australia there is no minimum compensation specified; it is within the discretion of the court: Property Law Act 1969 (WA), s 122(4). See Gladwell v Steen [2000] SASC 141; Gesmundo v Anastasiou (1975) 1 BPR 9297 (NSW Sup Ct); Re Melden Homes No 2 Pty Ltd Land [1976] Qd R 79; Morris v Thomas (1991) 73 LGRA 164 concerning the award of compensation. 96 Encroachment of Buildings Act 1922 (NSW), s 5(1); Encroachment of Buildings Act 1982 (NT), s 8; Property Law 1 Act 1974 (Qld), s 187(1); Encroachments Act 1944 (SA), s 6(1). 97 Bunney v South Australia (2000) 77 SASR 319; [2000] SASC 141. 1 836 [16.305]

The Scope and Meaning of Real Property  Chapter  16

building encroaches or a proposed building will encroach beyond the boundary. On such applications the court may make any order it deems proper for determining, marking and recording the true boundary.198

Other encroachments [16.315]  Damages and/​or an injunction based on trespass or nuisance may be sought by a

landowner in respect of any other form of encroachment onto the land surface of his or her property. Similar remedies may also be sought where there is a temporary or permanent encroachment into the airspace above the land or into the subsoil beneath the land. In these circumstances, the landowner’s title depends on the usque ad coelum et ad inferos principle: see [16.150]. As explained at [16.140], in respect of encroachments into airspace it appears likely that the landowner is not entitled to assert title to the airspace beyond the height which can be reasonably claimed to be within his or her effective control. Thus, for example, a landowner is entitled to assert title in respect of overhanging branches from a tree growing on adjoining property,199 wires passing over land at the height of 9  metres200 and an advertising sign projecting into his or her airspace by 20 centimetres from the second storey of an adjoining building.201 On the other hand, there has been stated to be no remedy in trespass where a balloonist passes over land202 or where bullets pass at a height of 25 metres over the land.203 There are no direct Australian authorities concerning the limitation on the circumstances in which a landowner can sue in trespass for trespass to the subsoil, but it is assumed that, as in the case of trespass to airspace (see [16.120]–​[16.140]), the landowner has at least a right to assert title to the subsoil within his or her effective control. The top layers of soil are clearly within the landowner’s control, and this has been judicially recognised as giving rise to damages for trespass in respect of encroaching tree roots.204 A landowner’s title clearly goes beyond this depth however. In Di Napoli v New Beach Apartments Pty Ltd (2004) 11 BPR 11 21,493; [2004] NSWSC 52 the sinking of rock anchors into the subsoil of a neighbour’s land was held to constitute a trespass, as was the exploitation of a coal seam beneath a private landowner’s property in Bulli Coal Mining Co v Osborne [1899] AC 351 (PC). A  similar result was reached in the United States in respect of conducting tours of that part of a cave 110 metres below the surface of the adjoining land.205 More recently, in Bocardo SA v Star Energy UK Onshore Ltd [2011] 1 AC 380 at 399, the United Kingdom Supreme Court has said that the rights of the owner of the surface land to the strata beneath it stops at “the point at which physical features such as pressure and 198 199 200 201 202 203 204 205

Encroachment of Buildings Act 1922 (NSW), s 9; Property Law Act 1974 (Qld), s 191; Encroachments Act 1944 (SA), s 10; Encroachment of Buildings Act 1982 (NT), s 11. Lemmon v Webb [1895] AC 1 (HL); Davey v Harrow Corporation [1958] 1 QB 60 (CA). Wandsworth District Board of Works v United Telephone Co Ltd (1884) 13 QBD 904 (CA). Kelsen v Imperial Tobacco Co (Great Britain & Ireland) Ltd [1957] 2 QB 334. See also John Trenberth Ltd v National Westminster Bank Ltd (1979) 39 P & CR 104. Pickering v Rudd (1815) 4 Camp 219; 171 ER 70 at 220–​221 (Camp), 70–​71 (ER) (NP) per Lord Ellenborough. Compare Kenyon v Hart (1865) 6 B & S 249; 122 ER 1188 at 252 (B & S), 1189 (ER) (KB) per Blackburn J. Clifton v Bury (1887) 4 TLR 8; cf Davies v Bennison (1927) 22 Tas LR 52 at 56. Morgan v Khyatt [1964] AC 475; [1964] NZLR 666; [1964] 1 WLR 475 (PC); Butler v Standard Telephones & Cables Ltd [1940] 1 All ER 121. Edwards v Sims 24 SW 2d 619 (1929). [16.315]  837

PART 5 Relations between Neighbouring Landholders

temperature render the concept of the strata belonging to anybody so absurd as to be not worth worrying about”. The application of this test meant that the defendant, who had drilled under the plaintiff’s land at depths ranging from 800 to 2,800 feet in order to extract oil, was guilty of trespass.206 As with the trend in recent cases dealing with trespass to airspace, the decision is inconsistent with a literal application of the usque ad coelum et ad inferos principle, but unlike those cases does not expressly limit the landowner’s rights to that part of the subsoil that is necessary for the ordinary use and enjoyment of the surface.207 These latter cases may arguably no longer represent good law in light of more recent decisions in the context of trespass to airspace which are more restrictive of the application of

FENCING OBLIGATIONS Common law [16.320]  At common law, a landowner has no obligation to erect or maintain fences around

his or her property on its adjoining boundaries or its road frontage.208 A number of exceptions to this rule are now recognised. First, a landowner is under an obligation to prevent his or her cattle trespassing on adjoining land and, as a practical matter, this may only be achieved by fencing.209 Secondly, the parties may enter into an express agreement to fence,210 which will be enforceable at common law on basic contractual principles. Thirdly, a duty to fence may be created by prescription or the implied grant or reservation of an easement.211 This latter right was sometimes referred to as a quasi-​easement or a spurious easement, in that (unlike other easements) it imposes a positive duty on the owner of the servient tenement. In Australia fencing easements may still be created, although they are rarely found. Fencing covenants may also be created, although being positive in nature the burden of such a covenant will not be enforceable against a successor-​in-​title of the covenantor: see [18.15]. In all other respects, however, the common law has been replaced by legislation controlling the rights and duties of neighbouring landowners concerning the construction and maintenance of dividing fences.212 In most jurisdictions legislation preserves the right of adjoining landowners

206

See Griggs, “Cujus Est Solum –​An Unfortunate Scrap of Latin, Doctrine in Disarray or a Brocard of Relevance? Its Applicability to the Subterranean and the United Kingdom Supreme Court Decision in Star Energy v Bocardo” (2011) 19 APLJ 155. 207 See [16.140]. 208 Noarlunga DC v Coventry [1967] SASR 71; Churchill v Evans (1809) 1 Taunt 529; 127 ER 939 (CP); Star v Rookesby (1710) 1 Salk 335; 91 ER 295 (KB). 209 Egerton v Harding [1975] QB 62 (CA). 210 Hilton v Ankesson (1827) 27 LT 519 (Exch); Jones v Price [1965] 2 QBD 618 (CA). 211 See Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011), Ch 10. See also Crow v Wood [1971] 1 QB 77 (CA); Lawrence v Jenkins (1873) LR 8 QB 274; Sutcliffe v Holmes [1947] KB 147 (CA). Note that in South Australia a fencing easement cannot be created by prescription: Fences Act 1975 (SA), s 21. 12 Dividing Fences Act 1991 (NSW); Fences Act 1968 (Vic) (as amended by Fences Amendment Act 2014 (Vic)); 2 Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld) (replacing Dividing Fences Act 1953 (Qld)); Fences Act 1975 (SA); Dividing Fences Act 1961 (WA); Boundary Fences Act 1908 (Tas); Common Boundaries Act 1981 (ACT); Fences Act 1972 (NT).

838 [16.320]

The Scope and Meaning of Real Property  Chapter  16

to make their own covenant or agreement relating to fencing,213 but, in the absence of such an agreement, establishes certain rules concerning the construction, maintenance and repair of dividing fences. The form and content of the legislation differs slightly between the jurisdictions, but the following represents an outline of the essential features of the various enactments: see [16.325]–​[16.360].

Dividing fences legislation –​construction [16.325] In New South Wales, Victoria, Queensland, Western Australia and the Northern

Territory the legislation states that the owners of adjoining lands not divided by a sufficient fence214 shall be liable to join in or contribute in equal proportions to the construction of a dividing fence between their properties.215 In South Australia any dispute as to the adjoining owners’ respective liabilities for the cost of fencing is determined according to the benefit that each of them derives from the performance of the fencing work and, in the absence of proof to the contrary, it is presumed that the parties derive equal benefit.216 In Tasmania the respective proportions that the adjoining owners must contribute to the erection of a sufficient fence are as agreed upon or as determined by an arbitrator.217 Any owner desiring to compel an adjoining owner to join in or contribute to the construction of a dividing fence may serve him or her with a notice in writing to fence which must specify the boundary to be fenced, contain a proposal for fencing it and specify the type of fence proposed to be constructed.218 [16.330]  Where the adjoining landowners do not agree as to the construction of the fence,

the relevant court of summary jurisdiction or administrative tribunal may, upon application of either person, make an order determining the type of fence to be constructed, what portion shall be constructed by each person, the time within which it shall be constructed and, if necessary, the boundary or line upon which the fence is to be constructed and the compensation to be paid in consideration of loss of occupation of any land.219 In Tasmania any dispute must be

213

Dividing Fences Act 1991 (NSW), s 26; Fences Act 1968 (Vic), s 34; Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 10; Dividing Fences Act 1961 (WA), s 6; Boundary Fences Act 1908 (Tas), s 43; cf Fences Act 1975 (SA), ss 5–​7; Fences Act 1972 (NT), s 6(1). 214 For the meaning of “sufficient fence”, see R v Hutchinson; Ex parte Jessell (1884) 10 VLR (L) 332; Hose v Cobden [1921] VLR 617. A retaining wall on the boundary line of adjoining properties is not a “dividing fence” and is not within the scope of the legislation: Carter v Murray [1981] 2 NSWLR 77. A fence may be a “dividing fence” if it is erected for the purpose of marking the land boundary, despite the fact that it may have been erected also for other purposes (eg, to retain soil): Kontikis v Schreiner (1989) 16 NSWLR 706; Jackson v Randall [2000] 2 Qd R 31. 15 Dividing Fences Act 1991 (NSW), s 7; Fences Act 1968 (Vic), s 7; Neighbourhood Disputes (Dividing Fences and 2 Trees) Act 2011 (Qld), ss 7, 20, 21; Dividing Fences Act 1961 (WA), s 7; Fences Act 1972 (NT), s 6; cf Common Boundaries Act 1981 (ACT), ss 4, 10(2), (3). 16 Fences Act 1975 (SA), s 12(6). 2 17 Boundary Fences Act 1908 (Tas), ss 8, 26. 2 18 Dividing Fences Act 1991 (NSW), s 11; Fences Act 1968 (Vic), s 13; Neighbourhood Disputes (Dividing Fences 2 and Trees) Act 2011 (Qld), s 31; Fences Act 1975 (SA), s 5; Dividing Fences Act 1961 (WA), s 8; Boundary Fences Act 1908 (Tas), s 9(1); Fences Act 1972 (NT), s 7. Compare Common Boundaries Act 1981 (ACT), s 4(3). 19 Dividing Fences Act 1991 (NSW), s 14; Fences Act 1968 (Vic), s 30C; Neighbourhood Disputes (Dividing Fences 2 and Trees) Act 2011 (Qld), s 35; Fences Act 1975 (SA), s 12; Dividing Fences Act 1961 (WA), s 9(1); Common Boundaries Act 1981 (ACT), s 10(2); Fences Act 1972 (NT), s 8.

[16.330]  839

PART 5 Relations between Neighbouring Landholders

referred to two arbitrators appointed by the parties.220 The court or administrative tribunal must take into consideration the kind of fence usual in the locality and the purposes for which the adjoining lands are used.221 If one party fails to comply with the terms of the court order or a fencing agreement within a specified time, the other party may construct the whole fence and may recover from the person in default a proportion of the cost as agreed or as awarded by the court or administrative tribunal.222 [16.335] Where a landowner satisfies the court or administrative tribunal that he or she

has made reasonable inquiries and has been unable to ascertain the whereabouts of the adjoining landowner for the purpose of serving a notice to fence, the court or tribunal may, upon application, make an ex parte order authorising the applicant to construct a fence of a specified type on the boundary line. Any person who constructs a fence in compliance with such an order may, if he or she later ascertains the whereabouts of the adjoining landowner, serve the landowner with a copy of the order and shall, after a specified period, be entitled to recover half the original cost of the fence.223 [16.340]  The legislation in most jurisdictions apportions the contributions between landlords

and tenants where any fence is constructed which divides any lands held by any person as tenant of any landlord from any adjoining lands.224 The apportionment depends on the nature of the tenant’s interest at the time of the construction of the fence. In Queensland and Western Australia, if the tenant’s interest is less than for a term of five years, the whole contribution is payable by the landlord; if the interest is between five and seven years, three fourths is payable by the landlord and one fourth by the tenant; if the interest is between seven and 12 years, one half is payable by each party; and if the interest is 12 years or upwards, the whole of the contribution is payable by the tenant. The scheme of apportionment in the Northern Territory is very similar, although not identical. In South Australia, if the tenant’s interest is less than for a term of three years, the whole contribution is payable by the landlord; if the interest is between 3 and 6 years, three fourths is payable by the landlord and one fourth by the tenant; if the interest is between 6 and 12 years, one half is payable by each party; and if the interest is 12 years or upwards, the whole cost is payable by the tenant.

220 221

222

223

224

Boundary Fences Act 1908 (Tas), s 10, Pt IV. Dividing Fences Act 1991 (NSW), s 4(b), (d); Fences Act 1968 (Vic), s 6(1)(b), (d); Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 36(b), (c); Dividing Fences Act 1961 (WA), s 9(3); Fences Act 1975 (SA), s 12(8); Fences Act 1972 (NT), s 8(6). Section of the Common Boundaries Act 1981 (ACT) defines what is a “basic urban fence” and a “basic rural fence”. In Tasmania, except in a city or town or adjacent to a dwelling-​house, “sufficient fence” is one “ordinarily capable of resisting the trespass of cattle or sheep”: Boundary Fences Act 1908 (Tas), s 4. Dividing Fences Act 1991 (NSW), s 15; Fences Act 1968 (Vic), s 30F; Fences Act 1975 (SA), ss 8(3), 12(2); Dividing Fences Act 1961 (WA), s 10; Boundary Fences Act 1908 (Tas), s 13; Fences Act 1972 (NT), s 9. There is no equivalent provision in Queensland or the Australian Capital Territory. Dividing Fences Act 1991 (NSW), ss 11, 17; Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 37; Dividing Fences Act 1961 (WA), s 11; Fences Act 1972 (NT), s 10; cf Fences Act 1968 (Vic), s 9; Fences Act 1975 (SA), s 9. There is no equivalent provision in Tasmania or the Australian Capital Territory. Fences Act 1968 (Vic), s 10; Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 24; Fences Act 1975 (SA), s 14; Dividing Fences Act 1961 (WA), s 19(1); Fences Act 1972 (NT), s 20. See further Boundary Fences Act 1908 (Tas), s 37(2).

840 [16.335]

The Scope and Meaning of Real Property  Chapter  16

In Victoria, if the tenant’s interest is for a term of between 5 and 10  years, one half is payable by the tenant; if the tenant’s interest exceeds 10  years, the whole contribution is payable by the tenant. In Queensland and Western Australia, if the tenant pays more than his or her proper proportion of the contribution, he or she may recover the excess from the landlord. In addition, any tenant may set off any such sum against any rent payable to the landlord.225 [16.345]  Every person engaged in constructing a fence, together with his or her agents and

servants, may at all reasonable times enter upon adjoining lands and do such acts as are necessary or reasonably required to carry into effect the construction of the fence.226

Dividing fences legislation –​ repair [16.350]  Wherever any dividing fence is out of repair, the adjoining landowners are liable to

join in or contribute in equal proportions to the repair of the fence.227 In South Australia the liability of each landowner is determined according to the benefit that each of them derives from the repair work and, in the absence of proof to the contrary, it is presumed that they derive equal benefit.228 [16.355] An adjoining landowner may serve on his or her neighbour at any time a notice

requiring him or her to assist in repairing the dividing fence.229 In some jurisdictions, where a person served with the notice does not within a specified period assist in repairing the fence, it is lawful for the person serving the notice to repair the fence and demand and recover from the person on whom the notice has been served one half of the cost of the repairs.230 Various exceptions are provided for in the legislation. The most common are:  if the fence has been constructed partly by one owner and partly by another owner, each shall bear the cost of the part constructed by him or her; if the fence is damaged or destroyed by flood, fire, lightning, storm, tempest or accident, either owner may repair it without notice to the other

225 226

227

228 229

230

Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 24(5); Dividing Fences Act 1961 (WA), s 19(2). Dividing Fences Act 1991 (NSW), s 20; Fences Act 1968 (Vic), s 33; Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 94; Fences Act 1975 (SA), s 18; Dividing Fences Act 1961 (WA), s 21; Boundary Fences Act 1908 (Tas), s 44; Fences Act 1972 (NT), s 22. Compare Common Boundaries Act 1981 (ACT), s 22(4). Dividing Fences Act 1991 (NSW), ss 6, 7; Fences Act 1968 (Vic), s 7(2); Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), ss 20, 21; Dividing Fences Act 1961 (WA), s 14; Boundary Fences Act 1908 (Tas), s 23; Fences Act 1972 (NT), s 14. Compare Fences Act 1975 (SA), s 12(2), (6) and Common Boundaries Act 1981 (ACT), ss 11, 12. In Stacey v Meagher [1978] Tas SR 56, Neasey J held that the liability to contribute in equal proportions is not absolute and can be modified in arbitration. “Repair” includes a case where an existing fence is entirely replaced by a new fence: Palmer v Lincott [1981] WAR 157. Fences Act 1975 (SA), s 12(6). Dividing Fences Act 1991 (NSW), s 11(1); Fences Act 1968 (Vic), s 13; Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 31; Fences Act 1975 (SA), s 5(3); Dividing Fences Act 1961 (WA), s 15(1); Boundary Fences Act 1908 (Tas), s 23(1); Common Boundaries Act 1981 (ACT), s 5; Fences Act 1972 (NT), s 15. Fences Act 1968 (Vic), ss 19, 21; Fences Act 1975 (SA), ss 8, 12; Dividing Fences Act 1961 (WA), s 15(7); Boundary Fences Act 1908 (Tas), s 23(1); Fences Act 1972 (NT), s 15(3). In New South Wales, Queensland and the Australian Capital Territory, there are instead provisions allowing urgent work to be done without notice to repair or replace a damaged or destroyed fence: Dividing Fences Act 1991 (NSW), s 9; Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld), s 28; Common Boundaries Act 1981 (ACT), s 6. For a recent consideration of the New South Wales provision, see Taylor v Joye [2018] NSWCATAP 309. [16.355]  841

PART 5 Relations between Neighbouring Landholders

and is entitled to recover half the expenses from the neighbour; and if the fence is damaged or destroyed by fire or the falling of any tree, the landowner through whose neglect the damage occurred is bound to repair the fence, and if he or she fails to do so, the adjoining landowner may repair it and recover from the liable owner the whole cost of the repairs. [16.360] The legislation (referred to at [16.340]) apportioning the contributions between

landlords and tenants for the construction of fences dividing the leased land from any adjoining land applies equally to the repair of such fences. The legislation (referred to at [16.345]) entitling every person engaged in constructing a fence to enter adjoining lands also applies to situations where repair work is undertaken.

Miscellaneous fencing legislation [16.365]  A variety of miscellaneous statutes other than the dividing fences legislation impose

on landowners a duty to fence their property boundaries. Many of these statutes relate to the construction and repair of vermin-​proof fences: for example, Dog Fence Act 1946 (SA) and Biosecurity Act 2014 (Qld), Pt 2. Other statutes require the construction of fences in certain cases to protect or improve reserves for the use of travelling stock: Local Land Services Act 2013 (NSW), Pt 6 Div 6; Stock Route Management Act 2002 (Qld), Pt 6.

842 [16.360]

CHAPTER 17

Easements and Related Interests [17.05] [17.35]

[17.125]

[17.275] [17.320]

[17.370] [17.395]

[17.450]

FUNCTION OF EASEMENTS........................................................................................ 844 CHARACTERISTICS OF EASEMENTS............................................................................. 846 [17.35] The four essential characteristics of easements................................................ 846 [17.40] There must be a dominant and a servient tenement....................................... 847 [17.50] An easement must accommodate the dominant tenement.............................. 848 [17.75] The dominant and servient owners must be different persons.......................... 851 [17.80] The right must be capable of forming the subject matter of a grant: precision of definition.................................................................................... 851 [17.85] The right must be capable of forming the subject matter of a grant: rights of utility.............................................................................................. 853 [17.90] The right must be capable of forming the subject matter of a grant: undue interference with the enjoyment of the burdened land........................... 853 [17.105] General approach to claimed easements........................................................ 855 CREATION AND ENFORCEMENT OF EASEMENTS........................................................ 858 [17.125] Formalities for creation.................................................................................. 858 [17.140] Creation by implied reservation..................................................................... 859 [17.165] Creation by implied grant............................................................................. 862 [17.165] Easements of necessity and intended easements...................................... 862 [17.170] The rule in Wheeldon v Burrows........................................................... 862 [17.175] General words imported into conveyances.............................................. 863 [17.195] By implication from the description of the land........................................ 865 [17.200] Simultaneous conveyances of land by one landowner............................... 866 [17.205] Creation by prescription................................................................................ 867 [17.205] Nature of prescription........................................................................ 867 [17.215] Lost modern grant............................................................................ 868 [17.235] Prescription Act 1832 (UK) (South Australia and Western Australia)............. 871 [17.240] Easements and Indefeasibility........................................................................ 872 STATUTORY EASEMENTS............................................................................................. 874 TYPES OF EASEMENTS................................................................................................. 877 [17.320] Rights of way............................................................................................... 877 [17.350] Rights in relation to watercourses.................................................................. 881 [17.355] Rights to support.......................................................................................... 881 FINANCIAL OBLIGATIONS........................................................................................... 883 EXTINGUISHMENT OR MODIFICATION OF EASEMENTS............................................. 884 [17.395] By statute.................................................................................................... 884 [17.410] By agreement............................................................................................... 885 [17.415] By abandonment.......................................................................................... 886 [17.435] By alterations to the dominant tenement....................................................... 888 [17.445] By unity of seisin........................................................................................... 890 PROFITS AND RENTCHARGES...................................................................................... 890 [17.450] Nature of profits........................................................................................... 890 [17.465] Creation of profits......................................................................................... 892 [17.470] Profits and the Torrens system....................................................................... 893 [17.480] Nature and creation of rentcharges............................................................... 894 [17.500] Remedies and extinguishment with respect to profits and rentcharges.............. 895

 

843

PART 5 Relations between Neighbouring Landholders

FUNCTION OF EASEMENTS [17.05]  An easement is a right constituting a legal interest in land and benefiting one piece

of land from the use or a restriction on the use of neighbouring land. An easement allows for the more convenient use of a parcel of land by rights over neighbouring land that do not substantially interfere with the enjoyment of the neighbouring land by its owner.1 The most common easement is a right of way over the neighbouring land. The benefit does not have to be essential for the use of the benefited land but it must assist the use of the land. For example, an easement constituting a right of way need not be the only form of access but it must offer convenience, such as a short cut to a public road.2 Most easements allow a benefited owner to do something on the other land (positive easements), but in some cases, restrictions on the use of the other land enhance the use by a benefited owner (negative easements).3 In particular, access of light and air is obtained by an absence of development on the neighbouring land. [17.10]  An easement requires a relationship between two parcels of land. While a range of

land uses that are less than possession confer benefits on the person entitled to them, they cannot qualify as an easement unless the benefit is attached to another piece of land4 and the burden is imposed on a piece of land.5 The benefit must be attached to one piece of land and allow the owner of that land to use another’s land for a specific purpose or to prevent the commission of some act on that land for the advantage of the other land. The land benefited is traditionally described as the dominant tenement and the burdened land as the servient tenement. A  right over one piece of land that is not connected to another piece of land is described as an interest in gross. Any permission to use land constitutes a licence and some licences qualify as interests in land other than an easement. A gratuitous licence (a permission without consideration) changes the permitted entry from a trespass but does not confer an enforceable entitlement so that an invitation to dinner can be withdrawn at any time. A licence may be conferred by contract and carries the legal entitlements provided by contract.6 [17.15] Previous chapters have considered rights in land that common law classes as

corporeal hereditaments, namely rights that entitle their owner to exclusive possession. This chapter examines those rights in land that do not entitle their owner to possession and that are designated as incorporeal hereditaments at common law. These rights can be viewed as collateral to the major rights in the land. Historically, under English law, a variety of miscellaneous rights have been classified as incorporeal hereditaments, such as seigniories, franchises, advowsons, titles, rights of common and various inheritable offices or titles of honour that are not necessarily connected with land. None of these rights is applicable in Australia. In this country, the only relevant incorporeal hereditaments are easements, profits à prendre and rentcharges. This chapter considers these three rights.

1

2 3 4 5 6

The concept was endorsed in Concord MD v Coles (1905) 3 CLR 96; 23 WN (NSW) 39 at 110 (CLR) per Barton J, quoting with approval a passage from Cave (ed), Gale on Easements (7th ed, Sweet & Maxwell, 1899), p 6. Harada v Registrar of Titles (Vic) [1981] VR 743 at 749 per King J. The range of negative easements may be limited: Phipps v Pears [1965] 1 QB 76; [1964] 2 WLR 996; [1964] 2 All ER 35 (CA). Concord MD v Coles (1905) 3 CLR 96; 23 WN (NSW) 39 at 106 per Griffith CJ. Faloon v District Land Registrar (1997) 3 NZLR 498 (HC) at 501 per Ellis J. Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605.

844 [17.05]

Easements and Related Interests  Chapter  17

[17.20]  Easements most commonly involve a limited use of neighbouring land but some cases

involve restrictions on the use of neighbouring land. An easement of way entitles a benefited owner to pass across the land, while a drainage easement allows waste to be discharged. These common easements are described as positive because the person entitled to the right can do a particular act on the neighbour’s land. Negative easements entitle a landowner to prevent a neighbour from engaging in a particular act on the neighbour’s land. The most common negative easements have been those of light and air whereby light and air can pass to the benefited land.7 The other most common negative easement whereby an owner of the land providing support must not carry out any activity, such as excavation of the land, so as to interfere with the support of the building.8 Difficulties with negative easements may arise due to the doctrines for the creation of easements by long user. At an absolute, any development of land involves some impediment of the flow of light and air to neighbouring land. Consequently, non-​development of land for 20 years opens the possibility of an argument that easements of light and air have been acquired by long user. Recognition of such easements has been substantially reduced by statute as described in the following paragraph. [17.25]  Courts and parliaments have been cautious in recognising negative easements which

may be needed for solar and wind access rights. Courts have been much more cautious in recognising new negative easements as opposed to new positive easements. This difference in approach is illustrated by the rejection by the English Court of Appeal in Phipps v Pears [1965] 1 QB 76; [1964] 2 WLR 996; [1964] 2 All ER 35 of an argument for an easement of protection from weather. A wall had stood for many years so close to its neighbour that the neighbour had not needed to be fully waterproofed and the neighbour sought to restrain demolition of the wall. The court rejected the claim on the basis that no such easement had previously been recognised and that the law is very wary of creating new negative easements.9 Easements of light have been limited in quantity to light which is required for the ordinary purposes of inhabitancy or business according to the ordinary notions of mankind.10 Doubts as to the feasibility of such easements in conditions of more intense urban development in the early 20th century led to legislation in New South Wales, Victoria, Queensland, South Australia and Western Australia that prevented the future creation by prescription of easements of light11 and legislation in New South Wales, Victoria, Queensland and Western Australia that prevented the future creation by prescription of easements of air.12 On the other hand, the High Court of Australia has upheld as a valid easement, an express agreement for the right to the uninterrupted access and enjoyment of light and air across a boundary strip of land of 10 feet in width.13

7 8 9 0 1 11 12 13

Commonwealth v Registrar of Titles (Vic) (1918) 24 CLR 348; [1918] VLR 228. Dalton v Henry Angus & Co (1881) 6 App Cas 740 (HL); Johns v Delaney (1890) 16 VLR 729 (FC); Thynne v Petrie [1975] Qd R 260. Phipps v Pears [1965] 1 QB 76; [1964] 2 WLR 996; [1964] 2 All ER 35 at 82–​83 (QB) per Lord Denning MR. Colls v Home & Colonial Stores Ltd [1904] AC 179 at 204 per Lord Davey. Conveyancing Act 1919 (NSW), s 179; Property Law Act 1958 (Vic), s 195; Property Law Act 1974 (Qld), s 178; Law of Property Act 1936 (SA), s 22; Property Law Act 1969 (WA), s 121. Conveyancing Act 1919 (NSW), s 179; Property Law Act 1958 (Vic), s 196; Property Law Act 1974 (Qld), s 178; Property Law Act 1969 (WA), s 121. Commonwealth v Registrar of Titles (Vic) (1918) 24 CLR 348; [1918] VLR 228. [17.25]  845

PART 5 Relations between Neighbouring Landholders

The significance of the considerations involved in these cases and statutes is that one of the most common new forms of urban development has been the installation of solar roofing panels generating hot water and electricity from sunlight.14 These installations have apparently been rarely protected by any express easement.15 Technological development of small wind-​powered generators may present similar problems.16 Statutory provisions now exist in Queensland for carbon abatement interests to be created and registered as interests in land.17 [17.30] Many easements are created on the adoption of a community or strata title with

common property and individual lots. All Australian jurisdictions make provision for a system of strata or community titles whereby land is divided into individual lots with a common area.18 This process allows for the creation of individual parcels of land that are connected with neighbouring parcels through common areas. Individual title may be conferred with respect to dwelling areas within a single building with common access and parking areas and common stairways. The inter-​relationship of these lots means that easements over other lots and the common area are necessary for access, provision of utility services and building support. Easements are impliedly created by the enabling legislation19 over other lots and common property in favour of the individual lots for support, shelter and access to such services as water and electricity, communication cables and drainage.20

CHARACTERISTICS OF EASEMENTS The four essential characteristics of easements [17.35]  Definition of an easement involves the relationship between two neighbouring pieces

of land. The definition involves the identification and role of the benefited and burdened land. The expression of the right of an easement is also subject to various requirements. The classic definition lists four essential characteristics of an easement.21 Those characteristics are: 1.

there must be both a dominant and servient tenement (see [17.45]ff);

2.

the easement must accommodate the dominant tenement (see [17.55]ff);

4 1 15

Bradbrook, “Solar Access Law: 30 Years on” (2010) 27 EPLJ 5. The existence of an easement of solar access was left unresolved in Allen v Greenwood [1980] Ch 119; [1979] 2 WLR 187; [1979] 1 All ER 819 (CA) at 128–​129 (Ch) per Goff LJ. Bradbrook, “The Access of Wind to Wind Generators” 1984 AMPLA Yearbook 433; Bradbrook, “Liability in Nuisance for the Operation of Wind Generators” (1984) 1 EPLJ 128. Land Title Act 1994 (Qld), s 97E. See [13.70]ff. See Chapter 13 of this text for a discussion of strata and community titles. What amounts to reasonable necessity for an easement of support was considered in Gordon v Body Corporate Strata Plan No 3023 (2004) 15 VR 557; [2006] V ConvR 54-​710; [2004] VSC 359. Cases adopting these characteristics include: Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] 3 WLR 1603; Re Ellenborough Park [1956] Ch 131; [1955] 3 WLR 892; [1955] 3 All ER 667 (CA) at 163 per Evershed MR; Riley v Penttila [1974] VR 547; (1974) 30 LGRA 79 at 557 (VR) per Gillard J; Harada v Registrar of Titles (Vic) [1981] VR 743 at 749 per King J; Mitcham CC v Clothier (1994) 62 SASR 394; 83 LGERA 431; [1995] ANZ ConvR 313 at 399 (SASR) per Olsson J; Evanel Pty Ltd v Nelson (1995) 39 NSWLR 209; 7 BPR 14,388; [1996] ANZ ConvR 328; [1995] NSW ConvR 55-​759 at 211 (NSWLR) per Brownie J; Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605; [2002] NSWCA 389.

16 17 18 19 20 21

846 [17.30]

Easements and Related Interests  Chapter  17

3. the owners of the dominant and servient tenement must be different persons (see [17.85]ff); and 4.

the right must be capable of forming the subject matter of a grant (see [17.95]ff).

The dominant tenement can be described as the benefited land and the servient tenement as the burdened land. The characteristic that the right be capable of forming the subject matter of a grant is further divided into three components: 1.

the right must be clearly defined (see [17.90]);

2.

the right must be one of utility (see [17.95]); and

3.

the right must not interfere too greatly with the burdened owner’s enjoyment of the land (see [17.100]ff).

In addition, the requirement that there be capacity to form the subject matter of a grant is often taken to include the need for a capable grantor and grantee.

There must be a dominant and a servient tenement [17.40]  The requirement that there be a dominant and a servient tenement has been constantly

reiterated by Australian and English courts22 and is based on the rationale that an easement over one land must benefit other land in the vicinity. Thus, an easement cannot benefit the public at large. As a result of this requirement, common law does not recognise easements in gross.23 An easement which is declared to be in gross on the ground that it infringes this essential characteristic will confer a mere personal licence upon the person for whose benefit the right was created.24 The origin of the rule against easements in gross is obscure and its rationale is unclear. As stated by one commentator,25 if A  wishes to grant to B a right enforceable as an easement to land helicopters on A’s property, why should this be prevented because of the lack of a dominant tenement? Similarly, if a long-​distance truck driver wishes to acquire easements of parking along his routes, why should this be denied? By way of contrast, in Australia, the similar interest of a profit à prendre can be created in gross, and in the United States easements in gross are recognised.26 There are numerous statutory exceptions to the rule against easements in gross. In Victoria, s  187Aof the Local Government Act 1989 (Vic) enables easements to be created without dominant tenements in favour of a council of any municipality and s 136 of the Water Act 1989 (Vic) gives a similar right in favour of any water authority. In New South Wales, South Australia, Western Australia and Tasmania easements in gross are recognised in favour of the

22

23

24 25 26

See, for example, Concord MD v Coles (1905) 3 CLR 96; Voice v Bell (1995) 68 P & CR 441 (CA); Re Ridgeway and Smith’s Contract [1930] VLR 111; Mitcham City Council v Clothier (1994) 62 SASR 394; Kitching v Phillips [2009] WASC 396; Pluim v Willis [2007] WASAT 233. Besmaw Pty Ltd v Sydney Water Corp (2001) 113 LGERA 246; [2001] NSWLEC 15 at [49]; Bouquey v DC of Marion [1932] SASR 32 at 37; Commissioner for Main Roads v North Shore Gas Co Ltd (1967) 120 CLR 118 at 134; Faloon and Piesse v District Land Registrar [1997] 3 NZLR 498 at 501. Gapes v Fish [1927] VLR 88 at 90 (FC). McLean, “The Nature of an Easement” (1966) 5 U Western Ontario LR 32 at 40. See also Sturley, “Easements in Gross” (1980) 96 LQR 557. See Giles Morgan, Easements in Gross Revisited, (1999) 29 Anglo-​American Law Review 220. [17.40]  847

PART 5 Relations between Neighbouring Landholders

Crown or of any public or local authority.27 In the Australian Capital Territory, s 103C of the Land Titles Act 1925 (ACT) permits the registration of easements in gross registered in favour of the Territory, the Commonwealth, a State or a person providing a public utility service in the Territory.28 [17.45] Although significant burdens on the servient owner flow from the existence of an

easement, it seems the case law in Australia makes it clear that the instrument creating an easement need not expressly identify the dominant tenement. The court may have regard to surrounding circumstances to identify the dominant tenement.29 This rule applies to Torrens land as well as general law land, despite the argument that, under the Torrens system, the parties should only be required to have regard to what is in the certificate of title or other relevant documents.30 The position in New South Wales is different. Section 88(1) of the Conveyancing Act 1919 (NSW) states, inter alia, that no easement expressed to be created by an instrument coming into affect after the commencement of the Conveyancing (Amendment) Act 1930 (NSW) shall be enforceable against a person interested in the land claimed to be subject to the easement and not being a party to its creation unless the instrument clearly indicates both the dominant and the servient land.31 Section 88(4) excepts easements acquired by or for the Crown or for any public or local authority constituted by Act of Parliament. The dominant tenement need not necessarily be corporeal real property. It may consist solely of incorporeal property32 or a combination of corporeal and incorporeal property.33

An easement must accommodate the dominant tenement [17.50]  There must be a connection between the alleged easement and the dominant tenement

in the sense that the dominant tenement benefits from the easement. The alleged easement must also be reasonably necessary for the enjoyment of the dominant tenement.34 The origin of this requirement is Ackroyd v Smith (1850) 10 CB 164; 138 ER 68 (CP),35 where a close was conveyed together with the right for the grantee and others to pass and repass “for all 27

28 29 30 31

32 33 34 35

Conveyancing Act 1919 (NSW), s 88A(1A); Law of Property Act 1936 (SA), s 41A; Land Administration Act 1997 (WA), ss 147, 195; Conveyancing and Law of Property Act 1884 (Tas), s 90A(1); Law of Property Act 2000 (NT), s 155. See Bonvale Enterprises Pty Ltd v Halfpenny Investments Pty Ltd [2005] NSWSC 219. Easements in gross may also be created in New South Wales pursuant to s 88B(2)(a), (b): Trevlind v BMP Manufacturing Pty Ltd [2008] NSWSC 603. See also Land Title Act 1994 (Qld), s 89; Real Property Act 1886 (SA), s 81. Re Maiorana and the Conveyancing Act [1970] 1 NSWR 627; Gas & Fuel Corp (Vic) v Barba [1976] VR 755. Re Maiorana and the Conveyancing Act [1970] 1 NSWR 627. Section 88(1A) of the Conveyancing Act 1919 (NSW) states that land is “clearly indicated” if it is shown in the manner prescribed by regulations or “in any other manner satisfactory to the Registrar-​General in the particular case or classes of cases concerned”. See Papadopoulos v Goodwin [1982] 1 NSWLR 413 and Goodwin v Papadopoulos [1985] ACLD 775 (CA) for a discussion of the meaning of “clearly indicates”. Extrinsic evidence, including evidence not of a written nature, may be examined for the purpose of determining whether the requirements of s 88(1) are satisfied: Margil Pty Ltd v Stegul Pastoral Pty Ltd [1984] ACLD 554 (NSW Sup Ct). Hanbury v Jenkins [1901] 2 Ch 401. Besmaw Pty Ltd v Sydney Water Corp (2001) 113 LGERA 246; [2001] NSWLEC 15 at [54]; Re Salvin’s Indenture [1938] 2 All ER 498. Huckvale v Aegean Hotels Ltd (1989) 58 P&CR 163 at 168 (CA). See also Bailey v Stephens (1862) 12 CB (NS) 91; 142 ER 1077 (CP).

848 [17.45]

Easements and Related Interests  Chapter  17

purposes” along a certain road. It was held that a right in gross had been created as the grant was made not only for the purposes of the land conveyed but also for purposes unconnected with it. Consequently, the right could not be assigned by the grantee. Cresswell J stated that it is not in the power of a vendor to create any rights not connected with the use or enjoyment of the land and annex them to it. This case was followed and expanded on by the New South Wales Court of Appeal in Clos Farming Estates v Easton [2002] NSWCA 389. The court held that there must be a natural connection between the dominant and servient tenements and that the right must be reasonably necessary for the enjoyment of the dominant tenement. The court added that it is not enough that the land be a convenient incident to the right; rather the nexus must exist in a real and intelligible sense.36 The proposition has also been recently affirmed by the High Court in Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528.37 [17.55] The dominant and servient tenements need not be contiguous. It appears to be

sufficient if the dominant and servient tenements are so adjacent that the enjoyment of one should be evidently connected with and dependent upon the state of the other. Thus, while the tenements need not be adjoining, the tenements must be physically close to one another.38 [17.60] An easement is limited to the needs of the dominant tenement. The guise of an

easement cannot be used to establish a business enterprise which has no normal connection with the use of the dominant tenement. In Hill v Tupper (1863) 2 H & C 121; 159 ER 51 (Exch),39 ownership of a canal and certain adjoining land was vested in a company. Other land abutting the canal was owned by the defendant. The company leased a small parcel of land of approximately 19 poles on the banks of the canal to the plaintiff. The lease purported to grant to the plaintiff “the sole and exclusive right or liberty to put or use boats on the said canal, and let the same for hire for the purpose of pleasure only”. The plaintiff alleged that the defendant had disturbed the exclusive right of the plaintiff of letting out pleasure boats for hire. It was held that the grant to the plaintiff did not create a sufficient estate or interest in him to enable him to maintain an action in his own name against the defendant. Pollock CB commented that it is not possible to create rights unconnected with the use and enjoyment of land and annex them to it so as to constitute a property in the grantee. The rationale of this case is disputed. Evershed  MR in Re Ellenborough Park [1956] 1 Ch 131 at 175 stated that the dominant tenement was in reality accommodating the alleged easement, which infringes the characteristic of an easement under discussion. If this is correct, it would seem that the easement must accommodate the dominant tenement in the sense that it be subservient to it. However, Gooderson believes that this proposition would be unlikely to apply today.40 Support for this view can be found in R v Registrar of Titles; Ex parte Waddington [1917] VLR 603,41 where the issue was whether a right of way could be said to

36 37 38

39 40 41

Clos Farming Estates v Easton [2002] NSWCA 389 at [31]. Applied in Shelbina Pty Ltd v Richards [2009] NSWSC 1449. Gallagher v Rainbow (1994) 68 ALJR 512 at 514; Wilcox v Richardson (1997) 43 NSWLR 4 at 15; Gas & Fuel Corp (Vic) v Barba [1976] VR 755; Pugh v Savage [1970] 2 QB 373 (CA); Harada v Registrar of Titles [1981] VR 743 at 751. Applied in Clos Farming Estates Pty Ltd v Easton [2002] NSWCA 389. Gooderson, “Easement –​Ius Spatiandi” (1956) CLJ 24 at 25. See also Concord MC v Coles (1905) 3 CLR 96. See also Thorpe v Brumfitt (1873) LR 8 Ch App 650. [17.60]  849

PART 5 Relations between Neighbouring Landholders

benefit a dominant tenement as small as one square link. Hood J held in the affirmative on the ground that, although it is difficult to see what benefit can be derived from the benefit of a tiny piece of land from a right of carriageway, such a benefit is not impossible; for example, there might be a water pipe or a letterbox erected on the one square link. [17.65]  An easement may accommodate a business carried out on the dominant tenement

provided that the business is tied to the dominant land. In Moody v Steggles (1879) 12 Ch D 26142 an alleged prescriptive right in favour of the plaintiffs, the owners of a public house, to affix a signboard on the wall of the defendant’s house was held to be a valid easement, notwithstanding that it related to the business of the occupant of the tenement rather than the tenement itself. Similarly, in Copeland v Greenhalf [1952] 1 Ch 48843 an alleged easement to store vehicles awaiting repairs or collection on neighbouring land was not invalid merely because it benefited the dominant owner’s business as a wheelwright rather than the dominant tenement itself. The New South Wales Court of Appeal has held in Clos Farming Estates v Easton [2002] NSWCA 389 that the facilitation of the business or commercial use in which the dominant land is involved may, in limited circumstances, be sufficient to create the required nexus with the land provided that the criteria for an easement are satisfied. [17.70] An easement may accommodate the subdivided parts of the dominant tenement.

This issue was considered by the High Court in Gallagher v Rainbow (1994) 179 CLR 624; 68 ALJR 512; 121 ALR 129.44 In this case, the appellant, Gallagher, purchased lot 14 in a subdivision. The respondents purchased lots 16 and 17. These lots, together with lot 15, received access to a public street by a private road. Mutual registered cross-​easements were entered into by the owners of these four lots giving each owner a right of way, subject to a covenant that each owner pay 25 % of the cost of the maintenance of the road. The dispute occurred when the owners of lots 16 and 17 each subdivided their lots into three smaller lots. The basis for the appellant’s concern was that the private road would be subject to significantly increased use. By a 3–​2 majority, the High Court held that there is a presumption that an easement attaches not only to the dominant tenement as a whole but also to all its component parts in the event of a subdivision.45 The majority (at 136) found it unnecessary on the facts to rule on the question of increased user of the easement, but indicated that, in appropriate circumstances, the owners of the subdivided lots may be restricted in their use if this results in an additional burden on the servient tenement. McHugh J dissented on the basis, inter alia, that such a presumption runs contrary to the rule in relation to restrictive covenants that a covenant is presumed not to run for the benefit of the subdivided parts of the benefited land. His Honour (at 142) also doubted the wisdom of applying any artificial presumptions; rather, the matter should depend on the intention of the parties, gleaned from the terms of the covenant read in light of the surrounding circumstances.

42 43 44 45

See also Harada v Registrar of Titles [1981] VR 743 at 751. Compare Nelson v Hughes [1947] VLR 227. This case is discussed in Skapinker, “Attaching Easements to the Subdivided Parts of Land” (1994) 68 ALJ 755. The court cited as authority Re Maiorana and the Conveyancing Act [1970] 1 NSWR 627; Newcomen v Coulson (1877) 5 Ch D 133; Crawford Realty Co v Ostrow (1959) 150 A 2d 5.

850 [17.65]

Easements and Related Interests  Chapter  17

The dominant and servient owners must be different persons [17.75] This proposition is based on the rationale that no-​one can acquire rights against

herself or himself.46 In the context of prescriptive rights, the proposition rests on the fact that there is nobody who could have prevented the user.47 It should be noted that an easement is not invalid unless both tenements are owned and occupied by the same person. Thus a tenant may acquire, by express or implied grant, an easement over adjoining land belonging to the landlord, even though both tenements are vested in the landlord in fee simple.48 However, a tenant may not acquire an easement over adjoining land belonging to his or her landlord by prescription.49 In Australia statutory modifications relating to the Torrens system have been made to the common law on this characteristic. Section 46A of the Real Property Act 1900 (NSW), s 86 of the Land Title Act 1994 (Qld), s 103D of the Land Titles Act 1925 (ACT), s 90C of the Real Property Act 1886 (SA), and s  95 of the Land Title Act 2000 (NT) all state that an instrument of easement may be registered, even if both the benefited and burdened lots have, or are to have, the same registered owner, or if the owner of the benefited lot holds an interest in the burdened lot. Section 88B(3) of the Conveyancing Act 1919 (NSW) provides that an easement may be created by registration of a plan of subdivision in the office of the Registrar-​ General, notwithstanding that at the time of registration both the land benefited and the land burdened are in the same ownership. Section 136H of the Transfer of Land Act 1893 (WA) is to similar effect. Section 109 of the Land Titles Act 1980 (Tas) states that registered easements are not affected by unity of seisin of that land and other land appearing from the Register to have the benefit or burden of the easement, or the identity at any time of the legal owners of the benefited and burdened land unless the easements are expunged from the Register by application to the Recorder of Titles.

The right must be capable of forming the subject matter of a grant: precision of definition [17.80] Three major questions were identified by Evershed  MR in Re Ellenborough Park

[1956] 1 Ch 131 at 164 as involved under the requirement of capacity to form the subject matter of a grant. They are whether the rights purported to be given are expressed in terms of too wide and vague a character; whether such rights constitute mere rights of recreation, possessing no quality of utility or benefit and thirdly whether the rights are inconsistent with the enjoyment of the dominant tenement. The first aspect of capacity to form the subject matter of a grant is that the nature of a right and its extent must be capable of exact description.50 Several different types of alleged easements have been challenged on the ground that they are too wide and vague to constitute 46 47 48 49 50

Roe v Siddons (1888) 22 QBD 224 at 236; Oleander Nominees Pty Ltd v Owners of Lakeside Villas Strata Plan 14025 [2002] WASC 255 at [21]. Onley v Gardiner (1838) 4 M & W 496; 150 ER 1525 at 500 (M & W), 1527 (ER) (Exch of Pleas); Sturges v Bridgman (1879) 11 Ch D 852 (CA). Maurice Toltz Pty Ltd v Macy’s Emporium Pty Ltd [1970] 1 NSWR 474;Borman v Griffith [1930] 1 Ch 493. Kilgour v Gaddes [1904] 1 KB 457 (CA). Riley v Penttila [1974] VR 547; (1974) 30 LGRA 79 at 559 (VR) per Gillard J; Evanel Pty Ltd v Nelson (1995) 39 NSWLR 209; 7 BPR 14,388; [1996] ANZ ConvR 328; [1995] NSW ConvR 55-​759 at 212 (NSWLR) per Brownie J. [17.80]  851

PART 5 Relations between Neighbouring Landholders

easements. They include a right of wandering at will; a right of prospect and a right to the undefined flow of light and air.51 A  right to wander freely over a neighbour’s land cannot form the subject of an easement because it is so indeterminate as to defy precise definition.52 However, it has been held that a right to enjoy a defined area (such as a garden or a park) for recreation given to a limited number of landowners is certain and can therefore form the subject of an easement.53 It has also been held that a grant of a right of way over neighbouring land will not fail as an easement in this regard merely because it does not define the exact way or route to be followed by the owner of the intended dominant land.54 If a burdened owner does not point out the exact way, a grantee is free to take the nearest way available to that owner.55 The validity of easements for recreation was reconsidered by the United Kingdom Supreme Court in Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd.56 Whereas Re Ellenborough Park considered recreational uses ancillary to the main use of the dominant tenement, Regency Villas examines the issue squarely from the perspective of an easement devoted to recreation. Diamond Resorts were the owners of a country club resort-​ style development, where the predecessors to them had entered into an arrangement with an adjacent timeshare resort, Regency Villas, which would involve customers of Regency Villas being entitled to use a golf course, sauna, swimming pool, tennis courts, gym, croquet lawn, formal gardens and other facilities owned by Diamond Resorts. The issue that arose was whether an easement for recreation existed in favour of Regency Villas? The Supreme Court, by majority, said yes. The principal question was whether the recreational use accommodated the dominant tenement, and was it capable of being defined with sufficient precision to form the subject matter of a grant. As to accommodation, this was essentially a question of fact dependent on context. There was nothing that prevented a recreational easement per se, provided that the dominant tenement was accommodated. This was clearly the case in this scenario given that the owners who had purchased units with Regency Villas would have done so because they were able to use the facilities that were under the ownership of Diamond Villas. Concern that recognition would impose obligations on the servient owner were dismissed by the majority, though in dissent Lord Carnwath held that it would be unrealistic to think that no responsibilities were in fact imposed on the servient owners. It has also been held that a right of undefined flow of air and light over neighbouring land can constitute an easement where created by express grant.57 Also a right to enter adjoining

51 52 53

54

55 56 57

Riley v Penttila [1974] VR 547; (1974) 30 LGRA 79 at 559 (VR) per Gillard J; Auerbach v Beck (1985) 6 NSWLR 424; [1985] NSW ConvR 55-​246 at 442 (NSWLR) per Powell J. Re Ellenborough Park [1956] Ch 131; [1955] 3 WLR 892; [1955] 3 All ER 667 (CA) at 176 (Ch) per Evershed MR; Riley v Penttila [1974] VR 547; (1974) 30 LGRA 79 at 557, 559 (VR) per Gillard J. Riley v Penttila [1974] VR 547; (1974) 30 LGRA 79 at 559 (VR) per Gillard J; Evanel Pty Ltd v Nelson (1995) 39 NSWLR 209; 7 BPR 14,388; [1996] ANZ ConvR 328; [1995] NSW ConvR 55-​759 at 212 (NSWLR) per Brownie J; Re Ellenborough Park [1956] Ch 131; [1955] 3 WLR 892; [1955] 3 All ER 667 (CA) at 180 (Ch) per Evershed MR. Maurice Toltz Pty Ltd v Macy’s Emporium Pty Ltd (1969) 91 WN (NSW) 591; [1970] 1 NSWR 474 at 597 (WN (NSW)) per Hope J (citing with approval Wimbledon & Putney Commons Conservators v Dixon (1875) 1 Ch D 362 (CA) at 369–​370 per Mellish LJ). See also Sunshine Retail Investments Pty Ltd v Wulff [2000] V ConvR 54-​ 618; [1999] VSC 415 at [87] per Hedigan J: “The law does not require exactitude to an excessive degree”. Wimbledon & Putney Commons Conservators v Dixon (1875) 1 Ch D 362 (CA) at 369–​370 per Mellish CJ. Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] 3 WLR 1603. See Commonwealth v Registrar of Titles (Vic) (1918) 24 CLR 348; [1918] VLR 228 where Griffith CJ denied that an easement of light exits only in respect of existing buildings or defined apertures. He held at 353 (CLR)

852 [17.80]

Easements and Related Interests  Chapter  17

land for the purpose of maintaining the external wall of a dwelling house is not too vague to constitute an easement.58 However, a right of privacy59 and a right of prospect or view have been held to be too imprecise to constitute the subject matter of an easement.60

The right must be capable of forming the subject matter of a grant: rights of utility [17.85]  The requirement that the right must confer some benefit of utility is regularly expressed in the rule that rights of recreation cannot constitute easements, referred to in Mounsey v Ismay (1865) 3 H & C 486; 159 ER 621. However, rights to use land for exercise and enjoyment of fresh air and surroundings were upheld by the English Court of Appeal in Re Ellenborough Park [1956] Ch 131; [1955] 3 WLR 892; [1955] 3 All ER 667 and it is difficult to place much weight on this supposed rule.

The right must be capable of forming the subject matter of a grant: undue interference with the enjoyment of the burdened land [17.90] An easement must not unduly detract from the enjoyment of burdened land. This requirement has commonly been incorporated under the vague heading of capacity to form the subject matter of a grant; it may be seen as a separate characteristic of an easement. However, the requirement is classified, in Clos Farming Estates Pty Ltd v Easton (2002) 11 BPR 20,605; [2002] NSWCA 389 the New South Wales Court of Appeal affirmed the requirement that an easement should not unduly interfere with enjoyment of the burdened land. In that case a right to grow and harvest vines on the burdened land was held to infringe this rule. The remaining rights of enjoyment were said to be sterile or nominal. In Registrar-​General of NSW v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321, the New South Wales Court of Appeal undertook a thorough review of the decided cases and followed Clos Farming Estates. The court emphasised the balancing involved in calculating an undue interference and posed the test whether the rights under the easement would amount to rights of joint occupation or would substantially deprive the owner of the burdened land of proprietorship or legal possession. [17.95]  An easement must not exclude the burdened owner from the land. A right that would

substantially deprive the burdened owner of proprietorship or possession of part of her or his land is incapable of being an easement.61 The right must not amount to an ouster of the burdened landowner.62 Accordingly, a right that purports to confer on a benefited owner

58 59 60 61 62

that such rule applies only if the claim is based on prescription but not where the easement was created by express grant. See also Gavan Duffy and Rich JJ at 355 (CLR). According to English case law the right to wind and air, coming from an undefined channel, is not a right known to the law: see Webb v Bird (1861) 10 CB (NS) 268; 142 ER 455; Cable v Bryant [1908] 1 Ch 259. Auerbach v Beck (1985) 6 NSWLR 424; [1985] NSW ConvR 55-​246 at 442 (NSWLR) per Powell J (following Ward v Kirkland [1967] Ch 194; [1966] 1 WLR 601; [1966] 1 All ER 609). Browne v Flower [1911] 1 Ch 219 at 225 per Parker J. Palmer v Board of Land & Works (1875) 1 VLR (E) 80 (claim of right of unobstructed view of the sea rejected as an easement). Auerbach v Beck (1985) 6 NSWLR 424; [1985] NSW ConvR 55-​246. Miller v Emcer Products Ltd [1956] Ch 304; [1956] 2 WLR 267; [1956] 1 All ER 237 (CA) at 316 (Ch) per Romer LJ. [17.95]  853

PART 5 Relations between Neighbouring Landholders

the exclusive right to use part of the burdened land, or a right which is too extensive,63 or practically amounts to exclusive possession64 is inconsistent with the concept of an easement and therefore is not an easement.65 Ownership and occupation of the burdened land must remain with the landowner subject to the easement.66 However, temporary exclusion of the burdened owner while the benefited owner exercises the right does not disqualify a right from being an easement.67 For example, a right to use a toilet is an easement even though the benefited owner excludes the burdened owner during exercise of the right.68 It has been held that grant of a right to use and enjoy a footway to the exclusion of the landowner, except for one day in a year, constitutes an easement. The reason for the decision was that the benefited owner was not given exclusive use of the land and the use was limited to a specific purpose.69 [17.100] The emphasis on the balance between the rights taken by the benefitted owner

and the interference with the servient owner’s enjoyment means that it is difficult to specify what rights will be accepted as valid easements. About all that seems accepted is that the inconclusive concept that there must not be a claim for joint ownership. As with several of the cases on this point, Registrar-​General of NSW v Jea Holdings (Aust) Pty Ltd (2015) 88 NSWLR 321 involved parking rights. The title of the benefited land recorded a purported covenant allowing the second defendant to use a substantial part of the surface of the land as a car park for its hotel business. The New South Wales Court of Appeal rejected the contention that validity of a claimed right depended upon whether the right applied to all or a substantial proportion of the land. It pointed out that the trend in Australian authorities was whether the rights asserted by the dominant owner under the easement impeded the reasonable use of servient tenement as a whole. Thus exclusive use of 15% of the land would not amount to an undue interference. In the case although the vast majority of the surface area was affected by the easement, the plaintiff was permitted to build above the surface area into the airspace and to use the subterranean space. Even with respect to surface, the plaintiff could do as it pleased so long as it did not disturb the second defendant’s rights to park on the land. Whilst second

63

64

65 66 67 68 69

In Harada v Registrar of Titles (Vic) [1981] VR 743 at 753 per King J, held that a right to lay and erect appliances for transmitting electricity was too extensive to constitute an easement. A grant of “exclusive or unrestricted use of a piece of land … passes the property or ownership in that land [for] there is no easement known to law which gives exclusive and unrestricted use of a piece of land”: Reilly v Booth (1890) 44 Ch D 12 (CA) at 26 per Lopes LJ. In Copeland v Greenhalf [1952] Ch 488; [1952] 1 All ER 809 the right to store vehicles on a neighbour’s land was held not to be an easement because it was practically a claim to possession (cited with approval in Harada v Registrar of Titles (Vic) [1981] VR 743 at 753 per King J). See also Grigsby v Melville [1972] 1 WLR 1355; [1973] 1 All ER 385 (CHD) at 1364 per Brightman J. Reilly v Booth (1890) 44 Ch D 12 (CA) at 26 per Lopes LJ; Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd (1971) 124 CLR 73; 45 ALJR 203 at 91 (CLR) per Windeyer J. Rangeley v Midland Railway Co (1868) LR 3 Ch App 306 (CA) at 311 per Lord Cairns LJ (cited with approval in Concord MD v Coles (1905) 3 CLR 96; 23 WN (NSW) 39 at 105 (CLR) per Griffith CJ). Miller v Emcer Products Ltd [1956] Ch 304; [1956] 2 WLR 267; [1956] 1 All ER 237 (CA) at 316 (Ch) per Romer LJ. Miller v Emcer Products Ltd [1956] Ch 304; [1956] 2 WLR 267; [1956] 1 All ER 237 (CA). Evanel Pty Ltd v Nelson (1995) 39 NSWLR 209; 7 BPR 14,388; [1996] ANZ ConvR 328; [1995] NSW ConvR 55-​759 at 222 (NSWLR) per Bryson J (distinguishing Copeland v Greenhalf [1952] Ch 488; [1952] 1 All ER 809).

854 [17.100]

Easements and Related Interests  Chapter  17

defendant’s rights could enable filling the car park, where an easement allowed a resource to be shared, focus should be on likely use as a matter of practice and the 198 spaces available left far more than nominal ownership to the plaintiff. Although a limitation on user by the dominant owner may not of itself save a purported grant, where there was a shared user, a limitation on use by the dominant owner did enhance the servient owner’s rights. The claimed right was held to be capable of registration as an easement.70

General approach to claimed easements [17.105]  A variety of novel easements have been recognised in modern times by Australian

and English Courts. The most significant of these are: 1.

An easement in a windbreak of natural timber located on the servient tenement.71

2.

An easement to create noise over adjoining land.72

3.

An easement to pollute water and cast noxious matter onto adjoining land.73

4.

A right to discharge surplus water from the dominant land when reasonably necessary.74

5.

The right to use an area alongside a wharf for the loading and unloading of vessels.75

6.

The right to enter the servient tenement to repair and maintain the wall of a cottage built on the extreme edge of the dominant tenement and to clean out the gutters.76

7.

The right to park vehicles.77

8.

The right to use an airfield for testing planes.78

9.

The right to use a lavatory on the servient tenement.79

10. A right to place rocks, stones and piles on the servient land for the purpose of protecting and securing a building on the dominant land from the sea.80 11. A right to extend an existing party wall and the right to use the extended portion of the wall.81

70

71 72 73 74 75 76 77 78 79 80 81

See also Multiplex Bluewater Mariana Village Pty Ltd v Harbour Tropics Pty Ltd [2017] QCA 202 where car parking easements were held to be valid. The use, however, must be reasonable. What was left unresolved is the extent to which a reasonable duration of parking would be: at [111]. This trend towards a more liberal view of car parking easements can also be seen in Stolyar v Towers (2018) 19 BPR 38,287. Ford v Heathwood [1949] QWN 11. Re State Electricity Commission (Vic) and Joshua’s Contract [1940] VLR 121; Auckran v Pakuranga Hunt Club (1904) 24 NZLR 235. Kirkcaldie v Wellington City Corp [1933] NZLR 1101. Municipality of Waterloo v Hinchcliffe (1866) 5 SCR (NSW) 273. Thomas W Ward Ltd v Alexander Bruce (Grays) Ltd [1959] 2 Lloyd’s Rep 472. Ward v Kirkland [1967] Ch 194. London & Blenheim Estates v Ladbroke Retail Parks Ltd [1993] 4 All ER 157; [1994] 1 WLR 31; Buchholz v Kempsey Shire Council [2005] NSWSC 235. Dowty Boulton Paul Ltd v Wolverhampton Corp (No 2) [1976] Ch 13 (CA). Hedley v Roberts [1977] VR 282; Miller v Emcer Products Ltd [1956] Ch 304 (CA). Philpot v Bath (1905) 21 TLR 634 (CA). Rufa Pty Ltd v Cross [1981] Qd R 365.

[17.105]  855

PART 5 Relations between Neighbouring Landholders

12. An easement for the passage (but not the supply) of water or electricity through pipes or wires located on neighbouring land.82 13. A right to bring goods into a shop through the main door of the adjoining shop.83 14. A right to install rock anchors, as part of the work needed in the construction of a nearby freeway.84 15. An easement for the use of cattle yards.85 [17.110] In Commonwealth v Registrar of Titles (Vic) (1918) 24 CLR 348 at 354 Griffith CJ

stated obiter that it would be possible to create easements for the passage of aircraft, for the passage of electricity through wires crossing the servient land, for the free passage of the flash from a heliograph station and for the sun’s rays. This latter possible easement may become of increasing significance in future years in light of the modern use of solar water and space heating systems in homes and factories. However, the existence of an easement of solar access is not yet settled, as in Allen v Greenwood [1980] Ch 119 at 828 Goff and Orr JJ stated obiter that they were leaving open the question whether solar heating would be appropriate for the creation of a new type of easement.86 A further possible easement which might arise in the future is an easement of wind access to wind generators. There seems to be no reason in theory why such a right would not be recognised as an easement, although the matter has yet to be tested.87 It thus seems that the common law of easements may have a significant role to play in the practical application of alternative energy technologies. [17.115]  Despite the flexibility of the law of easements, the following suggested easements

have been rejected by the courts: 1.

rights of prospect;88

2.

rights of recreation, though the broad statement of this must now be open to question;89

3.

the right to ground a barge on the bed of a navigable river;90

4.

the right to allow trees to overhang neighbouring property;91

5.

the right to hit cricket balls onto neighbouring property;92

6.

the right of protection from the weather;93

82 83 84 85 86 87 88 89

Rance v Elvin (1985) 50 P & CR 9 (CA); Duffy v Lamb (1998) 75 P & CR 364 (CA). Wilcox v Richardson (1997) 43 NSWLR 4 (CA). Pennant Hills Golf Club Ltd v Roads & Traffic Authority (NSW) (1999) 9 BPR 17,011 (NSWCA). Clifford v Dove [2003] NSWSC 938. Clos Farming Estates v Easton [2002] NSWCA 389. See Bradbrook, “Access of Wind to Wind Generators” (1984) AMPLA Yearbook 433. Palmer v Board of Land & Works (1875) 1 VLR (E) 80; Harris v De Pinna (1886) 33 Ch D 238. Mounsey v Ismay (1865) 3 H & C 486; 159 ER 621 (Exch). This authority would need reconsideration in light of the decision of Regency Villas Title Ltd v Diamond Resorts (Europe) Ltd [2018] 3 WLR 1603. Hawkins v Rutter [1892] 1 QB 668 (CA). Lemmon v Webb [1895] AC 1 (HC). Miller v Jackson [1977] QB 966 (CA). Phipps v Pears [1965] 1 QB 76; cf Rees v Skerrett, The Times, 18 June 2001 (CA).

90 91 92 93

856 [17.110]

Easements and Related Interests  Chapter  17

7.

the right to spread noxious wastes in indeterminate quantities generally over the servient land;94

8.

an easement for a vineyard, permitting the dominant owner to enter the servient land to carry out viticulture works, harvest the grapes and sell them;95

9.

the right to use a nearby block of land as a dog exercise area.96

10. the right to use neighbouring land for recreation, the storage of firewood and the burning of waste.97 In the case of claims for a prescriptive right, there cannot be an easement in any situation where the user is neither actionable nor capable of interruption by the servient owner.98 [17.120]  Parker J stated in Jones v Pritchard [1908] 1 Ch 630 at 638: The grant of an easement is prima facie also the grant of such ancillary rights as are reasonably necessary to its exercise or enjoyment. Thus, the grantee of an easement for a watercourse through his neighbour’s land may, when reasonably necessary, enter his neighbour’s land for the purpose of repairing, and may repair, such watercourse.

The High Court in Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 at 535 has affirmed that, on general principles of conveyancing, the grant of an easement carries with it those ancillary rights which are necessary for the enjoyment of the rights expressly granted.99 This principle has been applied in many modern Australian cases.100 In Owners of Strata Plan 48754 v Anderson (1999) 9 BPR 17,119; [1999] NSWSC 580 Young J of the Supreme Court of New South Wales held that a right to illuminate a right of way may be regarded as ancillary to the right of way itself. His Honour added that another approach to this problem which produces the same result is to say that there is a derogation from the grant of the easement if an ancillary right which a reasonable bystander would have expected to have passed with the grant is denied.101 In Hanny v Lewis (1998) 9 BPR 97,702 Young J stated that a person who has a right of footway over a cliff can erect stairs to go down the cliff.102

94 95 96 97 98 99

Pwllbach Colliery Co Ltd v Woodman [1915] AC 634 (HL). Clos Farming Estates v Easton [2002] NSWCA 389. Kitching v Phillips [2009] WASC 396. Laming v Jennings [2018] VSCA 335. Sturges v Bridgman (1879) 11 Ch D 852. Discussed in Skapinker and Verghese, “Construing Easements: To Pass or Not to Pass, That is the Question” (2007) 45 (11) LSJ 66. 100 See, for example, Prospect County Council v Cross (1990) 21 NSWLR 601; Auerbach v Beck (1985) 6 NSWLR 424; Hemmes Hermitage Pty Ltd v Abdurahman (1991) 22 NSWLR 343; Wilcox v Richardson (1997) 43 NSWLR 4; Besmaw Pty v Sydney Water Corp (2001) 113 LGERA 246; [2001] NSWLEC 15. 01 See, for example, Lyttleton Times Co Ltd v Warners Ltd [1907] AC 476 at 481 (PC). In Hoy v Allerton [2001] 1 QSC 440 a claimed right to withdraw water from a bore situated on neighbouring land was rejected on the ground that the dominant owner would have to use the bore and the pump owned by the servient owner in order to draw the water. Atkinson J stated that there can be no ancillary right to make use of fixtures and equipment belonging to another. 102 Cited with approval in Walker v Bridgewood [2006] NSWSC 149.

[17.120]  857

PART 5 Relations between Neighbouring Landholders

CREATION AND ENFORCEMENT OF EASEMENTS Formalities for creation [17.125]  Legal easements may be created expressly by appropriate documents. In addition,

easements may be created implication from the dealings by the parties or presumption from a course of conduct over a period of time. In relation to the express creation of legal easements, however, the general rule throughout Australia is that a deed is essential. In Queensland and the Northern Territory creation of legal interests in land may be completed by writing.103 In the other jurisdictions, legislation requires that all conveyances or dispositions of legal interests in land (except by will) must be made by deed.104 In relation to the Torrens system, each jurisdiction has legislation stating that a registered instrument takes effect as if it were a deed.105 The starting point for the creation of an easement with respect to Torrens system land is that applicable to the creation of any interest in land, namely registration of an instrument. Easements do however involve the two parcels of land, the benefitted and burdened lots. The title of the burdened lot seems of particular significance in that any easement detracts from the rights of enjoyment of the owner. The details of the process of registration applicable to the two parcels of land have not been clearly specified. The Queensland legislation seems the strongest; s 82 of the Land Title Act 1994 (Qld) states that an easement may only be created by registration of an instrument which must identify the land benefitted and burdened. On registration a record must be made on the titles of both pieces of land. None of the other jurisdictions adds with respect to easements to the general requirements for the registration of land dealings. However in New South Wales, Western Australia and the Australian Capital Territory, upon registration, record must be made on title of the land benefitted and of that burdened.106 The position in New South Wales has been subject to several legislative restatements and it seems that the rights of the parties depend on the requirements at the time of creation of the interest. In Victoria, South Australia, Tasmania and the Northern Territory, the legislation simply allows registration, with reference in Victoria and South Australia to registration on the title of the land burdened and that burdened.107 Contrary to common law, however, equity has never insisted on a formal deed for the conveyance of an interest in land. Based on the rule in Walsh v Lonsdale (1882) 21 Ch D 9 (CA), if a deed is absent, equity will treat a contract to convey an easement as effective to transfer the equitable interest to the purchaser. However, equity will only intervene where there

103 104

105

106 107

See Property Law Act 1974 (Qld), s 10; Law of Property Act 2000 (NT), s 9(1). Both these provisions state that no legal interest in land may pass without a deed or a written, signed document. Conveyancing Act 1919 (NSW), s 23B; Property Law Act 1958 (Vic), s 52(1); Law of Property Act 1936 (SA), s 28; Property Law Act 1969 (WA), s 33; Conveyancing and Law of Property Act 1884 (Tas), s 60(1); Civil Law (Property) Act 2006 (ACT), s 201. Real Property Act 1900 (NSW), s 36(11); Transfer of Land Act 1958 (Vic), s 40(2); Land Title Act 1994 (Qld), s 176; Real Property Act 1886 (SA), s 57; Transfer of Land Act 1893 (WA), s 85; Land Titles Act 1980 (Tas), s 48(7); Land Titles Act 1925 (ACT), s 48(8); Land Title Act 2000 (NT), s 179. Real Property Act 1900 (NSW), s 47(1); Transfer of Land Act 1893 (WA), ss 65A, 66A; Land Titles Act 1925 (ACT), s 103B. Transfer of Land Act 1958 (Vic), s 72(1); Real Property Act 1886 (SA), s 81; Land Titles Act 1980 (Tas), s 105; Land Title Act 2000 (NT), s 104.

858 [17.125]

Easements and Related Interests  Chapter  17

is an enforceable contract for the creation of a legal easement.108 In addition, the agreement, unless it is in writing, must be evidenced either by a memorandum or note in writing signed by the party to be charged or by a sufficient act of part performance. Equitable intervention to assist a party reliant on a dealing for value has been applied generally to the Torrens system and interests have been protected under the “in personam” doctrine. However some of the doctrines for the implied creation of easements, particularly for those arising by long use have been rejected in some jurisdictions, particularly as easements were traditionally a creature of the common law and their creation is said to lie in grant. [17.130]  As an alternative to the rule in Walsh v Lonsdale (1882) 21 Ch D 9 (CA), equitable

easements may arise under the principle of equity of acquiescence109 and possibly also under the principle of equitable or promissory estoppel.110 The High Court decision in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387,111 established that promissory estoppel may give rise to a cause of action and “may lead to the plaintiff acquiring an estate or interest in land”.112 Providing the requirements for promissory estoppel exist, an easement could be created. In King v The President, Councillors and Ratepayers of the Shire of Phillip Island (unreported, Sup Ct Vic, 10 August 1994) the Shire had represented to King that he had a right of way over a strip of land. On the basis of Waltons Stores, Nathan J held that the Shire was estopped from denying a strip of land was a road and therefore that King had right of access to the strip of land. [17.135]  Equitable easements may also arise where the grantor with only an equitable fee

simple estate in land agrees to grant an easement to a neighbouring landowner. This may occur, for example, where the grantor is a beneficiary of land held under a trust or holds the property under a contract of sale. In these situations, an equitable easement will be created if the grantor expressly creates an easement and complies with the relevant State legislation.113

Creation by implied reservation [17.140]  Based on the duty of express reservation which is imposed at common law upon a

grantor,114 the general rule is that, on a disposition of part of the land, no reservation of any

108

See Buchholz v Kempsey Shire Council [2005] NSWSC 235, where it was affirmed that Walsh v Lonsdale (1882) 21 Ch D 9 can be applied outside situations involving agreements to lease. 109 See, for example, McDonald v Peddle (1923) 42 NZLR 987; Dewhirst v Edwards [1983] 1 NSWLR 34; Crabb v Arun DC [1976] Ch 179 (CA); cf Brownsea v National Trustees Executors & Agency Co (Australasia) Ltd [1959] VR 243; Kitching v Phillips [2009] WASC 396. 110 See Jackson, “Estoppel as a Sword” (1965) 81 LQR 84 (Pt I), 223 (Pt II); Sheridan, “Equitable Estoppel Today” (1952) 15 MLR 325. 11 Upheld by the High Court in Commonwealth v Verwayen (1990) 170 CLR 394. Applied in numerous cases by 1 the courts, including Campbell v McGrath [2005] NSWSC 496; Mazzuchelli v Mazzuchelli [2006] WASC 124; Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466; Austotel Pty Ltd v Franklins Self-​Serve Pty Ltd (1989) 16 NSWLR 582; S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637. 112 Priestly JA in Silovi v Barbaro (1988) 13 NSWLR 466 at 472. 13 Conveyancing Act 1919 (NSW), s 23C; Property Law Act 1958 (Vic), s 53; Property Law Act 1974 (Qld), s 11; 1 Law of Property Act 1936 (SA), s 29; Property Law Act 1969 (WA), s 34; Conveyancing and Law of Property Act 1884 (Tas), s 60(2); Law of Property Act 2000 (NT), s 10. 14 Liddiard v Waldron [1934] 1 KB 435. 1 [17.140]  859

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easement in favour of any part retained will be implied.115 A grantor is expected to specify clearly anything that detracts from the grant. Exceptions to this general rule have been recognised in respect of easements of necessity and intended easements. [17.145]  Easements of necessity usually, although not necessarily, arise in the context of rights

of way, where, on the sale by a common owner of part of his or her land, either the grantor or grantee is left without any means of access to his or her property. This category of easements has been held to be based on the actual or presumed intention of the parties, not on a rule of public policy. The major authority is North Sydney Printing Pty Ltd v Sabemo Investment Corp Pty Ltd [1971] 2 NSWLR 150,116 where the plaintiff subdivided a large block of land and sold a part of it, intending that the part retained, which was landlocked and zoned for parking, should be sold to the local council as an extension to its existing car park. Thus, there was no intention on the part of the plaintiff to retain a means of access for itself to the land retained. The plaintiff unsuccessfully sought a way of necessity on the basis of public policy after the negotiations with the council for the sale of the land broke down. The unfortunate practical effect of the conclusion that a way of necessity is not based on public policy is that the doctrine of necessity cannot be regarded as a universal remedy for providing access to landlocked land.117 [17.150] Traditionally at common law, before an easement of necessity is implied, a court

must be satisfied that the right claimed is essential for the use of the alleged dominant tenement and is not merely a matter of convenience. The existence of an alternative means of access exercisable as of right has always been regarded as fatal to a claim of a way of necessity, even if this alternative access is very inconvenient118 or if the user of that alternative means is precarious.119 No way of necessity over neighbouring land will arise where a person, by her or his own acts, cuts off direct access to a road. Thus, in Harris v Flower (1905) 74 LJ Ch 127, a claim for a way of necessity was dismissed where the defendant, who had a right of way over the plaintiff’s land to certain land coloured pink on a plan, and who was also the owner of certain adjoining land coloured white, had by his own acts completely landlocked the white land so that the only access thereto was over the pink land. An easement of necessity does not create a right to a way of necessity for all purposes for which the landlocked close may at any time be used, but only such a right of way as will enable the owner of the close to enjoy it in the condition it happened to be at the time of the grant. If, for example, the land was used for agricultural purposes at the time of the grant, the

115 Bolton v Clutterbuck [1955] SASR 253 at 267; Re Webb’s Lease; Sandom v Webb [1951] Ch 808 at 823 (CA). 116 See also Nickerson v Barraclough [1981] Ch 426 (CA). 117 See Bradbrook, “Access to Landlocked Land: A Comparative Study of Legal Solutions” (1983) 10 Sydney LR 39. 118 McLernon v Connor (1907) 9 WALR 141 (FC); Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 (CA); MRA Engineering Ltd v Trimster Co Ltd (1988) 56 P&CR 1 (CA); Manjang v Drammeh (1991) 61 P & CR 194 (PC). Some Australian decisions have recognised that it might be possible that something less than absolute necessity will suffice for the grant of an easement. In other words, an easement of necessity might arise where it is reasonably necessary for the use of the land: see Lamos Pty Ltd v Hutchison (1984) NSW ConvR 55-​183, 57,300; Torrisi v Magame Pty Ltd [1984] 1 NSWLR 14 at 22. 119 Barry v Hasseldine [1952] 1 Ch 835. 860 [17.145]

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burden of a way of necessity cannot be increased (except by prescription) if the land is later used for building purposes.120 A way of necessity may arise even if the dominant tenement is not completely surrounded by the land of the grantor of the easement, but is surrounded partially by the land of the grantor and partially by the land of one or more other landowners.121 In this situation, the way of necessity will always be granted over the land of the grantor, not through private lands belonging to others.122 It was decided in Smith v Christie (1905) 24 NZLR 561 (CA)123 that a way of necessity ceases on the cessation of the necessity, even though the new way may not be as convenient as the previous one. Contrary authorities exist, however, and the matter cannot be regarded as settled. [17.155]  In respect of Torrens land, the doctrine appears to be within the scope of the wording

of the relevant legislation in Victoria, Western Australia and Tasmania.124 The position in New South Wales is unclear.125 In Queensland, the doctrine is possibly limited by the wording of s  185(1) and (3)  of the Land Title Act 1994 (Qld).126 The position in South Australia, the Australian Capital Territory and the Northern Territory is undecided. [17.160]  The law will imply the reservation of such easements as are required to give effect

to the common intention of the parties to a grant of real property as to the manner in which the land granted or the land retained by the grantor is to be used. This concession is subject only to the qualification that the parties must intend that the land granted or retained should be used in some definite and particular manner.127 A common illustration of the operation of this principle is in the case of semi-​detached or terraced houses, where the houses are so constructed as to be mutually subservient to and dependent on each other for drainage and support, neither house being capable of standing or being enjoyed without the support it derives from its neighbour. These rights are sometimes said to be mutual cross-​easements.128 Another illustration is provided in Re State Electricity Commission (Vic) and Joshua’s Contract [1940] VLR 121 at 173, where the State Electricity Commission of Victoria purchased land which, to the knowledge of the vendor, was intended to be used for the erection of an electricity substation which necessarily involved the transmission of noise over neighbouring land. Martin J held that the Commission was entitled

120 121 122 123 124 125

126 127

128

Corporation of London v Riggs (1880) 13 Ch D 798. Barry v Hasseldine [1952] 1 Ch 835. Riddiford v Foreman (1910) 29 NZLR 781 at 786. See also BOJ Properties Ltd v Allen’s Mobile Home Park Ltd (1979) 96 DLR (3d) 431 (NS Sup Ct). Transfer of Land Act 1958 (Vic), s 42(2)(d); Transfer of Land Act 1893 (WA), s 68; Land Titles Act 1980 (Tas), s 40(3). See MCA Camilleri Building & Constructions Pty Ltd v H R Walters Pty Ltd [1981] ACLD 396 (NSW Sup Ct); Torrisi v Magame Pty Ltd [1984] 1 NSWLR 14 which indicate that the doctrine may not apply in New South Wales. See also Pryce v McGuinness [1966] Qd R 591. Pwllbach Colliery Co Ltd v Woodman [1915] AC 634 at 646–​647 (HL); R J Finlayson Ltd v Elder, Smith & Co Ltd [1936] SASR 209 at 233; Rufa Pty Ltd v Cross [1981] Qd R 365 at 367–​368; Stafford v Lee (1992) 65 P&CR 172 (CA); Peckham v Ellison (1999) 77 P&CR 27 (CA). See Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 at 563 (CA). [17.160]  861

PART 5 Relations between Neighbouring Landholders

to have included in the transfer of the land it had purchased an easement of transmitting such noise as would arise from the proper use of an electricity substation. There are no cases in any State or Territory relating to the applicability of this doctrine to Torrens land. In the absence of authority, it is submitted that the same position applies as in respect of easements of necessity.

Creation by implied grant Easements of necessity and intended easements [17.165] Easements of necessity and intended easements may be implied in appropriate

circumstances in favour of a grantee as well as a grantor of the land; the same considerations apply as with implied reservation. In addition, grants may be implied under the rule in Wheeldon v Burrows (1879) 12 Ch D 31 (CA), under general words imported into conveyances by State legislation, by implication from the description of the land, on simultaneous conveyances by one landowner, and by the creation of a plan of subdivision. The rule in Wheeldon v Burrows [17.170]  Thesiger LJ stated in Wheeldon v Burrows (1879) 12 Ch D 31 at 49: On the grant by the owner of a tenement of part of the tenement as it is then used and enjoyed, there will pass to the grantee all those continuous and apparent easements (by which, of course I  mean quasi-​easements) or, in other words, all those easements which are necessary to the reasonable enjoyment of the property granted and which have been and are at the time of the grant used by the owners of the entirety for the benefit of the part granted.

This rule has been adopted in numerous cases in Australia129 and has been stated to be “well entrenched in Australian law”.130 It applies in respect of Crown land131 and to contracts for the sale of land132 as well as conveyances. There are three elements of the test propounded by Thesiger  LJ:  (a) “continuous and apparent”, (b) “necessary to the reasonable enjoyment of the property granted” and (c) “at the time of the grant used by the owners of the entirety for the benefit of the part granted”. An initial problem is whether the first two elements are synonymous, alternative or cumulative. Thesiger  LJ treated them as synonymous in one part of his judgment and as alternative in another part. Later courts have tended to the view that both elements must be complied with before the rule will apply,133 although the most recent judicial pronouncement has been to the contrary.134 The “continuous and apparent” element has given rise to problems of interpretation. The courts have tended to ignore the need for continuity in the exercise of an easement. The cases have construed the word as meaning “permanent” and, reading it together with “apparent”, have concluded that there must be, on the quasi-​servient tenement, a feature which would

129 See, for example, Lancaster v Lloyd (1927) 27 SR (NSW) 379; Taylor v Browning (1885) 11 VLR 158 (FC); Billiet v Commercial Bank of Australasia Ltd [1906] SALR 193. 130 Daar Pty Ltd v Feza Foundation Ltd [2001] NSWSC 949 at [14]. 131 Howitt v Fitzgerald (1898) 24 VLR 387 at 398. 132 Bowman v Griffith [1930] 1 Ch 493. 133 See, for example, Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144 (HL). 134 Wheeler v JJ Saunders Ltd [1996] Ch 19 (CA) per Gibson LJ. 862 [17.165]

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be seen on inspection and which is neither transitory nor intermittent.135 A right of way over a made-​up road or over-​worn tracks, an easement of watercourse and a right of light have all been held to satisfy this element.136 On the other hand, alleged rights having no physical evidence pointing to their existence (such as a right of way along a path which was unformed or unmade and an overflow from a tank) have been held to fail the test.137 The test of “necessary to the reasonable enjoyment of the property granted” is less strict than the test of necessity in an easement of necessity.138 This element can be satisfied either by showing that the alleged easement is necessary to the enjoyment of the tenement demised or that it is necessary to the enjoyment in a reasonable manner of some permanent feature or part of the demised tenement.139 The application of the doctrine to Torrens land in Victoria, South Australia and Western Australia is supported by judicial authority.140 In Tasmania, the doctrine is clearly within the scope of s 40 of the Land Titles Act 1980 (Tas). The requirement in s 82 of the Land Title Act 1994 (Qld) that easements be created only by registration seems to mean that the doctrine of Wheeldon v Burrows does not apply to Torrens system land. In McGrath v Campbell (2006) 68 NSWLR 229, the New South Wales Court of Appeal stated that although it was logical that a Wheeldon v Burrows easement fell within the “in personam” exception to indefeasibility, it was less clear whether the doctrine of prescription could extend to Wheeldon v Burrows easements. General words imported into conveyances [17.175] At common law, it was customary to include in conveyances “general words”,

which operated to convey expressly easements which, before the sale, had been used for the benefit of the part granted. The Australian State legislatures, following English precedent, have endeavoured to shorten conveyances by enacting that a conveyance of land shall be deemed to include certain specified rights. Each State has introduced similar (although not identical) legislation. For example, s 67 of the Conveyancing Act 1919 (NSW) states:141

(1) A conveyance of land shall be deemed to include and shall by virtue of this Act operate to convey with the land all buildings, erections, fixtures, commons, hedges, ditches, fences, ways, waters, watercourses, liberties, privileges, easements, profits à prendre, rights, and advantages whatsoever appertaining to the land, or any part thereof, or, at the time of conveyance.



(2) This section applies only if and as far as a contrary intention is not expressed in the conveyance, and has effect subject to the terms of the conveyance and to the provisions therein contained.

135 136 137 138 139 140

141

Stevens and Evans v Allan and Armanasco (1955) 58 WALR 1 at 15; Ward v Kirkland [1967] Ch 194 at 225; McKeand v Thomas [2006] NSWSC 1028 at [67]. Hansford v Jago [1921] 1 Ch 322; Watts v Kelson (1871) 6 Ch App 166; Phillips v Low [1892] 1 Ch 47. Polden v Bastard (1865) LR 1 QB 156; Bartlett v Tottenham [1932] 1 Ch 114. Nelson v Walker (1910) 10 CLR 450 at 586; Daar Pty Ltd v Feza Foundation Ltd [2001] NSWSC 949 at [14]; Wilcox v Richardson (1997) 43 NSWLR 4; Goldberg v Edwards [1950] 1 Ch 247 (CA). National Trustees, Executors & Agency Co (Australasia) Ltd v Long [1939] VLR 33. Wilcox v Richardson (1997) 43 NSWLR 4; Taylor v Browning (1885) 11 VLR 158; Billiet v Commercial Bank of Australasia Ltd [1906] SALR 193; Stevens and Evans v Allan and Armanasco (1955) 58 WALR 1; Campbell v McGrath [2005] NSWSC 496. Property Law Act 1958 (Vic), s 62; Property Law Act 1974 (Qld), s 239; Law of Property Act 1936 (SA), s 36; Property Law Act 1969 (WA), s 41; Conveyancing and Law of Property Act 1884 (Tas), s 6. [17.175]  863

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This legislation only operates on a conveyance of land. “Conveyance” is statutorily defined in each State so as to exclude holders of equitable interests.142 Thus, neither party to a contract for the sale of land143 or an agreement for a lease144 may rely on the legislation. An oral lease also appears to be outside the scope of the word “conveyance”.145 Despite these limitations, the legislation has a very broad application. The fact that the licence which is alleged on conveyance to be converted into an easement is personal to the plaintiff does not preclude the legislation from operating,146 nor does the fact that the owner of the quasi-​servient tenement has suffered the exercise of the alleged easement voluntarily, rather than as a matter of obligation or agreement or as a result of requests.147 The fact that the owner of the quasi-​servient tenement did not intend to create an easement has been considered irrelevant.148 A useful illustration of the operation of this legislation is International Tea Stores Co v Hobbs [1903] 2 Ch 165,149 where the defendant owned two adjoining blocks of land, one of which was leased to the plaintiff company. By permission of the defendant, renewed from time to time, the plaintiff used in business hours a way across the defendant’s other property to a door at the back of the plaintiff’s premises. The defendant later sold to the plaintiff the property which it had been leasing. No mention of any right of way was made in the conveyance. Farwell J held that the easement passed to the plaintiff by virtue of the general words implied into the conveyance by the legislation. [17.180]  There are two major limitations on the scope of the operation of the legislation. First,

the legislation will only operate if the kind of user relied on could have been the subject of a legal right binding on successors-​in-​title. Thus, if the expectation was that the enjoyment of the easement would be only temporary, or if prior to the conveyance the right was precarious in the sense that permission had to be sought on each exercise of user, the legislation will not operate to convert a licence into an easement on a later conveyance.150 Secondly, the rule was developed in Long v Gowlett [1923] 2 Ch 177 that before the legislation will operate, there must be prior diversity of occupation of the quasi-​dominant and quasi-​servient tenements.151 The rationale is that if the grantor not only owned, but also occupied, both the land sold and the land retained, then whatever he or she was accustomed to do on the land retained was attributable solely to his or her ownership and occupation of that part and so should not be converted into an easement under the legislation. This rule has

142

Conveyancing Act 1919 (NSW), s 7(1); Property Law Act 1974 (Qld), s 3; Law of Property Act 1936 (SA), s 7; Property Law Act 1958 (Vic), s 18(1); Property Law Act 1969 (WA), s 7; Conveyancing and Law of Property Act 1884 (Tas), s 2; Law of Property Act 2000 (NT), s 4. 143 Re Peck [1893] 2 Ch 315. 144 Borman v Griffith [1930] 1 Ch 493. 145 Rye v Rye [1962] AC 496 (HL). 146 Goldberg v Edwards [1950] 1 Ch 24. 147 Crow v Wood [1971] 1 QB 77. 148 Wright v Macadam [1949] 2 KB 744 (CA). 149 See also Hair v Gillman (2000) 80 P & CR 108 (CA); Graham v Philcox [1984] QB 747 (CA); Lyme Valley Squash Club Ltd v Newcastle under Lyme Borough Council [1985] 2 All ER 405. 150 See, for example, Wright v Macadam [1949] 2 KB 744;Phipps v Pears [1965] 1 QB 76; Marchant v Capital and Counties Property Co Ltd (1982) 263 EG 661. 151 See Jackson, “Easements and General Words” (1966) 30 Conv 340; Harpum, “Easements and Centre Point: Old Problems Resolved in a Novel Setting” (1977) 41 Conv 415. 864 [17.180]

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been affirmed by the House of Lords in Sovmots Investments Ltd v Secretary of State for the Environment [1979] AC 144 (HL).152 Lord Wilberforce stated that when land is under one ownership, one cannot speak in any intelligible sense of rights, privileges or easements being exercised over one part for the benefit of another: whatever the owner does, he or she does as an owner and, until a separation of ownership or occupation occurs, the condition for the existence of rights does not exist. [17.185]  In respect of Torrens land, the legislation appears to have a more limited application

than the rule in Wheeldon v Burrows (1879) 12 Ch D 31: see [17.170]. The legislation has been held to apply to Torrens land in Victoria153 and appears to apply to Torrens land in Western Australia by virtue of the similarity of the Torrens statutes. In New South Wales, Queensland and Tasmania State legislation expressly precludes the application of the “general words” doctrine to Torrens land.154 The issue has not been decided in South Australia, the Australian Capital Territory or the Northern Territory. [17.190] The operation of the legislation is subject to the principle of rectification, both

in respect of general law and Torrens land.155 However, this principle has only a narrow scope. Being an equitable remedy, it is discretionary and may be refused where there is delay amounting to laches.156 There can be no rectification unless the mistake to reserve rights in a conveyance is mutual: a unilateral mistake is insufficient.157 What the plaintiff must prove in all cases is that there was an actual agreement antecedent to the conveyance which is sought to be rectified and that such agreement is inaccurately represented in the instrument.158 By implication from the description of the land [17.195]  At common law, if, in a conveyance or a contract of sale, land is described as “bounded

by” or “abutting on” a road or street, the grantor will be regarded as having impliedly agreed to grant to the grantee a right of way over the land forming the road or street. An illustration of this principle is Mellor v Walmesley [1905] 2 Ch 164,159 where the English Court of Appeal held that by describing land conveyed as “situate on the seashore”, the grantor was estopped from saying that some land belonging to him, intervening between the actual seashore and the land conveyed, was not itself seashore, and that the plaintiffs, the successors-​in-​title of the grantees, were entitled to unrestricted access over the intervening land to the sea. The major Australian authority is Dabbs v Seaman (1925) 36 CLR 538.160 In this case Seaman, the registered proprietor of Torrens land in New South Wales, sold part of his land

152 153 154 155 156 157 158 159 160

See also Payne v Inwood (1996) 74 P & CR 42 (CA). National Trustees, Executors & Agency Co (Australasia) Ltd v Long [1939] VLR 33. See Barton, “The Applicability of Section 62 of the Property Law Act 1958 (Vic) to a Transfer of Torrens System Land” (1987) 61 ALJ 215. Conveyancing Act 1919 (NSW), s 67(5); Property Law Act 1974 (Qld), s 234A; Conveyancing and Law of Property Act 1884 (Tas), s 91, Sch 4. Clark v Barnes [1929] 2 Ch 368; Braye v Horsfall (1908) 8 SR (NSW) 258; Zdrojkowski v Pacholczak (1959) 59 SR (NSW) 382. Christie v Dalco Holdings Pty Ltd [1964] Tas SR 34. Slack v Hancock (1912) 107 LT 14; Braye v Horsfall (1908) 8 SR (NSW) 258. Reid v Zoanetti [1943] SASR 92 at 99; Australian Gypsum Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 63. See also Roberts v Karr (1809) 1 Taunt 495; 127 ER 926 (CP); Rudd v Bowles [1912] 2 Ch 60. See also Rock v Todeschino [1983] 1 Qd R 356; Hutchinson v Lemon [1983] 1 Qd R 369; cf Boulter v Jochheim [1921] St R Qd 105; 29 CLR 602. [17.195]  865

PART 5 Relations between Neighbouring Landholders

to Smith, describing that land as bounded on one side by a lane 20 feet wide over another part of Seaman’s land. The transfer was registered and the certificate of title issued to Smith showing his land abutting the lane. Mrs Dabbs eventually acquired title to Smith’s land, but her right to use the lane as an easement was disputed by Seaman. The High Court held by a two to one majority that Mrs Dabbs was entitled to have the 20-​foot strip for her use as a lane, with a right of way over it. All the judges in the case gave different reasons for their decisions. Higgins J (dissenting) rejected Mrs Dabbs’ claim to an easement on the basis that under the relevant Torrens legislation the only valid method for the creation of easements is by registration of an express grant. He added that Seaman’s implied representation that a lane that existed on one of the boundaries of the property did not create any right of way in the absence of registration of an express grant. Starke J held that an easement of way had been created by estoppel on the basis that such a right would be created on these facts if the land were general law land. Isaacs J held that Mrs Dabbs was entitled to a right of way over the land as long as she remained registered proprietor of the land, but complicated the issue by rejecting the contention that the right of way in this case constituted an easement, likening it instead to natural rights in property, such as the support of land by adjoining land. Because of these differing analyses, the interpretation of Dabbs v Seaman has long been a matter of controversy.161 Recent cases have found reasons to distinguish it,162 and in Bellevue Crescent Pty Ltd v Marland Holdings Pty Ltd (1998) 43 NSWLR 364 at 372,Young J stated that “anyone who relies on Dabbs v Seaman in light of its subsequent history is a bold person”. In Victoria, unlike the other States, Dabbs v Seaman appears not to apply to Torrens land by virtue of s 96(2) of the Transfer of Land Act 1958 (Vic). Simultaneous conveyances of land by one landowner [17.200]  If a landowner severs her or his property and sells both parts to different purchasers,

will the quasi-​easements previously enjoyed by the common owner over the quasi-​servient tenement pass to the purchaser of the quasi-​dominant tenement? The doctrine of implied grant applies equally in the case of simultaneous conveyances of the whole of the property to different purchasers as when the common owner disposes of part of his or her land and retains the rest.163 Thus each grantee of simultaneous conveyances obtains the same easements over the land of the other grantee as he or she would have obtained if the grantor had retained the remainder of the land. In other words, each grantee is in the same position as if he or she had obtained the first grant.164 With respect to the Torrens system, the New South Wales Court of Appeal in McGrath v Campbell (2006) 68 NSLR 229 stated that this doctrine would not apply unless the putative burdened owner actually intended to be bound.

161 See the detailed discussion in Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [4.43]ff. 162 Jobson v Nankervis (1943) 44 SR (NSW) 277; Lamos v Hutchison (1984) 3 BPR 9350 (NSWSC); Hutchinson v Lemon [1983] 1 Qd R 369; Bellevue Crescent Pty Ltd v Marland Holdings Pty Ltd (1998) 43 NSWLR 364. 163 Sunset Properties Pty Ltd v Johnston (1985) 3 BPR 9185 (NSWSC). 164 Swansborough v Coventry (1832) 9 Bing 305; 131 ER 629 (CP); Hansford v Jago [1921] 1 Ch 322.

866 [17.200]

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Creation by prescription Nature of prescription [17.205]  Prescription must be distinguished from limitation. In the case of limitation, adverse

possession of land for the requisite period of time operates to extinguish the existing title to land whereupon the adverse possessor has title to his or her land based on the right of possession. In contrast, prescription does not extinguish the landowner’s title, but creates an additional incorporeal right which is superimposed on the title of the servient tenement. Statute law now declares certain easements to be incapable of acquisition by prescription. Easements of light can no longer be acquired by prescription anywhere in Australia, while prescriptive easements of air may only arise in South Australia. In Queensland rights of way can no longer be acquired as prescriptive easements since 1975.165 The scope of prescription is also restricted in respect of land held under the Torrens system. There is case law establishing the applicability of prescription to Torrens land in Victoria and Western Australia.166 The Torrens legislation in Tasmania is phrased sufficiently broadly to allow for prescriptive easements.167 In the two Territories, the legislation is unclear and perhaps the Victorian and Western Australian cases will be followed. In Queensland, s 82 of the Land Titles Act 1994 (Qld) again rules out prescriptive easements. Courts of equal standing in South Australia and New South Wales have reached conflicting positions on this issue. In South Australia, the Full Court of the Supreme Court has decided in Golding v Tanner (1991) 56 SASR 482 that a prescriptive easement may arise over Torrens land. The easement would be recognised where the acts or omissions, on which the prescriptive right is based, are the acts or omissions of the registered owner himself or herself for the requisite period of 20 years. In the case, the acts on which the claim was based occurred over a period in which the titles to the servient land and the dominant land did not change. In such circumstances the in personam rights that the owner of the dominant land has against the owner of the servient land include the right to have the court order that all necessary things be done to have the easement registered, which will thus allow it to be enforced against the servient owner. The court refused to follow the earlier Federal Court decision in Anthony v Commonwealth (1973) 47 ALJR 83 where the application of the doctrine of prescription was denied with particular reference to s 84 of the Real Property Act 1886 (SA) which denies enforceability to unregistered easements created by express grant. By contrast in Williams v State Transit Authority of NSW (2004) 60 NSWLR 286 the New South Wales Court of Appeal rejected the application of the doctrine of lost modern grant and expressly declined to follow Golding. The court pointed out that the doctrine was based on a fictitious lost grant and a grant was essential to the creation of an easement as a legal interest. To imply a lost registrable instrument added fiction to fiction in an unacceptable way.

165 166

167

Property Law Act 1974 (Qld), s 198A(1). Sunshine Retail Investments Pty Ltd v Wulff (2000) V ConvR 64,377; Nelson v Hughes [1947] VLR 227; National Trustees, Executors & Agency Co (Australasia) Ltd v Long [1939] VLR 33; Di Masi v Piromalli [1980] WAR 57. It should also be noted that where there is a dispute between two neighbouring landowners, both of whom are tenants, with one landowner claiming an easement by prescription, the consent of the landowner is not required for the tenant to enforce an easement. Hampshire Automotive Centre Pty Ltd v Centre Com (Sunshine) Pty Ltd [2019] VSCA 77. Land Titles Act 1980 (Tas), s 40(3), Pt IXB, Div 2.

[17.205]  867

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A registrable instrument could only give rise to equitable rights and prescription involves the creation of a legal right.168 [17.210]  Two separate forms of acquisition of prescriptive easements apply in Australia. The

common law doctrine of lost modern grant applies throughout the country. In addition, a statutory form of acquisition based on the Prescription Act 1832 (UK) applies in Western Australia169 and (probably) in South Australia.170 In these States, an easement is frequently claimed in the alternative under both the statute and the common law.171 Lost modern grant [17.215] The doctrine operates as a fiction. A  grant will be presumed to have been made

and lost in modern times if enjoyment of the alleged easement for 20 years can be proved.172 Its justification is that the alleged servient owner would not have abstained from exercising her or his right of interference, knowing that 20 years’ abstinence would extinguish it, unless he or she intended to permit the enjoyment; and, after the alleged dominant owner has been encouraged to rely on acquiescence, there is a strong ground to make possession the basis of right.173 A further justification is that the state of affairs which is shown to exist is otherwise unexplained.174 Note that in Tasmania the doctrine of lost modern grant was abolished in 2001 by s 138I(2) of the Land Titles Act 1980 (Tas). Despite early doubts, it appears that the fiction is irrebuttable and evidence showing that a grant was impossible or that no grant was made will be regarded as irrelevant.175 The only exception to this is proof that the alleged grantor was under a legal incapacity to make the grant.176 [17.220] There are numerous miscellaneous rules affecting the scope of the fiction. The

fiction operates in respect of Crown lands,177 but not between landlords and tenants.178 The question whether time runs against the servient owner when the servient property is leased is still disputed. Cross LJ stated in Pugh v Savage [1970] 2 QB 373 at 383 (CA):179

168

See also Maoi v City of Stirling [No 2] [2016] WASCA 45, it would appear that the Court of Appeal in Western Australia considered that the acquisition of a prescriptive right would be prohibited if the users were exercising their rights in the belief that they were entitled to exercise it. 169 The Prescription Act 1832 (UK) was adopted by Act 6 Will IV No 4 (1836) (WA). 170 See White v McLean (1890) 24 SALR 97; Golding v Tanner (1991) 56 SASR 482. In Tasmania the Prescription Act 1934, which substantially re-​enacted the UK legislation, was repealed in 2001 by s 138I of the Land Titles Act 1980 (Tas). 171 See, for example, Diment v N H Foot Ltd [1974] 1 WLR 1427. 72 Johns v Delaney (1890) 16 VLR 729 at 731; Gangemi v Watson (1994) 11 WAR 505 at 508 (FC). 1 73 Wynstanley v Lee (1818) 2 Swan 333; 36 ER 643 at 340 (Swan), 646 (ER) (Ch) per Plumer MR. 1 74 Hamilton v Joyce [1984] 3 NSWLR 279 at 287 per Powell J. See also Attorney-​General v Simpson [1901] 2 Ch 1 671 at 698. 75 White v McLean (1890) 24 SALR 97;Thwaites v Brahe (1895) 21 VLR 192;Oakley v Boston [1976] QB 270 (CA). 1 76 Thwaites v Brahe (1895) 21 VLR 192;Tuckett v Brice [1917] VLR 36;Golding v Tanner (1991) 56 SASR 482. 1 77 Pekel v Humich (1999) 21 WAR 24. 1 78 Maher v Bayview Golf Club Ltd [2004] NSWSC 275; Wheaton v Maple & Co [1893] 3 Ch 48 (CA); Kilgour v 1 Gaddes [1904] 1 KB 457 (CA); Simmons v Dobson [1991] 1 WLR 720 (CA). 79 See also Sunshine Retail Investments Pty Ltd v Wulff (2000) V ConvR 64,377; State Transit Authority of NSW v 1 Australian Jockey Club [2003] NSWSC 726. 868 [17.210]

Easements and Related Interests  Chapter  17

A distinction can properly be drawn between cases where the tenancy was in existence at the beginning of the period of user and cases where the tenancy came into existence in the course of the period of user … If a tenancy is in existence at the beginning of a period of user it may well be unreasonable to imply a lost grant by the owner at the beginning of the user. He might not have been able to stop the user, even if he knew about it. If, on the other hand, you get a period of user against an owner or owners without any evidence that they did not know about it when they were in possession, then afterwards the grant of a tenancy, though undoubtedly such a tenancy during the period of user is a matter to be considered, it would be quite wrong to hold that it is a fatal objection to presuming a grant.

In calculating whether the prescription period has been satisfied, the alleged dominant owner may add to his or her own period of user any period of user of a predecessor-​in-​title, provided that there has been no interruption between the periods.180 Where there is an increase in the user during the prescription period, no bar to prescription arises unless it is user of a different kind or for a different purpose, or unless the increase is so great that the practical burden on the servient tenement is drastically increased181; in any of these situations, there must be a further 20-​year period before the prescriptive right will apply to the increased burden or different user.182 There is no requirement that an easement claimed by prescription be used with any particular frequency, although in the case of an easement intermittently used, such as a right of way, the enjoyment must be of such a nature and frequency as to indicate that the dominant owner is asserting a right.183 [17.225]  To obtain an easement by lost modern grant, it must be proved that the enjoyment

by the alleged dominant owner is “as of right”.184 This means that the enjoyment must be exercised not by violence, nor secretly or by stealth, nor by permission asked from time to time, on each occasion or even on many occasions of using it.185 The “stealth” requirement is justified on the basis that the enjoyment of the alleged easement must be such that an ordinary owner of the land, diligent in the protection of her or his interests, would have, or must be taken to have, a reasonable opportunity of becoming aware of that enjoyment.186 Thus, in Milne v James (1910) 13 CLR 168, which concerned an alleged prescriptive easement of support, Griffith CJ stated that the fact that the defendant’s beams rested upon the plaintiffs’ wall could not be discovered by an inspection of the exterior of the buildings or the plaintiff’s building was fatal to a prescriptive claim. The “permission” requirement is justified on the ground that the asking of permission is inconsistent with a claim “as of right”.187 The relationship between permission and tolerance in this context is disputed. Where the evidence shows that the landowner over whose land a

180 181 182 183

Auckran v Pakuranga Hunt Club (1904) 24 NZLR 235 at 240; Pekel v Humich (1999) 21 WAR 24 at 38. Cargill v Gotts [1980] 1 WLR 521; Nelson v Hughes [1947] VLR 227. Johns v Delaney (1890) 16 VLR 729. Eaton v Swansea Waterworks Co (1851) 17 QB 267; 117 ER 1282; White v Taylor (No 2) [1969] 1 Ch 160; Gangemi v Watson (1994) 11 WAR 505. 184 Attorney-​General v Horner (No 2) [1913] 2 Ch 140 at 178 (CA); Dewhirst v Edwards [1983] 1 NSWLR 34 at 49; Fulwood Nominees Pty Ltd v Teitz (1987) V ConvR 54-​217. Compare Bridle v Ruby [1988] 3 WLR 191. 185 See, for example, Fernance v Simpson [2003] NSWSC 121; Wayella Nominees Pty Ltd v Cowden Ltd [2003] WASC 210; Sunshine Retail Investments Pty Ltd v Wulff (2000) V ConvR 64,377; R v Oxfordshire County Council; Ex parte Sunningwell Parish Council [2000] 1 AC 335 at 350–​351; Hough v Taylor (1927) 29 WALR 97. 86 Union Lighterage Co v London Graving Dock Co [1902] 2 Ch 557 at 570 (CA). 1 87 Hyman v Van den Bergh [1907] 2 Ch 516 at 530. 1 [17.225]  869

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prescriptive easement is claimed acquiesced or tolerated the user, this was held in Mills v Silver [1991] 1 All ER 449 not to be inconsistent with a claim “as of right”, since such user was not by permission. On the other hand, recent cases have held that permission might be inferred on the basis of acts of “neighbourly tolerance” or “tacit consent”.188 In Thomopoulos v Faulks [2006] VSC 262 a claim for a prescriptive right of way failed on evidence that there was “a state of perpetual warfare between the parties”, which suggested to the court that user could not have been as of right. While it is settled that consent given during a prescriptive period is fatal to a claim for an easement,189 controversy surrounds the effect of consent given before the commencement of the prescriptive period. In Wilkinson v Spooner [1957] Tas SR 121 Burbury CJ held that permission given before the commencement of the period is irrelevant. Conversely, Healey v Hawkins [1968] 1 WLR 1967 decided that permission, whenever granted, is fatal to a prescriptive claim. The latter approach seems more consistent with the notion that enjoyment must always be “as of right”. Payment for a right to use neighbouring land has been held to infringe the “permission” requirement.190 On the other hand, if during the prescriptive period the neighbours compromise as to the exercise of a right claimed by one landowner, the permission requirement is not infringed. Thus, where during the 20-​year period the parties agreed to alter the route of a claimed right of way, the user of the original and substituted ways were considered as one and added together for the purposes of prescription.191 [17.230]  In addition to proof that the enjoyment was “as of right”, it must be proved that

the servient owner acquiesced in the exercise of the alleged easement.192 This has been held to involve actual knowledge, means of knowledge or constructive knowledge on the part of the alleged servient owner.193 In Williams v State Transit Authority of NSW (2004) 60 NSWLR 286, the court indicated that permission involves some overt act; if the servient owner has no knowledge of the conduct no prescriptive easement will arise. In the case of an agent appointed by the owner of the servient tenement to manage the property, it is only actual knowledge that can be imputed to the servient owner.194 Knowledge of the basic details is sufficient, for example, in the case of an easement of support, it is unnecessary for the servient owner to possess particular information as to those details of the internal structure of the building on which the weight depends.195 On the other hand, mere proof of common knowledge in the local community of the exercise of the alleged easement is insufficient.196

188 189 190 191 192 193

194 195 196

See Sunshine Retail Investments Pty Ltd v Wulff (2000) V ConvR 64,377; Fulwood Nominees Ltd v Teitz (1987) V ConvR 54-​217; Neville v Dale (1990) Vic ConvR 54-​382. Austin v Wright (1926) 29 WALR 55. Gardner v Hodgson’s Kingston Brewery Co Ltd [1903] AC 229; cf Smith v Christie (1905) 24 NZLR 561. Davis v Whitby [1974] Ch 186 (CA). Hamilton v Joyce [1984] 3 NSWLR 279 at 288; Dalton v Angus & Co (1881) LR 6 App Cas 740 at 773 (HL); Capar v Wasylowski [1983] 4 WWR 526 (Man QB). Fernance v Simpson [2003] NSWSC 121; Gangemi v Watson (1994) 11 WAR 505; Sunshine Retail Investments Pty Ltd v Wulff (2000) V ConvR 64,377; Davies v Du Paver [1953] 1 QB 184 (CA); Diment v N H Foot Ltd [1974] 1 WLR 1427. Liaweena NSW Pty Ltd v McWilliams Wines Pty Ltd (1991) ASC 56-​038 at 56,623; Sunshine Investments Pty Ltd v Wulff (2000) V ConvR 64,377. Dalton v Angus & Co (1881) LR 6 App Cas 740 at 801 (HL). Davies v Du Paver [1953] 1 QB 184 at 210 (CA).

870 [17.230]

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The requirement of acquiescence also means that there can be no prescriptive claim if there is genuine doubt as to the boundaries of the servient land as a result of which the servient owner does not know whether the right claimed is over her or his land,197 or if the servient owner has a mistaken belief as to the ownership of the land over which the disputed easement has been exercised.198 Prescription Act 1832 (UK) (South Australia and Western Australia) [17.235] The Prescription Act 1832 (UK) applies in South Australia and Western Australia.

In general, the rules as to the scope and methods of acquisition of easements under this legislation are the same as in the case of a presumption of a lost grant.199 However, the following differences exist: 1.

The legislation provides for two different time periods. Section 2 provides that no claim to any easement which has been actually enjoyed by any person claiming right thereto without interruption for 20 years can be defeated by showing only that such easement was first enjoyed at any time before that period. The claim, however, remains liable to be defeated in any other way in which it could be defeated apart from the Act. If the enjoyment has continued for 40  years, the right to the easement is deemed absolute and indefeasible, unless it appears that it was enjoyed by some consent or agreement expressly given or made for that purpose by deed or writing. In practice, the 40-​year period is very rarely invoked.

2.

Pursuant to s 4, the period of enjoyment must immediately precede the commencement of an action in which the claim is in question. This is unnecessary in the case of lost modern grant. This rule effectively reduces the scope of the application of the Prescription Act 1832 in comparison with the doctrine of lost modern grant.

3. Pursuant to s  4, no interruption is deemed to have occurred for the purposes of prescription unless the dominant owner has submitted to it or acquiesced in it for at least one year after notice of the fact of interruption and of the person responsible for causing it. This requirement does not exist under the doctrine of lost modern grant. 4.

Sections  7 and 8 grant extensions of time to the prescriptive period of enjoyment in certain circumstances. Section 7 stipulates that, for the purposes of computing the period of enjoyment, any time during which any person otherwise capable of resisting any claim shall have been or shall be “an infant, a patient within the meaning of Pt VI of the Mental Health Act 1963, or tenant for life” must be disregarded. This section, however, is limited to claims for prescription based on a 20-​year period of prescription, and not where the enjoyment has continued for 40 years, in which case the easement is deemed absolute and indefeasible: s 2. On the other hand, s 8 extends the 40-​year period, but not the 20-​ year period, in respect of any time during which the servient tenement is subject to a life interest or term of years longer than three years from the date of grant.

197 Anthony v Commonwealth (1973) 47 ALJR 83 at 91; Hamilton v Joyce [1984] 3 NSWLR 279 at 290–​291. 198 Hamilton v Joyce [1984] 3 NSWLR 279. 199 For Australian illustrations of the operation of this legislation, see Di Masi v Piromalli [1980] WAR 173; Wayella Nominees Pty Ltd v Cowden Ltd [2003] WASC 210. A South Australian example can be seen in Golding v Tanner (1991) 56 SASR 482. See Burns, “The Future of Prescriptive Easements in Australia and England” (2007) 31 Melbourne University Law Review 3. [17.235]  871

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Easements and Indefeasibility [17.240] Easements may be expressly granted or reserved in respect of Torrens land and

may be entered on the certificate of title of the dominant and servient tenements.200 Where easements are so entered, the easement is binding on all future purchasers of the servient tenement.201 Where easements are not registered, the principle of indefeasibility of title in respect of land held under the Torrens system may mean that the easement will not be enforceable against a registered proprietor of the land. Statutory exceptions to indefeasibility exist in all jurisdictions with respect to easements. Unfortunately, the scope of the exception varies from jurisdiction to jurisdiction. [17.245]  The widest exceptions to indefeasibility with respect to easements exist in Victoria,

Western Australia and Tasmania. Section  42(2)(d) of the Transfer of Land Act 1958 (Vic) states that the title of a registered proprietor is subject “any easements howsoever acquired subsisting over or upon or affecting the land”. The relevant Western Australian and Tasmanian sections are to similar effect.202 In these jurisdictions, all easements validly created at common law will amount to exceptions to indefeasibility of title.203 [17.250]  Section 185(1)(c) of the Land Title Act 1994 (Qld) and s 189(3) of the Land Title

Act 2000 (NT) provide for an exception to indefeasibility in the case of “the interest of a person entitled to the benefit of an easement if its particulars have been omitted from, or misdescribed in, the freehold land register”. In Queensland and the Northern Territory the meaning of “omission” is now given in the legislation. Section 189(3) of the Land Title Act 2000 (NT) states that an easement is taken to have been omitted if: (a) the easement was in existence when the lot burdened by it was first registered but particulars are no longer recorded in the freehold land register against the lot burdened; or (b) the easement was registered but later omitted by an error of the Registrar-​General. In Queensland, pursuant to s 185(3) of the Land Title Act 1994 (Qld) there is an additional situation where an easement is taken to have been omitted: “the easement particulars have previously been recorded in the freehold land register, but the current particulars in the freehold land register about the lot do not include the easement particulars, other than because the easement has been extinguished in relation to the lot”. In these two jurisdictions the exception is limited to easements created in one of the ways prescribed. [17.255]  In South Australia and the Australian Capital Territory, the legislation provides for

an exception to indefeasibility in the case of “the interest of a person entitled to the benefit of an easement if its particulars have been omitted from, or misdescribed in, the freehold land register”. In these jurisdictions, the crucial point is the meaning of the word “omission” and the concept of an easement contained in the statutory exception to indefeasibility in respect of “easements”.204 New South Wales case law may be used to guide the interpretation 200

Real Property Act 1900 (NSW), ss 46, 47 (see also s 46A); Transfer of Land Act 1958 (Vic), s 72; Land Title Act 1994 (Qld), ss 82, 83; Real Property Act 1886 (SA), ss 81, 96; Transfer of Land Act 1893 (WA), ss 63A, 64, 65, 67; Land Titles Act 1980 (Tas), ss 105, 106; Land Titles Act 1925 (ACT), s 103B; Land Title Act 2000 (NT), ss 91, 185. 201 Parramore v Duggan (1995) 183 CLR 633; Chiu v Healey [2003] NSWSC 857. 202 Transfer of Land Act 1893 (WA), s 68(1); Land Titles Act 1980 (Tas), s 40(3). 203 This includes unregistered agreements to create an easement: Cantelo v Kapellides [2003] VSC 442. 04 For a discussion of this issue, see (1987) 61 ALJ 660. 2

872 [17.240]

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of “omission” and it has yet to be argued whether the concept of an easement carries any reference to validity. There is no protection in South Australia for easements created by express grant as s 84 of the Real Property Act 1886 (SA) precludes protection unless such easements are registered on the title to the servient land. [17.260]  Until 1995, the New South Wales legislation was a form similar to that in South

Australia and the Australian Capital Territory. However, pursuant to s 42(1)(a1) of the Real Property Act 1900 (NSW) the exception to indefeasibility now applies “in the case of the omission or misdescription of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act”. What is the position in New South Wales under the current s 42(1)(a1) of the Real Property Act 1900 (NSW)? It is necessary to distinguish the two limbs of this paragraph. The first limb concerns general law land which has been converted to Torrens title. This limb merely reiterates the terms of the old s  42(1)(b) and preserves the traditional law on this point upholding easements existing prior to the land being brought under the Torrens system but for some reason not recorded on the registered title. The second limb concerns land which has always been held under the Torrens system. There are two aspects to this limb; firstly what amounts to omission and secondly what amounts to valid creation. [17.265]  The difference created by the 1995 legislation is that the easement must be “validly

created” before it classes as an exception to indefeasibility. This appears to require the registration of a transfer or a plan in accordance with s 88B of the Conveyancing Act 1919 (NSW). The mere execution and lodging of the documents required for registration will not be sufficient. Debate has occurred as to whether registration involves recording on the titles of both the dominant and servient tenements. [17.270] In Papadopoulos v Goodwin (No  2) [1983] 2 NSWLR 113 Wootten  J held that

the failure of the Registrar-​General to record an easement on the folio relating to the servient tenement constituted an “omission” within the meaning of s 42(1)(b) of the Real Property Act 1900 (NSW). His Honour also held that the failure of the Registrar-​General to record an existing easement when creating a new folio also constitutes an “omission”. In Australian Hi-​ Fi Publications Pty Ltd v Gehl [1979] 2 NSWLR 618 the registered proprietor of Torrens land had subdivided his property into two lots. The appellant became the owner of lot 1, while the respondent company purchased lot 2. The owner of lot 1 used lot 2 in such a way that had the land been general law land an easement would have been created in favour of lot 1 under the rule in Wheeldon v Burrows (1879) 12 Ch D 31. No notification of any easement appeared on either certificate of title. The New South Wales Court of Appeal granted an injunction restraining the appellant from attempting to enforce the easement on the ground that the appellant could not bring his case within the statutory exception to indefeasibility. In reaching its conclusion, the court deliberately gave a narrow definition to the word “omission”. The court rejected the wider interpretation of “omission” suggested by the appellant, namely that s 42(1)(b) is not confined to what is “not there” because of the failure to discharge some form of obligation, and held that it may also extend to a case where a thing is “not there” merely because a person did not do something which he was entitled to do. The decision was justified, inter alia, on the ground that the Torrens system is based on the conclusiveness of the register [17.270]  873

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and that to make the system effective any exceptions to indefeasibility should be construed narrowly.205 The decision on this point in Gehl’s case was later disapproved by the unanimous decision of the New South Wales Court of Appeal in Dobbie v Davidson (1991) 23 NSWLR 625.206 In this case an access road to a country property had been used without permission for 60 years before the land was brought under the Real Property Act 1900. It was omitted from the register at that time. The property was then used for a further 25 years without permission. On the narrow interpretation of “omitted” in Gehl’s case, the claimant of the easement would have failed. The court, however, decided that “omitted” was broader, and means “left out” or “something not there”. It was decided that Gehl’s case should be confined to the precise issue that was then before the court, namely, whether an implied easement under the doctrine in Wheeldon v Burrows (1879) 12 Ch D 31 in existence prior to land coming under the Torrens legislation would prevail against a certificate of title that made no mention of it. The court (at 634) added that the interpretation of “omitted” given in Gehl’s case was “unduly narrow”. The matter came before the High Court in Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (2013) 247 CLR 149. In that case the easement had been removed from the register by a deliberate decision of the Registrar. The court held that the easement had not been omitted because there had been a deliberate act. The court did indicate that an easement would be omitted if it had been validly created prior to the bringing of the land under the Torrens system or if it had been validly registered but then left off the register. The court considered that the New South Wales legislation at the time of creation of the alleged easement gave a discretion to the Registrar-​General as to whether the easement must be recorded on the title of the servient tenement. Thus an easement recorded on the title of the dominant tenement but not the servient tenement would be regarded as validly created. The matter again came before the New South Wales Court of Appeal in Jea Holdings (Aust) Pty Ltd v Registrar-​General of NSW (2013) 16 BPR 31, 745. The court followed Dobbie v Davidson and held that “omission” includes leaving out. The court held that the legislation in force in 1964 allowed for registration on the title of benefitted land alone. The court emphasised that a statutory protection conferred when the easement was created would not be affected by any subsequent change to the indefeasibility provision unless clear words were used. In the case, the easement was validly created by recording on the title of the benefitted land and had been omitted from the title of the burdened land by being left off that title. The easement was protected by indefeasibility. Little consideration has been given to the rights of the owner of the burdened land whose title has been made defeasible, sometimes significantly, who might attempt a claim for compensation against the Registrar-​General.

STATUTORY EASEMENTS [17.275]  In Australia, there are numerous State and Territory enactments creating easements.

Most, but not all, of these Acts are designed to create easements in favour of local councils or State or Territory government authorities, the majority being granted in favour of authorities supplying essential services.207 An easement created by statute may validly create an easement 205 This decision was applied in Beck v Auerbach (1986) 6 NSWLR 454 (CA); Papadopoulos v Goodwin (No 2) [1983] 2 NSWLR 113. 206 This case has been applied in Cirino v Registrar-​General (1993) 6 BPR 13,260. 207 See, for example, Acquisition of Land Act 1967 (Qld), ss 5, 6; Land Administration Act 1997 (WA), s 144. 874 [17.275]

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in gross in favour of a government authority even though this would not be possible in the case of an agreement inter partes.208 Where a statutory easement is created, the grantee only has such authority as is granted by the statute. If the grantee exceeds its powers, it is in the same position as a mere wrongdoer creating a public nuisance.209 [17.280]  In New South Wales, the Northern Territory, Queensland and Tasmania, courts are

empowered to impose an easement to promote land development. In those jurisdictions, courts are given power to make an order imposing an easement of way over land if the easement is reasonably necessary for the effective use of the dominant land.210 Under this power, an applicant for a grant of an easement must satisfy a court that: 1.

the easement is necessary for the effective use and development of the benefited land;

2.

the use of the benefited land in accordance with the easement will not be inconsistent with the public interest;

3.

the grantor of the easement can be adequately compensated for the loss flowing from the imposition of the easement;

4.

all reasonable steps have been made by the applicant to obtain the easement or an alternative, but those attempts have been unsuccessful;

5.

the nature and the terms of the easement can be specified by the court; and

6.

the court should exercise its discretion to impose the easement.211

[17.285]  A court may impose an easement where it is reasonably necessary for the effective

use or development of the benefited land. The provision does not require that there be absolute necessity, as with easement of necessity; therefore the requirement may be satisfied even if an applicant’s land could be effectively used and developed without it.212 However, in order that an easement be reasonably necessary for a use or development, a court must be satisfied that the proposed use or development is a reasonable one in comparison with possible alternatives and that the use or development with the easement is substantially preferable to a use or development without the easement.213 Reasonable necessity must be measured having regard

208 209 210

Newcastle-​under-​Lyme v Wolstanton Ltd [1947] 1 Ch 92 at 103. Perth Corp v Halle (1911) 13 CLR 393 at 399. Conveyancing Act 1919 (NSW), s 88K; Law of Property Act 2000 (NT), ss 163–​164; Property Law Act 1974 (Qld), s 180(1); Conveyancing and Law of Property Act 1884 (Tas), s 84J. The first application of this legislation in Tasmania was seen in Clarence City Council v Howlin [2016] TASSC 61; [2019] TASFC 1. 211 These factors were set out in Sodhi v Stanes [2007] NSWSC 177 at [110] per Austin J. 12 Re Seaforth Land Sales Pty Ltd’s Land [1976] Qd R 190 at 194 per Douglas J; Re Application by Kindervater 2 [1996] ANZ ConvR 331 (QSC) at 333 per Derrington J; Tregoyd Gardens Pty Ltd v Jervis (1997) 8 BPR 15,845 (NSWSC); 117 York St Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; 98 LGERA 171; 8 BPR 15,917; [1998] NSW ConvR 55-​859 at 508 (NSWLR) per Hodgson CJ; Hanny v Lewis (1998) 9 BPR 16,205; [1999] NSW ConvR 55-​879. 13 117 York St Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; 98 LGERA 171; 8 BPR 2 15,917; [1998] NSW ConvR 55-​859 at 508–​509 (NSWLR) per Hodgson CJ; Sodhi v Stanes [2007] NSWSC 177. See also Re Seaforth Land Sales Pty Ltd’s Land (No 2) [1977] Qd R 317 (FC) at 320–​321 per Hanger CJ; Re Application by Kindervater [1996] ANZ ConvR 331 (QSC) at 333 per Derrington J; Hanny v Lewis (1998) 9 BPR 16,205; [1999] NSW ConvR 55-​879. In Bradshaw v Griffiths (2016) Q ConvR 54-837 the Court of Appeal considered that in applying these principles; what is reasonably necessary is determined objectively, but that it must mean something more than merely desirable or preferable. The court must also have regard to the implications to the servient tenement in imposing a right of use. [17.285]  875

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to the burden which the easement would impose on other land.214 Generally, the greater the burden the stronger the case needed to justify a finding of reasonable necessity.215 The court may apply conditions to the proposed easement to align it with the needs of the servient owner and it will be up to that owner to satisfy those conditions.216 In attaching conditions to the declaration of a court-​ordered easement, an evidentiary basis must exist to impose conditions that limit the use of an easement.217 [17.290]  A proposed use must be weighed against the public interest. In New South Wales the

requirement is expressed in s 88K(2)(a) of the Conveyancing Act 1919 (NSW) which requires that a proposed easement not be inconsistent with the public interest. On the other hand, legislation in the Northern Territory, Queensland and Tasmania states that the easement must be “consistent with the public interest”.218 It has been held with respect to the Queensland provision that the onus is on the applicant to satisfy the court that the order being sought is not inconsistent with the public interest, however, the applicant does not have to prove that the order advances the public interest.219 [17.295] A court cannot make an award unless a burdened owner can be adequately

compensated for the imposition. In some cases, no payment will be able to compensate a burdened owner for the imposition of the easement. This will be particularly so where an easement interferes with peace or privacy and is detrimental to the lifestyle of the burdened party. The court order is depriving an owner of property rights and is not to be made lightly. In Sodhi v Stanes [2007] NSWSC 177, the burdened owners claimed that they had travelled around Australia to find a special piece of land and that the proposed easement would spoil that value. Nonetheless, the Court held that an amount could be fixed to the loss of amenity. Generally compensation reflects the diminished value of the burdened land, including impact on its potential use.220 [17.300]  A court must be satisfied that all reasonable attempts have been made to obtain the

easement sought in proceedings and that all reasonable attempts have been made to obtain an easement having the same effect.221 “Reasonableness” is a matter of degree and a court must consider the likelihood that consensus would be reached if further steps had been taken.222 An applicant does not have to show that they offered an amount that is later considered fair compensation by the court, so long as the applicant showed a willingness to negotiate and respond reasonably to the other party’s expert opinions and contentions.223

214 215 216 217

218 219 220 221 222 223

Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303; [1999] NSWSC 1045. Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303; [1999] NSWSC 1045. Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2012] NSWCA 445. Gordon v Lever (2018) 97 NSWLR 90 –​the Trial Judge had limited the use of an easement to those circumstances when an alternate path was impassable. The Court of Appeal allowed the appeal holding that there was no evidentiary foundation for this limitation. The matter was returned to the Trial Judge for consideration. Law of Property Act 2000 (NT), s 164(3)(b); Property Law Act 1974 (Qld), s 180(3)(a); Conveyancing and Law of Property Act 1884 (Tas), s 84J(1). Ex parte Edward Street Properties Pty Ltd [1977] Qd R 86 (disapproving Tipler v Fraser [1976] Qd R 272). Wengarin Pty Ltd v Byron SC (1999) BPR 16,985; [1999] NSW ConvR 55-​903; [1999] NSWSC 485. Khattar v Wiese (2005) 12 BPR 23,235; [2005] NSWSC 1014. Coles Myer New South Wales Ltd v Dymocks Book Arcade Ltd (1996) 7 BPR 14,638 (NSWSC). Katakouzinos v Roufir Pty Ltd (1999) 9 BPR 17,303; [1999] NSWSC 1045 at [75]–​[77] per Hodgson CJ.

876 [17.290]

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[17.305]  A court must be able to specify the terms of an easement. The result of a successful

application is an order for an easement which must satisfy the established criteria for such an order. An easement will not be granted where use of the easement would be illegal.224 An order may be made on conditions, particularly in relation to the need for planning consent for use of the land.225 [17.310]  Even if all factors for the imposition of an easement have been made out, a court has

an overriding discretion whether to make an order. The court may conclude that there is some feature of the proposed easement which militates against its operation. This consideration may involve similar considerations to those of the public interest. In Sodhi v Stanes [2007] NSWSC 177, Austin J considered an application for an access road to a banana plantation. This road would have had a very steep gradient and expert evidence suggested there was a real risk of harm to drivers and passengers of vehicles using that road. His Honour held that the court should exercise its discretion to decline to impose the easement.226 [17.315]  The statutory power in New South Wales, the Northern Territory, Queensland and

Tasmania to impose an easement has been held not to extend to easements in favour of public utility suppliers. Although such an easement is permitted under s 88K of the Conveyancing Act 1919 (NSW), the New South Wales Supreme Court has held that it lacked the power to impose one by a s 88A order.227 Section 88K required that there be land that would benefit from the easement whereas s 88A provided for easements in favour of a prescribed authority. The equivalent legislation in the Northern Territory, Queensland and Tasmania seems to produce a similar result.

TYPES OF EASEMENTS Rights of way [17.320] A right of way may be granted in general terms or may be of a limited nature.

The extent of the user may be limited to a particular purpose. The courts will enforce such limitations if the wording of the document is clear and unambiguous. For example, a restriction to “vehicular traffic only” has been held to exclude pedestrians.228 The extent of the way may also be limited to particular persons, although such a limitation will be strictly construed by the courts. As stated by Haslam J in Grinskis v Lahood [1971] NZLR 502 at 509, in cases where the classes of persons entitled to use the way are enumerated, prima facie such categories are by way of example only. [17.325]  The basic principles of construction have been examined and clarified by the New

South Wales Court of Appeal in Perpetual Trustee Co Ltd v Westfield Management Ltd (2006)

224 225 226 227 228

117 York St Pty Ltd v Proprietors of Strata Plan No 16123 (1998) 43 NSWLR 504; 98 LGERA 171; 8 BPR 15,917; [1998] NSW ConvR 55-​859 at 511 (NSWLR) per Hodgson CJ. Sodhi v Stanes [2007] NSWSC 177 at [152] per Austin J. Sodhi v Stanes [2007] NSWSC 177 at [148] per Austin J. Bonvale Enterprises Pty Ltd v Halfpenny Investments Pty Ltd (2005) 62 NSWLR 698; [2005] ANZ ConvR 208; [2005] NSW ConvR 56-​128; [2005] NSWSC 219 at [7]‌–​[8] per Burchett AJ. Barry v Fenton [1952] NZLR 990. [17.325]  877

PART 5 Relations between Neighbouring Landholders

12 BPR 23, 793 (decision affirmed by the High Court in Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528).229 Hodgson JA stated (at [26]–​[28]): In my opinion, there is just one question, what does the grant authorise; and that question is to be determined by construing the grant. One way of posing the question is to ask, what use was intended to be authorised by the grant; but no separate investigation into the issue contemplated by the parties is either necessary or permissible. However, in determining this question, regard may be had to surrounding circumstances, including the physical circumstances of the dominant and servient tenements and the use actually being made of them at the time of grant. This is turn gives rise to the question of whether other circumstances may be taken into account, such as communications between the parties prior to the grant of the easement. One view could be that such circumstances can be taken into account, to the extent to which they can be taken into account in construing an ordinary contract … Another could be that, because easements are documents of title and operate in rem, the surrounding circumstances to which regard can be had should be more limited, and in particular limited to objective circumstances readily ascertainable by the public in general … As a matter of general principle, I would have preferred the latter approach; the meaning and effect of a document of title, that binds successors in title to both the dominant and servient tenements for indefinite and possibly very long periods, should not in my opinion depend on anything other than the terms of the document and ascertainable objective circumstances existing at the time of the grant. However, there is authority supporting the former approach which I believe I should follow.230 [17.330]  In determining the extent of a right of way, and possible interference with that right

of way, the Court is required to consider what will amount to substantial interference and whether that interference is unreasonable.231 The court will also consider the nature of the route where this is relevant to the interpretation of a right of way.232 For example, the issue in St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No 2) [1973] 1 WLR 1572233 turned on whether a right of way was limited to a footpath or whether it included the right to drive vehicles along it. In deciding in favour of the former interpretation, Megarry J examined the terminus of the route, the space in front of a church porch, and concluded that it was not large enough to permit the turning round of average-​sized vehicles without the risk of damage to the adjoining grass and graves. Similarly, in Walker v Bridgewood (2006) 12 BPR 23, 537 Gzell  J declared a right of way established in 1899 in favour of “horses, carts, carriages or wagons” as obsolete on the basis that modern vehicles could not negotiate the 90 degree turns specified in the route of the way without encroaching on the land of the servient tenement. The court will also consider the purpose for which the way is to be used. For example, in Elliott v Renner [1923] St R Qd 172234 where a right of way over a laneway leading to the defendant’s shop was expressly granted, the Full Court of the Supreme Court of Queensland held that as the premises were used or intended to be used for the purposes of a pastry cook’s 29 Discussed in Peter Butt, “Adding Properties to An Easement” (2008) 82 ALJ 14. 2 230 Applied in Sertari Pty Ltd v Nirimba Developments Pty Ltd [2007] NSWCA 324; Panfili v Lawless [2010] NSWSC 79; Markos v O R Autor Pty Ltd [2007] NSWSC 810; Berryman v Sonnenschein [2008] NSWSC 213. Distinguished in Neighbourhood Association DP No 285220 v Moffat [2008] NSWSC 54. 231 Lowe v Kladis [2018] NSWCA 130. 232 Bond and Leitch v Delfab Investments Pty Ltd (1980) 26 SASR 462; 90 LSJS 570; Cannon v Villars (1878) 8 Ch D 415. 233 See also Cannon v Villars (1878) 8 Ch D 415. 234 See also Bulstrode v Lambert [1953] 2 All ER 728; [1953] 1 WLR 1064. 878 [17.330]

Easements and Related Interests  Chapter  17

business, the right of way should be construed as including the right of bringing up vehicles to the premises and keeping them standing outside the premises while they were being loaded or unloaded. [17.335]  A dispute may arise over the construction of a grant which defines or restricts the

modes of user of a right of way. There have been many disputes over the meaning of a “right of carriageway”. The courts have decided that the grant is not to be construed by reference to the mode of traction used at the time of the grant.235 Bennett J stated in Lock v Abercester Ltd [1939] Ch 861 at 864 that the law must keep pace with the times: where proof is given of the user of a way by carriages drawn by horses for the required period so as to establish the right to an easement for a carriageway, the right so acquired is one which enables the owner of the dominant tenement to use the way with mechanically propelled vehicles.236 The majority of States have established a legislative definition of “right of carriageway”. For example, s 181A(1) and Sch 8 of the Conveyancing Act 1919 (NSW) and s 34A(1) and Sch 8 of the Conveyancing and Law of Property Act 1884 (Tas), define the right as:237 Full and free right for every person who is at any time entitled to an estate or interest in possession in the land herein indicated as the dominant tenement or any part thereof with which the right shall be capable of enjoyment, and every person authorised by that person, to go, pass and repass at all times and for all purposes with or without animals or vehicles or both to and from the said dominant tenement or any such part thereof.

In the absence of words of restriction, the basic rule is that the use to which a right of way may be put are as general as are compatible with the physical nature of the servient tenement.238 [17.340]  In relation to the purpose of user, the present rule is that a grantee is not confined

to using a right of way for the purpose prevailing at the date of the grant, but may use the way for any different purpose.239 However, the rule is arguably different where the changed purpose results in an increase of the user. Although the matter is by no means settled, the balance of authorities suggests that although some change in the degree of user is permissible, provided that it does not go beyond anything contemplated by the parties at the time the easement was created, it will not be permissible if the result is to increase substantially the burden on the servient tenement.240 The major authority on this point is Jelbert v Davis [1968] 1 All ER 1182; [1968] 1 WLR 589 (CA),241 where changed purpose of user was denied where the conversion of the dominant

235

Walker v Bridgewood [2006] NSWSC 149; Attorney-​General v Hodgson [1922] 2 Ch 429; Kain v Norfolk [1949] Ch 163. 236 See also Archer v Timpar Nominees Pty Ltd [1999] WASC 20. 237 See also Transfer of Land Act 1958 (Vic), s 72(3), Sch 12; Transfer of Land Act 1893 (WA), s 65, Sch 9; Land Titles Act 1925 (ACT), s 81, Sch 1; Law of Property Act 2000 (NT), s 157(1), Sch 3. 238 Elliott v Renner [1923] St R Qd 172 (FC). 239 Timpar Nominees Pty Ltd v Archer [2001] WASCA 430; Grinskis v Lahood [1971] NZLR 502; Flavell v Lange [1937] NZLR 444; White v Grand Hotel, Eastbourne [1913] 1 Ch 113. 240 See also the discussion at [17.405]. 41 See also Kyren Pty Ltd v Cinema Place Pty Ltd [2006] SASC 93; Owners of Corinne Court 290 Stirling Street Perth 2 Strata Plan 12821 v Shean Pty Ltd (2000) 23 WAR 1; [2000] WASC 181; Malden Farms Ltd v Nicholson 3 DLR (2d) 236 (1956) (Ont CA). Compare Hurt v Bowmer [1937] 1 All ER 797; South Eastern Rly Co v Cooper [1924] 1 Ch 211 (CA); Rosling v Pinnegar (1986) 54 P & CR 124 (CA). [17.340]  879

PART 5 Relations between Neighbouring Landholders

tenement from agricultural use to a large camping park would lead to an unreasonable increase in the burden on the servient tenement. There is no legal impediment to creating two rights of way over the same area in one block of land, provided that there is no inconsistency or derogation from the grant.242 It is possible for a right of way to be granted subject to an obstruction. In cases where a right of way is granted over land on which there exists an obstruction at the date of the grant, it is a question of interpretation of the instrument of grant whether the easement is granted subject to the obstruction or free from it.243 In the latter event and in the absence of an express agreement to the contrary, the onus is on the grantee to remove the obstruction.244 Gohl v Hender [1930] SASR 158245 decided that the owner of the servient land subject to a right of way may lawfully erect a gate across the way, provided that the gate is left unlocked and does not substantially obstruct the way. The issue whether the grantee of a right of way has a duty to close such a gate is a question of fact depending on the circumstances of the case.246 The New South Wales Supreme Court held in Dunell v Phillips (1982) 2 BPR 9517 that although there is no absolute right in a servient owner to fence the common boundary if the grant is silent, nevertheless there is a natural presumption that he should be able to do so.247 This matter will be of considerable importance in construing the words of the grant. The owner of the dominant tenement has a right to deviate on to another part of the servient land from the route of a right of way where it is obstructed by the grantor, although not in any other circumstances.248 In the absence of an express grant to the contrary, a right of way does not extend in height “usque ad coelum”, but only as far as is required by the reasonable needs of the owner of the dominant tenement.249 It is a question of fact in each case as to what is reasonable.250 Similarly, the width of a right of way only extends as far as is required by the reasonable needs of the owner of the dominant tenement.251 [17.345] In Queensland, s  198A(1) of the Property Law Act 1974 (Qld) prohibits the

establishment of future prescriptive rights of way. Prescriptive rights of way in existence prior to 1975 are preserved by virtue of s  198A(2). In New South Wales no prescriptive rights of way can be claimed against the Crown. Section  178of the Conveyancing Act 1919 (NSW) states that no dedication or grant of a way shall be presumed or allowed to be asserted as against the Crown or any persons holding land in trust for any public purposes by reason only of user.252 The issue whether prescriptive rights of way can be 242 243 244 245 246 247 248 249 250 251 252

Smouha v Fleming (1997) 8 BPR 15,419. Spear v Rowlett [1924] NZLR 801; Mantec Thoroughbreds Pty Ltd v Batur [2009] VSC 351. Spear v Rowlett [1924] NZLR 801 at 804. See also Deanshaw v Marshall (1978) 20 SASR 146; Walker v Espie [2003] NSWSC 559. See Dresdner v Scida (2003) 12 BPR 22,629; [2003] NSWSC 957; Powell v Langdon (1944) 45 SR (NSW) 136. See also Panfili v Lawless [2010] NSWSC 79; Baypeak Pty Ltd v Lim [2005] VSC 77; Boglari v Steiner School and Kindergarten (2007) 20 VR 1 (CA). Selby v Nettlefold (1873) LR 9 Ch App 111; Hemmes Hermitage Pty Ltd v Abdurahman (1991) 22 NSWLR 343. McMahon v McMahon [2008] VSC 386. See Manly Properties Pty Ltd v Castrisos [1973] 2 NSWLR 420; Ex parte Purcell [1982] Qd R 613; Loclot Pty Ltd v Pullen (2003) 56 NSWLR 592; [2003] NSWSC 67. See VT Engineering Ltd v Richard Barland & Co Ltd (1968) 19 P & CR 890; Celsteel Ltd v Alton House Holdings Ltd [1985] 2 All ER 562; [1985] 1 WLR 204. Applied in Williams v State Transit Authority of NSW (2004) 60 NSWLR 286; [2004] NSWCA 179.

880 [17.345]

Easements and Related Interests  Chapter  17

claimed against the Crown in other States is less clear, but the answer appears to be in the negative.253 In other respects, except in Queensland, prescriptive rights of way can be claimed in Australia as in England [see 17.205]. Thus, for example, in Byrne v Steele [1932] VLR 143 a prescriptive right of way was recognised where the defendant admitted that the plaintiff and his predecessors in title had continuously passed over a defined portion of the plaintiff’s land for over 70 years.

Rights in relation to watercourses [17.350]  Various rights in respect of the flow of water have been recognised at common law

as amounting to easements. Illustrations of these are the right to discharge pollution into watercourses254 and the right to divert watercourses.255 In recent times, however, various State enactments in Australia have been introduced which control the use of rivers and streams and those have largely supplanted the common law in this area.256

Rights to support [17.355] In all jurisdictions except New South Wales, the right to support by land from

neighbouring land is a natural right attaching to real property and does not need to be created by easement. This natural right is still based on common law in all jurisdictions except Queensland and the Northern Territory. Section  179 of the Property Law Act 1974 (Qld), states: For the benefit of all interests in other land which may be adversely affected by any breach of this section, there shall be attached to any land an obligation not to do anything on or below it that will withdraw support from any other land or from any building, structure, or erection which has been placed on or below it.

Section 162 of the Law of Property Act 2000 (NT) states: “All land is subject to the obligation that nothing is to be done on the land that will withdraw support from other land or from a building, structure or erection on other land”. [17.357]  In New South Wales, the common law rules have been replaced by s  177 of the

Conveyancing Act 1919 (NSW).257 This legislation abolishes the right at common law to bring an action for nuisance in respect of the removal of support provided by supporting land to supported land: s 177(8). This is replaced by a duty of care based on the law of negligence not to do anything on, or in relation to land, that removes the support provided to any other land: s 177(2). This duty of care does not extend to any support provided for buildings on the supporting land. The exception to this is the extent to which the supporting building

253

See Thwaites v Brahe (1895) 21 VLR 192 at 201; Wheaton v Maple & Co [1893] 3 Ch 48 (CA). See, however, dicta to the contrary by Master Weld in Connellan Nominees Pty Ltd v Camerer [1988] 2 Qd R 248 at 254–​255. 254 McIntyre Bros v McGavin [1893] AC 268 (HL); Ballard v Tomlinson (1885) 29 Ch D 115 (CA). 255 John White & Sons v J & M White [1906] AC 72 (HL); Ivimey v Stocker (1866) LR 1 Ch App 396. 256 See, for example, Water Resources Act 1997 (SA); Rights in Water and Irrigation Act 1914 (WA). 57 This section was added by the Conveyancing Amendment (Law of Support) Act 2000 (NSW). 2 [17.357]  881

PART 5 Relations between Neighbouring Landholders

concerned has replaced the support that the supporting land in its natural state formerly provided to the supported land: s 177(4). The duty of care in relation to the support of land may be excluded or modified by express agreement between a person on whom the duty lies and a person to whom the duty is owed: s 177(5). Such an agreement may be created by an easement: s 177(7). Except as provided in s 177(4), the scope of the legislation appears to be limited to the support of land in its natural state and does not extend to the support of buildings on the supported land by either the supporting land or buildings on the supporting land. Such situations are still subject to the common law of easements and are actionable in nuisance. [17.360]  The natural right has been held not to give rise to liability for loss of support caused

by withdrawal of water as distinguished from withdrawal of soil,258 although it will give rise to liability where the abstraction of water is merely the agency where a shrinkage of soil and a consequent subsidence of land occurs. Liability was held to exist in Todorovic v McWatt [1927] Tas SR 9, where the defendant simply excavated his property to a depth of 1.3 metres, which caused the side of the excavation next to the plaintiff’s property to dry out and crumble through erosion and the plaintiff’s house to subside. The natural right to support does not extend to liability to support any building erected on the adjoining land.259 Such a right of support must be created by easement. This common law rule applies in all States except Queensland, where s 179 of the Property Law Act 1974 (Qld) imposes liability for withdrawal of support “from any building, structure or erection”. The only exception to the rule is that if the adjacent support is withdrawn, causing the land to subside, and the subsidence has not been the result of the additional weight of the buildings on the land. In this case the landowner may recover, in addition to damages for the land subsidence, damages for the injury to buildings, notwithstanding that he or she does not have an easement of support in respect of them.260 Both the common law rule and s 179 of the Queensland Act apply not only to the owner of the adjoining land, but also to all persons who by their activities on the adjoining land withdraw support from a neighbour.261 The support of buildings by buildings on adjoining land is also outside the scope of the natural right and must be acquired by easement. In the absence of an easement, one party may remove his or her portion of a party wall, even if the other party’s house might collapse. There is no obligation on either party to shore up or underpin, or to notify the other party of an intention to remove part of the wall.262 [17.365] In many instances, buildings are mutually supported by means of a party wall.

Unlike the other States, New South Wales, Tasmania and the Australian Capital Territory possess legislation which defines “party wall” when this expression is contained in documents,

258 259

260 261 262

Popplewell v Hodkinson (1869) LR 4 Ex 248; Metropolitan Water Supply & Sewerage Board v R Jackson Ltd [1924] St R Qd 82. Gordon v Body Corporate Strata Plan 3023 [2004] VSC 359; Dalton v Angus & Co (1881) LR 6 App Cas 740 at 792 (HL); Stephens v Anglian Water Authority [1987] 3 All ER 379; [1987] 1 WLR 1381; Kebewar Pty Ltd v Harkin (1987) 9 NSWLR 738. Public Trustee v Hermann [1968] 3 NSWR 94 at 109. Dalton v Angus (1881) LR 6 App Cas 740 at 791; De Pasquale Bros Pty Ltd v Cavanagh Biggs & Partners Pty Ltd [2000] 2 Qd R 461; (1999) Aust Tort Reports 81-​521 at 66,255. Walsh v Elson [1955] VLR 276 at 280; Jones v Pritchard [1908] 1 Ch 630 at 636; Peyton v Mayor etc of London (1829) 9 B & C 725; 109 ER 269 at 736ff (B & C), 273ff (ER) (KB).

882 [17.360]

Easements and Related Interests  Chapter  17

and expressly provides for mutual cross-​easements of support.263 Section  181B(1) of the Conveyancing Act 1919 (NSW) reads: Where in an assurance of land made by a person entitled to assure or create easements in respect of a wall built or to be built on the common boundary of that land and adjoining land so that the boundary passes longitudinally through the wall, the wall is described as a party wall, that expression means (unless a contrary intention appears) a wall severed vertically and longitudinally with separate ownership of the severed portions, and with cross-​easements entitling each of the persons entitled to a portion to have the whole wall continued in such manner that each building supported thereby shall have the support of the whole wall, and the assurance shall operate to create such easements accordingly.

This section applies to both Torrens and general law land: s 181B(3).264 In New South Wales cross-​easements of support of party walls also arise on the lodging of plans for registration or recording. Pursuant to s 88BB of the Conveyancing Act 1919 (NSW), in these circumstances cross-​easements are taken to be intended by the parties. Section 88BB was added in 1995 and was stated only to apply to plans lodged after the date of commencement of the provision: s 88BB(1). Plans lodged earlier may create cross-​easements for party walls on application by each person having a registered estate or interest in land that will be benefited or burdened by the cross-​easements: Real Property Act 1900 (NSW), s 48. In the other States the common law operates. In Walsh v Elson [1955] VLR 276265 O’Bryan J held that, in the case of party walls, the property in the wall follows the property in the land upon which it stands; on a sale of one of the blocks of land by a person owning both properties, there is an implied grant and reservation of such cross-​easements as may be necessary to carry out the common intention of the parties with regard to the user of the wall.

FINANCIAL OBLIGATIONS [17.370] Primary responsibility lies with a benefited owner to maintain an easement.

A benefited owner is entitled to enter the land and do all work necessary for the enjoyment of the easement.266 A party entitled to a right of way normally may construct a road267 and improvements for access can include cutting away undergrowth and building bridges.268 [17.375] An owner of burdened land is under no obligation to carry out any work on an

easement. A burdened owner’s sole obligation is not to harm or interfere with the easement. The burdened owner must not obstruct the use of the easement or do any work on the burdened land to impair enjoyment of the easement.269 [17.380] Even express obligations on burdened or benefited owners are personal only. In

many cases the easement imposes obligations to contribute to maintenance of the easement. In Rural View Developments Pty Ltd v Fastfort Pty Ltd [2009] QSC 244, half the cost of improvements was to be contributed by each of the benefited and burdened owners but this 63 2 264 265 266 267 268 269

See also the definition in s 4 of the Development Act 1993 (SA). See also Conveyancing and Law of Property Act 1884 (Tas), s 34B; Common Boundaries Act 1981 (ACT), s 27. See also Jones v Pritchard [1908] 1 Ch 630 at 635. Spear v Rowlett [1924] NZLR 801; Byrne v Steele [1932] VLR 143. Lawrence v Griffiths (1987) 47 SASR 455 (FC). Mantec Thoroughbreds Pty Ltd v Batur [2009] V ConvR 54-​767; [2009] VSC 351 at [122] per Habersberger J. Mantec Thoroughbreds Pty Ltd v Batur [2009] V ConvR 54-​767; [2009] VSC 351. [17.380]  883

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obligation was held to be personal only and not enforceable against successors in title. It has been argued that an obligation may be part of the interest270 or that an owner cannot accept a benefit without a burden,271 but these holdings have been doubted272 and at best an obligation may be enforced where there is a real opportunity to deny the benefit.273 In New South Wales positive obligations can now be enforced.274 [17.385]  In carrying out work, benefited and burdened owners have responsibilities to each

other. They must not unreasonably interfere with the other’s interest.275 A benefited owner may deviate around an obstruction on a right of way.276 It is normally permissible for a burdened owner to place a fence on the boundary of a road or footpath.277 A burdened owner may also normally place a gate at the point where the right of way (and therefore the burdened land) meets a public road, as long as the gate does not unduly impede access to the easement.278 [17.390]  Upon subdivision, the benefit is presumed to be for each and every part. Owners

of part of a benefited land are entitled to the use of the easement and costs of maintenance may then be spread proportionately. A burdened owner cannot complain of an increase in entitlement unless undue burden is imposed by the number of new owners.279

EXTINGUISHMENT OR MODIFICATION OF EASEMENTS By statute [17.395] In New South Wales, Victoria, Queensland, Western Australia, the Northern

Territory, and Tasmania, jurisdiction is conferred upon the Supreme Court or in Tasmania either the Supreme Court or the Recorder of Titles to modify or wholly or partially extinguish easements and restrictive covenants. The relevant statutory provisions are set out in s 89(1) of the Conveyancing Act 1919 (NSW), s 181 of the Property Law Act 1974 (Qld), s 129C of the Transfer of Land Act 1893 (WA), s 177 of the Law of Property Act 2000 (NT) and s 84C of the Conveyancing and Law of Property Act 1884 (Tas). In Western Australia the legislation only applies to Torrens land and in Tasmania it does not apply to easements which have effect by virtue of a plan of subdivision. In Victoria legislation for modification or extinguishment applies only to restrictive covenants: Property Law Act 1958 (Vic), s 84. [17.400]  Other limited powers allow for extinguishment or modification in New South Wales

and Victoria and South Australia. In New South Wales easements may be extinguished on the lodging of plans. Pursuant to s 88B(2)(c1) of the Conveyancing Act 1919, all plans lodged with the Registrar-​General for registration must indicate what easements (if any) appurtenant to or 270 271 272 273 274 275 276 277 278 279

Frater v Finlay (1968) 91 WN (NSW) 730; 2 DCR (NSW) 132 (DC). Rufa Pty Ltd v Cross [1981] Qd R 365; [1981] ANZ ConvR 33 (FC). Rhone v Stephens [1994] 2 AC 310; [1994] 2 WLR 429 (a case of a party wall). Rural View Developments Pty Ltd v Fastfort Pty Ltd [2009] QSC 244. Conveyancing Act 1919 (NSW), s 88BA(1). Lawrence v Griffiths (1987) 47 SASR 455 (FC) at 488 per von Doussa J. Hemmes Hermitage Pty Ltd v Abdurahman (1991) 22 NSWLR 343 (CA). Dunel v Phillips (1982) 2 BPR 9517 (NSWSC). Gohl v Hender [1930] SASR 158. Gallagher v Rainbow (1994) 179 CLR 624; 68 ALJR 512; 121 ALR 129; [1995] ANZ ConvR 408; [1994] Q ConvR 54-​456; [1994] V ConvR 54-​503.

884 [17.385]

Easements and Related Interests  Chapter  17

burdening land comprised in the plan are intended to be released. Section 88B(3AA) states that, on registration, any such easement indicated is released. In Victoria, s 36(1) of the Subdivision Act 1988 (Vic) states that if a municipal council decides that the economical and efficient subdivision, consolidation or servicing of any land requires that the owner of the land acquire or remove an easement over any land in the subdivision or consolidation of any land in the vicinity, the owner may apply to the Victorian Civil and Administrative Tribunal for leave to acquire or remove the easement compulsorily. In South Australia s 90B of the Real Property Act 1886 (SA), confers limited powers on the Registrar-​General to modify or extinguish an easement where the owners of the dominant and servient owners agree, subject to some exceptions. The Registrar-​general may also act where a right of way is no longer accessible by the owner of the dominant land. [17.405]  In New South Wales, Victoria, Queensland, Western Australia and Tasmania the powers

to modify or extinguish easements are based generally on change of circumstances, obsolescence or abandonment. In these jurisdictions the grounds for action by the courts overlap and in some instances extend beyond grounds at common law. The scope of the statutory powers was thoroughly reviewed by Slattery  J in the New South Wales Supreme Court in Campbell v Baigent [2010] NSWSC 1348. In that case the servient owner applied to modify an easement to lessen the width of a right of way then in use for access to the dominant tenements. The lots were on the seafront and the plaintiff owner of the dominant tenement held higher ground and the defendant owners of the servient tenements held lower ground sloping down to the sea. The application sought to restrict the right of way to the width then used for access; the boundary land required significant work if it was to be available for use. Slattery J outlined the scope of each of the statutory grounds for action. The first ground of obsolescence applied where the original purpose could no longer be served or was incapable of fulfilment. The second ground of abandonment occurred where the dominant owners have made it clear that neither the current or any succeeding owner will make any use of the easement. The third ground of injury to the dominant owner required a real and present but not necessarily large injury to the dominant owner or impediment to reasonable use by the dominant owner without any practical benefit to the servient owners. Finally, the court had a discretion whether to make an order, and the established approach was that the court should be slow to take away any property rights. The case turned on traffic engineering considerations as the defendants argued that they sought to retain the ability to widen the access route to allow more convenient access particularly for larger vehicles which had difficulty manoeuvring into garages on the servient lots. The traffic and geotechnical evidence showed a need for an extended turning area and earth works to achieve that end were possible. In view of the defendants’ ambitions the easements could not be regarded as obsolete or abandoned and potential benefit to the servient owners existed. Possible future developments whilst expensive should be taken into account. Although planning requirements posed difficulties and were thus relevant, they did not provide an impenetrable bar to future widening works. The application was denied.280

By agreement [17.410] The dominant and servient owners, if they are both legally competent, may

extinguish or modify an easement by agreement. Although at common law an express release of an easement must be made by deed,281 an informal agreement to release an easement will be 280 281

See also Dowd v Various Proprietors [2016] NTSC 24; Laris v Lin [No 2] [2016] NSWSC 560. Poulton v Moore [1915] 1 KB 400. [17.410]  885

PART 5 Relations between Neighbouring Landholders

enforceable in equity, provided that it is in writing or supported by acts of part performance. The Torrens legislation relating to the cancellation or alteration of a notification of an easement if the easement is extinguished, varied or modified by agreement of the parties differs from jurisdiction to jurisdiction. Unlike in other jurisdictions, s 110 of the Land Titles Act 1980 (Tas) empowers the Recorder of Titles, with the consent of all persons having registered interests in the land shown in a plan of subdivision of Torrens land, to cancel or alter easements by making an order setting forth, in respect of each lot shown in the plan, the easements to be appurtenant to the lot. Notice of intention must be given to every person appearing in the Register to have an interest in that land and, during a period of 30 days from the making of an order by the Recorder, a person affected by such order may appeal to the Supreme Court. The Supreme Court may stay proceedings wholly or in part, quash or vary the order, or make any order that the Recorder might have made. It appears that, in the majority of jurisdictions, the Registrar (or other equivalent official) is empowered to cancel any such notification if the easement is released, varied or modified by agreement of the parties. This power is expressly provided for in s 47(6) of the Real Property Act 1900 (NSW), s 108(1) of the Land Titles Act 1980 (Tas), s 90(1) of the Land Title Act 1994 (Qld) and s 90B of the Real Property Act 1886 (SA). As for Victoria and the Australian Capital Territory, s 73(2) of the Transfer of Land Act 1958 (Vic) and the s 103E(3) of the Land Titles Act 1925 (ACT) state that if the Registrar is of the opinion that an easement has been extinguished in whole or in part, he or she shall make appropriate entries and amendments in the Register book.282 This section appears to encompass the extinguishment of easements by express agreement of the parties. In Western Australia and the Northern Territory, it would seem that the respective parties must obtain a court order before any notification of an easement will be removed from the Register, even though the parties may have reached an agreement that the easement be extinguished.283

By abandonment [17.415]  Abandonment is a question of intention by the owner of the dominant tenement,

to be decided on the facts of each case.284 An abandonment occurs when the dominant owner makes it clear that neither the owner nor the owner’s successors in title will make any use of the easement, though it is not lightly to be inferred.285 Mere non-​user of an easement is not in itself sufficient to constitute abandonment, nor is it conclusive evidence of intention to abandon. For example, in Re Marriott [1968] VR 260286 Gillard J held that, even though a

282 Compare s 229A(2) of the Transfer of Land Act 1893 (WA), which appears not to cover the extinguishment of easements by agreement. 283 Transfer of Land Act 1893 (WA), s 129C(1)(b); Law of Property Act 2000 (NT), s 177. 284 Bookville Pty Ltd v O’Loghlen [2007] VSC 67; Pekel v Humich (1999) 21 WAR 24; Pearce v City of Hobart [1981] Tas R 334; McIntyre v Porter [1983] 2 VR 439; James v Stevenson [1893] AC 162 (PC); Scott v Pape (1886) 31 Ch D 554 (CA); Wolfe v Freijahs’ Holdings Pty Ltd [1988] VR 1017; Benn v Hardinge (1992) 66 P&CR 246 (CA); Couche v Adams [2002] NSWSC 27. 285 Grill v Hockey (1991) 5 BPR 11,421; Castagna v Great Wall Resources Pty Ltd [2005] NSWSC 942; Long v Michie [2003] NSWSC 233 at [11]; Chiu v Healey [2003] NSWSC 857 at [36]. 286 See also Bookville Pty Ltd v O’Loghlen [2007] VSC 67; Ashoil Holdings Pty Ltd v Fassoulas [2005] NSWCA 80; Couche v Adams [2002] NSWSC 27; Benn v Hardinge (1992) 66 P&CR 246 (CA); Castagna v Great Wall Resources Pty Ltd [2005] NSWSC 942. 886 [17.415]

Easements and Related Interests  Chapter  17

right of way had not been used for over 20 years, in the absence of proof of intention this did not mean that the way had been abandoned. The only exception to this rule is where other persons acquire rights by acquiescence. For example, Shand  J held in Boulter v Jochheim [1921] St R Qd 105 that a right of way was abandoned where the dominant owners allowed the servient owners to erect fences and buildings across the way without protest. The use by the dominant owner of an alternative means of access may be relevant evidence as to whether a prescriptive right of way has been abandoned, but will be more strongly suggestive of abandonment when it is used voluntarily than when it is forced on the dominant owner by closure of the prescriptive way.287 It is possible for part abandonment to occur. Thus, for example, in the case of a right of way for vehicles, if there is an abandonment of the right to drive vehicles along the way, the court may hold that the easement has been converted into a footpath only.288 [17.420] No minimum period stipulated either by statute or common law for the

extinguishment by abandonment of an easement. Exceptions apply to Torrens land in New South Wales, Victoria, Western Australia and Tasmania. Section  73(3) of the Transfer of Land Act 1958 (Vic) states that where it is proved to the satisfaction of the Registrar that any such easement has not been used or enjoyed for a period of not less than 30  years, such proof shall constitute sufficient evidence that such easement has been abandoned. The Supreme Court of Victoria, Appeal Division, held in Shelmerdine v Ringen Pty Ltd [1993] 1 VR 315 at 339289 that s  73(3) does not require the Registrar of Titles, once the proof mentioned in it is made, to determine that the easement has been abandoned if there is other evidence which, having regard to common law principles, places him or her in the position where, on the whole of the evidence, he or she is not satisfied that the easement has been abandoned. Section 49(2) of the Real Property Act 1900 (NSW), s 229A of the Transfer of Land Act 1893 (WA) and s 108(3) of the Land Titles Act 1980 (Tas), specify a period of 20 years’ non-​ user.290 The New South Wales, Tasmanian and Western Australian legislation does not require the Registrar to treat an easement as abandoned after the 20-​year period in all cases, but rather gives her or him a discretion in this matter. Section 49(3) of the Real Property Act 1900 (NSW) states that an easement is not capable of being abandoned, inter alia, to the extent that the easement benefits land owned by the Crown, or a public or local authority, and if the easement is of a class of easements prescribed by the regulations as being incapable of being abandoned. Despite the lack of a minimum period, the length of time of non-​user is significant. The longer the non-​ user continues, the more readily will the courts infer that the dominant owner should be deemed to have abandoned the easement, unless there is proof of facts or

287

Pekel v Humich (1999) 21 WAR 24; cf Long v Michie [2003] NSWSC 233 at [21]; McIntyre v Porter [1983] 2 VR 439. 288 Proprietors of Strata Plan No 9968 v Proprietors of Strata Plan No 11173 [1979] 2 NSWLR 605; Webster v Strong [1926] VLR 509. 289 See also Wolfe v Freijah’s Holdings Pty Ltd [1988] VR 1017 at 1024 and 1026 per Tadgell J. 290 The relevant legislation concerning abandonment of rights of way is s 73A of the Transfer of Land Act 1958 (Vic)and the s 230 of the Transfer of Land Act 1893 (WA). [17.420]  887

PART 5 Relations between Neighbouring Landholders

circumstances which provide a satisfactory explanation for the non-​user and which negate any intention of abandonment.291 [17.425]  In the case of rights of way, the mere non-​removal of obstructions to the use of the

easement is insufficient to show an intention to abandon. Thus, for example, the High Court held in Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274292 that there had been no abandonment of a right of way even though the way was impassable because of sheer rock faces, an impenetrable bamboo clump and the construction of a swimming pool across the way. [17.430]  In respect of Torrens land, Riley v Penttila [1974] VR 547293 has held that in Victoria

an easement noted on a certificate of title remains enforceable by the dominant owner, even though at common law it would be held to have been abandoned. The easement will remain effective until it is removed from the register as a result of a successful application under s 73 of the Transfer of Land Act 1958 (Vic). In New South Wales has been held that easements over Torrens land may be abandoned even though they remain recorded in the Register. In this respect the conclusiveness of the Register is undermined.294 As Western Australia, Queensland, Tasmania and the Northern Territory all possess legislation equivalent to the s 89(1) of the Conveyancing Act 1919 (NSW),295 it is submitted that the New South Wales authorities would be followed in those jurisdictions. South Australia, which has no such equivalent legislation, will probably adopt the Victorian position. In respect of the abandonment of unregistered easements over Torrens land, although the matter is still undecided, it is submitted that the common law principles on abandonment will apply.

By alterations to the dominant tenement [17.435] Where alterations to the dominant tenement are argued to increase the burden

on the servient tenement, the normal remedy would be to seek an injunction based on the argument that the alterations amount to a nuisance, entitling the owners of the servient tenement to restrain the owners of the dominant tenement from using the easement in an excessive manner: see, for example, The Owners of Corinne Court 290 Stirling Street Perth Strata Plan 12821 v Shean Pty Ltd [2000] WASC 181. However, in certain circumstances, alterations made to the dominant tenement which significantly increase the burden imposed on the servient tenement and restrict the use to which it can be put may be treated by the courts as an extinguishment of the rights to which the dominant owner was formerly entitled.

291

292 293 294 295

McIntyre v Porter [1983] 2 VR 439 at 444; Crossley & Sons v Lightowler (1867) LR 2 Ch App 478 at 482; Swan v Sinclair [1925] AC 227 (HL); Long v Michie [2003] NSWSC 233 at [17]; Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274 at 284. See also Proprietors Strata Plan No 9968 v Proprietors Strata Plan No 11173 [1979] 2 NSWLR 605. See also Webster v Strong [1926] VLR 509. Treweeke v 36 Wolseley Road Pty Ltd (1973) 128 CLR 274; Proprietors Strata Plan No 9968 v Proprietors Strata Plan No 11173 [1979] 2 NSWLR 605. Transfer of Land Act 1893 (WA), s 129C; Property Law Act 1974 (Qld), s 181; Conveyancing and Law of Property Act 1884 (Tas), s 84C; Law of Property Act 2000 (NT), s 177.

888 [17.425]

Easements and Related Interests  Chapter  17

In Ray v Fairway Motors (Barnstaple) Ltd (1968) 20 P & CR 261 (CA)296 the parties owned adjoining yards separated by a wall. The plaintiff erected a shed at the rear of his yard, using the dividing wall as one of the walls of the shed. The defendant later excavated his property adjacent to the separating wall, causing the wall of the shed to crack and bulge. The defendant admitted the existence of an easement of support for the wall, but argued that by attaching the shed to it the plaintiff had so increased the burden on the servient tenement as to cause the easement to be extinguished. The Court of Appeal held that an easement is extinguished when the owner of the servient tenement proves that its mode of use is altered in such a way as to prejudice the enjoyment of the servient tenement and to restrict the use to which it can be put. This case was followed in Attwood v Bovis Homes Ltd [2001] Ch 371, The Times, 18 April 2000, where Neuberger J held that a radical change of use of the dominant tenement would not by itself cause extinguishment of an easement unless the change of use imposed a substantially increased burden on the servient tenement. [17.440] In Graham v Philcox [1984] QB 747 (CA), however, the Court of Appeal (at 756

per May  LJ) indicated that an easement will only be extinguished in these circumstances in two situations:  first, where the excessive burden cannot be separated from the original, permissible burden due to the nature of the dominant tenement297; and, secondly, where the dominant owner disposes of part of his or her property and retains none of the dominant tenement for which the original easement was granted.298 This issue was adverted to by the majority decision of the High Court in Gallagher v Rainbow (1994) 179 CLR 624; 68 ALJR 512; 121 ALR 129 at 136 (ALR). The majority found it unnecessary on the facts to rule on the question of increased use of the easement, but indicated that in appropriate circumstances the owners of the component parts of a dominant tenement which is subdivided may be restricted in their use of the easement if this results in an additional burden on the servient tenement. There was no suggestion that the increased use might extinguish the easement. Hasluck  J stated in The Owners of Corinne Court 290 Stirling Street Perth Strata Plan 12821 v Shean Pty Ltd (2000) 23 WAR 1; [2000] WASC 181 that a review of the cases suggests that, although some change in the degree of user is permissible, provided that it does not go beyond anything contemplated by the parties at the time the easement was created, it will not be permissible if the result is to increase substantially the burden upon the servient tenement. The same approach was adopted in Owners Corporation –​Strata Plan No 8450 v Owners –​Strata Plan No 54547 [2002] NSWSC 780. The importance of the degree of use originally contemplated by the parties was also emphasised in Westfield Management Ltd v Perpetual Trustee Co Ltd [2006] NSWSC 716.299

296

See also Luttrell’s Case (1601) 4 Co Rep 86a; 76 ER 1063 (KB); Colls v Home & Colonial Stores Ltd [1904] AC 179 at 202 (HL). 297 Ankerson v Connelly [1906] 2 Ch 544 held that an easement will not be extinguished where the excessive burden can be separated from the original, permissible burden. 298 See [1985] Conv 60 at 65. 99 Upheld on appeal to the High Court: Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 2 528; [2007] HCA 45.

[17.440]  889

PART 5 Relations between Neighbouring Landholders

By unity of seisin [17.445]  If the same person acquires a fee simple estate in possession in both the dominant

and servient tenements, the easement is extinguished. If the servient tenement is later resold, the easement will not revive and the purchaser will not be bound unless a fresh easement is taken.300 This rule has been reversed by legislation in respect of Torrens land in New South Wales and Tasmania.301 Occasionally, unity of title without unity of possession will occur, as when one person acquires the title of both the dominant and servient tenements, but the right of possession of only one. This situation occurred in Richardson v Graham [1908] 1 KB 39 (CA), where the dominant tenement was leased to the plaintiffs. Later during the lease, the owner of the dominant tenement sold the reversion to the owner of the servient tenement. It was held that this conveyance did not extinguish the easement. However, after the determination of the lease, the easement would be extinguished as there would then be unity of possession and title vested in the same person. Unity of possession without unity of title occurs more commonly, usually in the case where the owner of the servient tenement is granted a leasehold estate in the dominant tenement. In these circumstances the easement will not be extinguished, but will merely be suspended during the term of the lease.302

PROFITS AND RENTCHARGES Nature of profits [17.450]  A profit à prendre has been defined as “a right to take from the servient tenement

of another some part of the soil of that tenement or minerals under it or some of its natural produce, or the animals ferae naturae existing upon it”.303 A profit is not valid if it purports to allow the user to take all of the property. Thus in Clayton v Corby (1843) 5 QB 415 a right to enter a property, dig up clay, sand, gravel, earth, soil and turf and take it away was not valid.304 Common law recognises both sole or several profits and profits in common.305 A  profit exists in severalty if the owner of the profit enjoys his or her right to the exclusion of the owner of the servient tenement. In contrast, a profit exists in common where the servient owner is entitled to share the enjoyment of the right with the owner of the profit. Profits in common are frequently encountered in the United Kingdom, where they are now subject to the control contained in the Commons Registration Act 1965 (UK). However, profits in common are non-​ existent in Australia and for this reason no further mention will be made of them.

300 301

Roe v Siddons (1888) 22 QBD 224; Ivimey v Stocker (1866) LR 1 Ch App 396. Real Property Act 1900 (NSW), s 47(7); Land Titles Act 1980 (Tas), s 109. See Margil Pty Ltd v Stegul Pastoral Pty Ltd [1984] ACLD 554 (NSW Sup Ct). 302 Aynsley v Glover (1875) LR 10 Ch App 283; Cuvet v Davis (1883) 9 VLR (L) 390 at 395 (FC); McCarthy v Cunningham (1877) 3 VLR (L) 59 at 63–​64. 303 Alfred F Beckett Ltd v Lyons [1967] Ch 449 at 482 (CA) per Winn LJ. See also Clos Farming Estates v Easton [2002] NSWCA 389 at [51]; National Executors & Trustee Co (Tas) v Edwards [1957] Tas SR 182 at 187; Manning v Wasdale (1836) 5 Ad & E 758; 111 ER 1353 at 764 (Ad & E), 1355 (ER) (KB). 304 Lord Chesterfield v Harris [1908] 2 Ch 397; Clos Farming Estates v Easton [2002] NSWCA 389. 305 See the discussion in Bettison v Langton [2000] Ch 54 (CA). 890 [17.445]

Easements and Related Interests  Chapter  17

[17.455]  At common law, both appurtenant profits and profits in gross are recognised. An

appurtenant profit is one which, like an easement, benefits or accommodates the dominant tenement. A profit in gross is one where the use of the profit need have no connection with the ownership of other land.306 In this regard, the law of profits differs markedly from the law of easements, which does not recognise rights in gross: see [17.10]. Even if the profit is in gross, it is a proprietary interest which can be disposed of by the owner by sale or gift and can pass under a will or by the laws of intestacy.307 It is essential that appurtenant profits relate to the needs and use of the dominant tenement. For example, in Anderson v Bostock [1976] Ch 312308 the plaintiff’s claim to an exclusive right to grazing without limit was rejected as an appurtenant right, although there would appear to be no reason why such a right could not exist as a profit in gross. Apart from cases involving wild animals,309 the right claimed must be part of the land itself. Thus, while the right to remove sand has been held to be a profit,310 the right to collect objects blown onto the land is probably not a profit because of the lack of affinity with the land.311 A borderline case would be a right to collect coal washed up by the sea from the shore. There are dicta in Alfred F Beckett Ltd v Lyons [1967] Ch 449 at 476 (CA) to the effect that this would be a valid profit. [17.460]  The following rights have been recognised as valid profits by Australian courts:

1.

A licence to operate a mine or quarry for the extraction of coal or other minerals.312

2.

A right to harvest timber313 or to take sand314 or salt315 from land.

3.

A right to gather and burn mallee roots.316

4.

The sale of slate and authority to the purchaser to enter land for the purpose of removing the slate.317

5.

An agreement for participation in the commercial enterprise of planting and harvesting pine trees on the land of another.318

306 See, for example, Bettison v Langton [2000] Ch 54; Staffordshire & Worcestershire Canal Navigation v Bradley [1912] 1 Ch 91. 307 See, for example, Webber v Lee (1882) 9 QBD 315 (CA). 308 See also Lord Chesterfield v Harris [1911] AC 623 (HL). 309 See, for example, Mason v Clarke [1955] AC 778 (HL); Webber v Lee (1882) 9 QBD 315 (CA). 310 Blewitt v Tregonning (1835) 3 Ad & El 554; 111 ER 524 (KB); Unimin Pty Ltd v Commonwealth (1974) 2 ACTR 71. 311 Jackson, “Estoppel as a Sword (Part II)” (1965) 81 LQR 223 at 229. 312 Ex parte Henry; Re Commissioner of Stamp Duties (1963) 63 SR (NSW) 298 (SC in banco); Mittagong SC v Mittagong Anthracite Coal Co (1957) 3 LGRA 290 (ACT Sup Ct); Emerald Quarry Industry Pty Ltd v Commissioner of Highways (1976) 14 SASR 486 (SC in banco). 313 Duff v Blinco [2006] QCA 497; Connolly v Noone and Cairns Timber Ltd [1912] St R Qd 70; Ellison v Vukicevic (1986) 7 NSWLR 104. 314 Unimin Pty Ltd v Commonwealth (1974) 2 ACTR 71; Australian Aggregates (NSW) Pty Ltd v Maxmin Pty Ltd [1988] ACLD 576; cf Maddalozzo v Commonwealth (1979) 22 ALR 561 (NT Sup Ct). 315 Nicholls v Lovell [1923] SASR 542. 316 Vanstone v Malura Pty Ltd (1988) 50 SASR 110. 317 Mills v Stockman (1967) 116 CLR 61. 318 Australian Softwood Forests Pty Ltd v Attorney-​General (NSW) (1981) 36 ALR 257 (HC). [17.460]  891

PART 5 Relations between Neighbouring Landholders

6.

An agreement for the supply of nut trees growing or to be grown on the land belonging to a proprietary company, the trees to be cared for by the company for a maximum period of 25 years. The owners of the trees were given the right to have the company harvest the crop or to harvest the crop themselves.319

7.

Pursuant to s 88AB(a) of the Conveyancing Act 1919 (NSW), a forestry right is a profit à prendre.

In Permanent Trustee Australia Ltd v Shand (1992) 27 NSWLR 426 the issue whether investors in a macadamia nut enterprise had a caveatable interest in the plantation on which the macadamia trees stood. The agreement between the parties gave the investors “a licence to plant, grow, tend, harvest and prepare for sale macadamia nut trees”. The investors claimed unsuccessfully that this licence amounted to a profit à prendre. Young  J held that a profit essentially involves the right to take the produce of the land, not the right to go onto the land to tend and maintain that produce. His Honour added (at 432) that a profit is limited to the right to remove a crop which does not require attention after initial planting.320 In recognition of the need for proprietary interests to cope with climate change, statutory provisions have been made to recognise forestry carbon rights.321 Such rights confer upon the holder a right to the benefit of carbon sequestration on a piece of forested land. Reference has already been made to the Queensland legislation322 allowing for the registration of such an interest (see [17.25]). In New South Wales and Tasmania such rights are deemed to be profit a prendre interests.323 In South Australia and Western Australia the rights are new property interests.324 In Victoria carbon rights exist as part of a forest property agreement.325

Creation of profits [17.465]  With certain exceptions, profits may be created in the same manner as easements.

Thus, profits may be created by express or implied grant or reservation or by prescription. In relation to implied rights, the doctrine of “general words” has been held to apply to profits. Although there is no authority on the point, profits may be created by mutual intention or under the doctrine in Wheeldon v Burrows (1879) 12 Ch D 31. In this latter regard, it might be difficult on the facts to satisfy the “continuous and apparent” requirement. By the very nature of a profit, however, it is submitted that profits cannot be created as of necessity or by implication from the description of land. In relation to prescription, profits may be claimed after 20 years’ enjoyment by lost modern grant, although this occurs very rarely in practice.326 In South Australia and Western Australia, where the Prescription Act 1832 (UK) is in effect profits may also be claimed under s 1 of that Act, although the two periods of necessary enjoyment are 30 and 60 years, rather than the

319

Warren v Nut Farms of Australia Pty Ltd [1981] WAR 134; cf Corporate Affairs Commission v Australian Softwood Forest Pty Ltd [1978] 1 NSWLR 150. 320 Followed in Clos Farming Estates v Easton [2002] NSWCA 389. 321 Hepburn, “Carbon Rights as New Property: The Benefits of Statutory Verification” (2009) 31 SLR 239. 22 Land Titles Act 1994 (Qld), s 97E. 3 23 Conveyancing Act 1919 (NSW), ss 87A, 88AB(1), 88EA; Forestry Rights Registration Act 1990 (Tas), s 5. 3 24 Forest Property Act 2000 (SA), s 7; Carbon Rights Act 2003 (WA), s 6. 3 25 Climate Change Act 2017 (Vic). 3 26 Bettison v Langton [2000] Ch 54. 3 892 [17.465]

Easements and Related Interests  Chapter  17

20-​and 40-​year periods applicable to easements by virtue of s 2. Like easements, profits may be created at equity under the rule in Walsh v Lonsdale (1882) 21 Ch D 9 (CA). Australian courts have recognised equitable profits in the case of an informal written agreement327 and, in the case of part performance, by entry onto the servient land pursuant to a profit granted orally.328

Profits and the Torrens system [17.470]  The basic issue is whether profits can be created in respect of Torrens land. In the

case of profits only five Australian jurisdictions (New South Wales, Queensland, Tasmania and the two Territories) make such a provision.329 For example, s 103G of the Land Titles Act 1925 (ACT) states that the Registrar-​General may register a memorandum of “incorporeal right that creates an incorporeal right other than an annuity or rent charge”. This clearly includes a profit. Section 107 of the Land Titles Act 1980 (Tas) states: (1) A profit à prendre may be granted by an instrument in an approved form, which shall indicate clearly the nature of the profit à prendre, the period for which it is to be enjoyed, and whether it is to be enjoyed –​

(a) in gross or as appurtenant to other land; and



(b) by the grantee exclusively or by him in common with the grantor.



(2) The Recorder shall register the instrument referred to in subsection (1) –​



(a) by recording it on the folio of the Register or the registered lease which it burdens;  and



(b) where it is appurtenant to registered land, by recording it on the folio of the Register or registered lease evidencing title to that land.

In the jurisdictions where there is no express statutory mention of profits, there is genuine doubt as to the creation of profits in respect of Torrens land.330 Both Barwick CJ and Menzies J considered in Mills v Stockman (1967) 116 CLR 61 at 73 and 79331 that profits can exist in respect of Torrens land, although neither judge analysed the issue in terms of the legislation. Professor Whalan states that the correct analysis is that the definition of “land” in the Torrens statutes is wide enough to include profits and, as all jurisdictions permit “land” to be transferred, this should permit the use of a transfer to create a profit by grant or reservation.332 This conclusion was supported by the decision of the New South Wales Supreme Court (Young J) in Ellison v Vukicevic (1986) 7 NSWLR 104. Based on this analysis, it is submitted that profits can be created in respect of Torrens land throughout Australia. [17.475]  Except in New South Wales, there is no statutory exception to indefeasibility in favour

of profits. Thus, all profits created by express grant or reservation will not receive protection until registration, while profits arising by implied grant or reservation or by prescription must be recognised by court declaration and the court declaration must be registered. Until a court 327 328

Mills v Stockman (1967) 116 CLR 61; Ellison v Vukicevic (1986) 7 NSWLR 104; Duff v Blinco [2006] QCA 497. Unimin Pty Ltd v Commonwealth (1974) 2 ACTR 71; Mason v Clarke [1955] AC 778; Vanstone v Malura Pty Ltd (1988) 50 SASR 110. 329 Conveyancing Act 1919 (NSW), ss 46, 47; Land Title Act 1994 (Qld), ss 97E–​97M; Land Titles Act 1980 (Tas), s 107; Land Titles Act 1925 (ACT), s 103G; Land Title Act (NT), ss 118–​124. 330 See (1982) 56 ALJ 426. 31 See also Moreland Timber Co v Reid [1946] VLR 237 at 247. 3 32 Whalan, The Torrens System in Australia (Law Book Co, Sydney, 1982), p 107. 3 [17.475]  893

PART 5 Relations between Neighbouring Landholders

order is obtained, profits may be protected by the lodging of a caveat. In New South Wales s 42(1)(b) of the Real Property Act 1900 (NSW), which still applies to profits even though it has been repealed in respect of easements, provides a statutory exception to indefeasibility “in the case of the omission or misdescription of any profit à prendre created in or existing upon any land”.

Nature and creation of rentcharges [17.480]  Rent payable by a tenant to a landlord is classified at law as a “rent service”. Rent

services arise whenever privity of estate exists between the parties. Rent services must be distinguished from rentcharges, which may be defined as any annual or other periodic sum of money charged on or issuing out of land, except for rent reserved in a lease or any money by way of interest.333 Rentcharges are encountered frequently in the United Kingdom, but only rarely in Australia. Following the recommendation of the Queensland Law Reform Commission,334 the Queensland legislature enacted in s  176 of the Property Law Act 1974 (Qld) that no rentcharges shall be created after the commencement of this Act. Thus, any rentcharges created after 1 December 1975 are void and of no effect. Rentcharges have also been abolished in the Australian Capital Territory. Section  103G of the Land Titles Act 1925 (ACT) permits the Registrar-​General to register “a memorandum of incorporeal right other than an annuity or rentcharge”. [17.485]  Apart from this Queensland and Australian Capital Territory provision, rentcharges

still appear to be recognised throughout Australia in respect of both general law and Torrens land. By way of example, some jurisdictions make specific reference to the registration of rentcharges.335 As this term is not defined in the statutes, it presumably has the same meaning as at common law. In those jurisdictions, where the Torrens legislation makes no mention of rentcharges, the issue rises whether such interests are recognised over Torrens land. In Victoria and Western Australia, the Transfer of Land Act defines “annuity” as “a sum of money payable periodically and charged on land under the operation of this Act by an instrument of charge”.336 This definition coincides with the common law meaning of a rentcharge. Thus, curiously, in Victoria and Western Australia rentcharges are defined as annuities and a person who would class as a rentchargee at common law is protected as an annuitant under the Torrens legislation. The legislation in the Northern Territory is different in form, relying on the definition of “mortgage”, but it is possible that it reaches the same result.337 A rentcharge is an incorporeal hereditament as no possessory right is given to the rentchargee. Like profits à prendre, rentcharges may exist in gross, and no necessary connection with any land owned by the beneficiary need be proved.

333

This is the definition in s 1(1) of the Rentcharges Act 1977 (UK). See also National Executors & Trustee Co (Tas) v Edwards [1957] Tas SR 182 for a discussion of the nature and meaning of rentcharges. 334 QLRC, Report No 10 (1972), p 100. 35 See Real Property Act 1900 (NSW), s 56(2); Real Property Act 1886 (SA), s 128B; Land Titles Act 1980 (Tas), 3 s 72(b); Land Titles Act 1925 (ACT), s 92(2). 36 Transfer of Land Act 1958 (Vic), s 4(1); Transfer of Land Act 1893 (WA), s 4(1). 3 37 Land Title Act 2000 (NT), s 4 (definition of mortgage). 3 894 [17.480]

Easements and Related Interests  Chapter  17

[17.490] The most common illustration of a rentcharge arises upon a sale of land, where the

vendor reserves to himself or herself and his or her heirs the payment of an annual sum of money in perpetuity. This annual sum may be in lieu of or in addition to a lump sum payment. In Australia rentcharges have been held to exist in Re Trusts of the Will of Foss (1868) 7 SCR (NSW) Eq 68, where the testator bequeathed an annuity of 400 pounds to his wife charged upon certain specified lands and premises with power of entry and distress in case of non-​payment of the annuity within 30 days after the due date. In In the Will of Walmsley (1922) 18 Tas LR 32 the testator devised land to his son on the condition that he pay 25 pounds per annum rent for the benefit of two children named in the will of his son. In the latter case, the court held that the effect of the disposition was to create a charge in favour of the two children and the survivor of them for life.338 [17.495]  Except in Queensland and the Australian Capital Territory, rentcharges may be created

by instrument inter vivos or by will, and may be held in fee simple, for life or for a term of years. The normal rules concerning words of limitation apply in this context.339 In respect of Torrens land, rentcharges may be created by the execution of an instrument in the form specified in the legislation.340 An equitable rentcharge may be created under the rule in Walsh v Lonsdale (1882) 21 Ch D 9341 in the case where an informal agreement to grant a rentcharge has been signed or where there has been part performance. The rule at common law is that a rentcharge can only be charged upon a corporeal hereditament.342 A partial exception to this rule exists in Victoria, where s 127(1) of the Property Law Act 1958 (Vic) states that a rentcharge may be granted, reserved, charged or created out of or on another rentcharge in like manner as it could have been made to issue out of land.

Remedies and extinguishment with respect to profits and rentcharges [17.500]  The owner of a profit may protect the owner’s interest by abatement or by court action

based on nuisance. Profits may be extinguished by unity of seisin343 and by agreement between the parties. In respect of Torrens land, s 108(1) of the Land Titles Act 1980 (Tas) empowers the Recorder of Titles to cancel the registration of a profit à prendre if the profit is extinguished, varied or modified by agreement of the parties. In the other jurisdictions it would seem that the respective parties must obtain a court order before the profit will be removed from the register. [17.505]  Although at common law mere non-​user of a profit for a lengthy period is not in

itself sufficient to constitute abandonment, extinguishment will occur if non-​user is coupled with proof of evidence that the owner of the profit never intended to exercise her or his right again.344 This has been judicially described as a “heavy onus”.345 The only statutory 338 See also Thompson v Whittard (1925) 25 SR (NSW) 430. 339 See [2.175]ff for a discussion of the rules relating to words of limitation. 340 Real Property Act 1900 (NSW), s 56(2); Transfer of Land Act 1958 (Vic), s 74(1)(b); Real Property Act 1886 (SA), s 128B; Transfer of Land Act 1893 (WA), s 105; Land Titles Act 1980 (Tas), s 72(b); Land Titles Act 1925 (ACT), s 92(2); Land Title Act 2000 (NT), ss 4, 74 (if interpreted in this manner). 341 See, for example, Jackson v Lever (1792) 3 Bro CC 605; 29 ER 724 (Ch). 342 Re the Alms Corn Charity [1901] 2 Ch 750 at 759; Earl of Stafford v Buckley (1750) 2 Ves Sen 170; 28 ER 111 at 178 (Ves Sen) (Ch). 343 White v Taylor (No 2) [1969] 1 Ch 160; Re Yateley Common (Hampshire) [1977] 1 WLR 840. 344 Tehidy Minerals Ltd v Norman [1971] 2 QB 528 at 533 (CA); Re Yateley Common (Hampshire) [1977] 1 WLR 840. 345 Re Yateley Common (Hampshire) [1977] 1 WLR 840 at 846. [17.505]  895

PART 5 Relations between Neighbouring Landholders

modification to this is in respect of Torrens land in Tasmania, where s 108(3) of the Land Titles Act 1980 (Tas) states that the Recorder of Titles may treat evidence of 20 years’ non-​ user of a profit as evidence that the profit has been abandoned. Even if at common law a profit would be held to have been abandoned, it is submitted that a profit under Torrens land will be enforceable in Victoria and South Australia until it is removed from the register by court order. The rule in the remaining jurisdictions is the reverse. [17.510] Extinguishment of a profit may occur where the dominant tenement is altered to

such an extent as to make further use of the profit impossible. However, extinguishment will not occur where the dominant tenement is altered, but where it is still in such a state that it might be turned to the original purpose of the profit.346 Thus, for example, there would be no extinguishment where grazing land subject to a profit was turned into a crop-​growing area. [17.515] The final issue is whether profits may be extinguished pursuant to the legislation

in New South Wales, Queensland, Western Australia, and Tasmania permitting a court to modify or wholly or partially extinguish easements and restrictive covenants in certain specified circumstances.347 In New South Wales and Tasmania the answer is clearly in the affirmative, based on the express inclusion of profits in the legislation. In Queensland and Western Australia there is no such express inclusion and the issue has not yet been resolved by the courts. The identical wording of the relevant enactment in both States reads “where land is subject to an easement or to a restriction arising under covenant or otherwise as to the user thereof”. While the matter is not beyond dispute, it is submitted that profits are included within the scope of this legislation as a “restriction arising … otherwise”. [17.525] Legislation in each State now gives a rentchargee the right to take possession of the

land charged once the charge is at least 40 days in arrears.348 There is no need for a formal demand. Where this remedy is exercised, the rentchargee may hold the land charged and take the income thereof until the annual sum, all arrears due at the time of his or her entry or afterwards becoming due, and all costs and expenses are fully paid. The possession of the rentchargee is stated to be without impeachment of waste. [17.530] The court may order a sale or mortgage of the land charged, although this remedy

is discretionary and depends on the circumstances of the case.349 In addition to these non-​ statutory rights, the Torrens legislation gives a registered rentchargee similar powers of sale by public auction to those of a registered mortgagee, although there is no power of private sale by foreclosure proceedings.350

346 347

Carr v Lambert (1866) LR 1 Exch 168. Conveyancing Act 1919 (NSW), s 89(1); Property Law Act 1974 (Qld), s 181; Transfer of Land Act 1893 (WA), s 129C; Conveyancing and Law of Property Act 1884 (Tas), ss 84A, 84C. See also s 84(1) of the Property Law Act 1958 (Vic) where the legislation refers to a “restriction arising under covenant or otherwise…”. 348 Conveyancing Act 1919 (NSW), s 146; Property Law Act 1958 (Vic), ss 125, 127; Conveyancing and Law of Property Act 1884 (Tas), s 56. 349 See, for example, Blackburne v Hope-​Edwardes [1901] 1 Ch 419; Cupit v Jackson (1824) McCle 495; 148 ER 207 (Exch). 50 Real Property Act 1900 (NSW), s 58; Real Property Act 1886 (SA), s 133; Transfer of Land Act 1893 (WA), s 108; 3 Land Titles Act 1980 (Tas), s 78; Land Titles Act 1925 (ACT), s 94; Land Title Act 2000 (NT), s 80. 896 [17.510]

Easements and Related Interests  Chapter  17

[17.535] Rentcharges may be extinguished by natural determination; express release; and

merger. A rentcharge may be extinguished at any time by express release of part or all of the land charged. Legislation now dictates what occurs where there is extinguishment of part of the land, and the effect of this on the rentcharge.351 For example, s 70(1) of the Property Law Act 1958 (Vic) states that a release from a rentcharge of part of the land charged shall operate only to bar the right to recover any part of the rentcharge out of the land released, without prejudice to the rights of any persons interested in the land remaining unreleased, and not concurring in or confirming the release.

351

Property Law Act 1974 (Qld), s 177; Law of Property Act 1936 (SA), s 38; Conveyancing and Law of Property Act 1884 (Tas), s 57; Land Titles Act 1925 (ACT), s 101; Conveyancing Act 1919 (NSW) s 18; Property Law Act 1969 (WA) s 43; Land Title Act 2000 (NT) s 83; Property Law Act 1958 (Vic) s 70. [17.535]  897

CHAPTER 18

Land-​Use Agreements: Restrictive and Positive Covenants [18.05] [18.10]

[18.50]

[18.195]

[18.245] [18.260] [18.265]

URBAN DEVELOPMENT AND LEGAL CONTROLS......................................................... 899 CHARACTERISTICS OF RESTRICTIVE COVENANTS....................................................... 900 [18.10] Equitable requirements.................................................................................. 900 [18.25] Position under the Torrens system.................................................................. 902 [18.45] Covenants in favour of public authorities........................................................ 904 PASSING OF BENEFIT AND BURDEN OF RESTRICTIVE COVENANTS............................. 905 [18.50] General principles......................................................................................... 905 [18.65] Annexation.................................................................................................. 906 [18.85] Express assignment....................................................................................... 909 [18.125] Annexation and express assignment in the Torrens system.............................. 911 [18.130] Schemes of development............................................................................... 911 [18.190] General words legislation.............................................................................. 917 DISCHARGE AND MODIFICATION OF RESTRICTIVE COVENANTS............................... 917 [18.195] By agreement............................................................................................... 917 [18.200] By unity of ownership.................................................................................... 918 [18.230] Grounds for discharge or modification............................................................ 921 REMEDIES FOR BREACH OF RESTRICTIVE COVENANTS............................................... 923 [18.245] Damages..................................................................................................... 923 [18.250] Equitable remedies........................................................................................ 924 STATUTORY PLANNING IMPACTS............................................................................... 925 POSITIVE COVENANTS................................................................................................ 927 [18.265] Privity of contract......................................................................................... 927 [18.280] Passing of the benefit at common law............................................................ 928 [18.320] Mutual benefit and burden........................................................................... 930

URBAN DEVELOPMENT AND LEGAL CONTROLS [18.05]  Mining booms and busts have been a feature of Australian development since the

first European landings in the late 18th century. The middle of the 19th century saw massive wealth for some Australians through the gold rushes in particular. But the Australian colonies soon concentrated population in the capital cities. These cities were both the major ports and centres for radial railway networks. Alongside population growth came crowded and unsanitary housing conditions. The depression of the 1890s exacerbated the problems of the cities. Activists called for government action with a focus on the role of local government to impose building standards, zoning laws to separate conflicting land-​uses and controls of land subdivision to ensure that lot sizes allowed minimum standards for urban development.1 Alongside government intervention, developers sought to attach conditions to land-​use such as the form of use (commonly only residential), material for building, and limits on

1

A useful description of the development of government measures to enhance urban living conditions remains, Fogg, Australian Town Planning Law: Uniformity and Change (University of Queensland Press, 1974). [18.05]  899

PART 5 Relations between Neighbouring Landholders

future subdivision. The enforcement of these standards was limited because the contract rule of privity of contract prevented action against successors in title. Gradually through the second half of the 19th century the common law position was circumvented by equitable intervention. The starting point for this intervention came in 1848 in the landmark decision in Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143 (Ch). The facts of this case were that Tulk owned undeveloped land in the middle of Leicester Square in London and surrounding houses. He sold the undeveloped land to one Elms, who covenanted inter alia to retain the land in an open state. The land was later acquired by Moxhay, who, despite taking with notice of the covenant, argued that it was unenforceable against him. The Lord Chancellor defied earlier precedents and upheld the grant of an injunction restraining Moxhay from developing the land. The decision was based on the fact that Moxhay purchased the land with notice of the covenant and the price paid reflected the restrictions. This decision has since been affirmed and applied in numerous decisions in Australia2 and the bases for intervention clarified.

CHARACTERISTICS OF RESTRICTIVE COVENANTS Equitable requirements [18.10] Despite the emphasis in Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143 (Ch) on

the buyers’ notice of the restrictions on development, later decisions have established two essential prerequisites to the operation of the equitable doctrine. The prerequisites are that the covenant must be negative in nature and that it must relate to the land of the person taking the benefit of the covenant (“covenantee”). These requirements are somewhat paradoxically narrower than those applicable in the limited instances when exceptions to the rule of privity of contract are allowed (see [18.285]). [18.15]  In 1881 the English Court of Appeal held in Haywood v Brunswick Permanent

Benefit Building Society (1881) 8 QBD 403 (CA)3 that equity will only enforce covenants against successors-​in-​title of the covenantor where the covenants are negative in nature.4 The court thus refused on the facts to enforce a covenant to repair against the successor-​ in-​title of the covenantor. In determining whether a covenant is negative or positive in nature, the courts will examine the substance, rather than the form, of the agreement.5 If the expenditure of money is necessary in order to comply with the covenant, then it will usually be positive.6

2 3 4 5

6

See, for example, Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227; Forestview v Perpetual Trustees WA (1998) 193 CLR 154; Baramon Sales Pty Ltd v Goodman Fielder Mills Ltd [2001] FCA 1672. See also Rural View Developments Pty Ltd v Fastfort Pty Ltd [2009] QSC 244 at [16]; Marquess of Zetland v Driver [1939] 1 Ch 1 (CA). The requirement for negativity has been partially overcome in respect of strata title developments by legislation: see, for example, Strata Titles Act 1985 (WA), s 42. Shepherd Homes Ltd v Sandham (No 2) [1971] 2 All ER 1267; Westpoint Corporation Pty Ltd v Registrar of Titles [2004] WASC 189; Ceda Drycleaners Ltd v Doonan [1998] 1 NZLR 224 at 235; Fitt v Luxury Developments Pty Ltd [2000] VSC 258. Pirie v Registrar General (1962) 109 CLR 619; Westpoint Corporation Pty Ltd v Registrar of Titles [2004] WASC 189; Ceda Drycleaners Ltd v Doonan [1998] 1 NZLR 224 at 235; Haywood v Brunswick Permanent Benefit Building Society (1881) 8 QBD 403 at 409 (CA).

900 [18.10]

Land-Use Agreements: Restrictive and Positive Covenants  Chapter  18

A positive obligation may be binding if it is simply a condition of a negative one.7 A covenant to submit plans before building may thus be construed as a covenant not to build without first submitting plans;8 similarly in the case of a covenant not to let down the surface without paying compensation.9 Although both these covenants involve the expenditure of money by the covenantor, they are restrictive in substance because they prohibit a particular user of the land except upon a condition. The condition need not be negative as the covenant as a whole can be complied with by inaction. Many covenants that appear to be positive will be construed as negative (and vice versa). For example, a covenant to use a dwelling as a private residence only, although it appears positive, will be construed as negative as, in substance, it is a covenant not to use the premises for any purposes other than a dwelling.10 In this regard, the drafting used by the parties is not of vital significance. Where the covenant contains both positive and negative obligations, the courts will sever the obligations where possible and will enforce the negative obligations against the successor-​in-​title of the covenantor.11 [18.20]  The second equitable requirement is that there must be both burdened and benefited

land before equity will enforce a restrictive covenant. This principle was first authoritatively established in London CC v Allen [1914] 3 KB 642 (CA). Later in Australia in Kerridge v Foley (1964) 82 WN (Pt I) (NSW) 29312 it was further decided that a covenant declaring that a certain restriction is appurtenant to land described in a plan is not enforceable where part of the land included in the plan has already been sold before the covenant was entered into. Thus, a covenant cannot be annexed to land which the covenantee does not own except in the case of schemes of development.13 For this purpose, “land” may be regarded as benefited if the covenant benefits a business carried out on the land.14 The issue arose recently in Baramon Sales Pty Ltd v Goodman Fielder Mills Ltd [2001] FCA 1672 as to whether the benefited land must be adjacent to the burdened land for the covenant to be valid. Finkelstein J held (at [15]) that while the benefited land will usually be close to the burdened land, or else it would not be possible to conclude that any benefit can reasonably be regarded as attaching to the benefited land: [t]‌here is no hard and fast rule concerning the maximum distance between the benefited and burdened land. The only relevant rule is that the benefited land must be benefited by the covenant. In some cases it will be benefited only if it adjacent, or reasonably proximate, to the burdened land. In other cases there may be a good deal of traveling time between the two, and nevertheless the benefit can be found to exist.

There are certain statutory exceptions to the rule under discussion. For example, s  88E of the Conveyancing Act 1919 (NSW) states that specified statutory authorities may impose

7 8 9 0 1 11 12 13 14

Ceda Drycleaners Ltd v Doonan [1998] 1 NZLR 224 at 236. Powell v Hemsley [1909] 1 Ch 680; [1909] 2 Ch 252. Westhoughton Urban District Council v Wigan Coal and Iron Co Ltd [1919] 1 Ch 159 (CA). German v Chapman (1877) 7 Ch D 271 (CA). Shepherd Homes Ltd v Sandham (No 2) [1971] 2 All ER 1267 at 1272. See also Re Mack and the Conveyancing Act [1975] 2 NSWLR 623. Applied in Hosking v Haas [2009] NSWSC 624. Baramon Sales Pty Ltd v Goodman Fielder Mills Ltd [2001] FCA 1672; Newton Abbott Cooperative Society Ltd v Williamson & Treadgold Ltd [1952] Ch 286.

[18.20]  901

PART 5 Relations between Neighbouring Landholders

restrictive covenants as to the use of land not vested in the authority, and the restriction will be enforceable whether or not the benefit of the covenant is annexed to other land.15 Similar, although not identical, legislation exists in the Northern Territory: Law of Property Act 2000 (NT), s 168. Legislation in New South Wales and Western Australia also makes it possible for the benefit of a covenant to be annexed to an easement created in favour of the Crown or of any public or local authority.16

Position under the Torrens system [18.25]  The general law rules were adopted after the introduction of the Torrens and have

been applied uncertainly in the eight jurisdictions.17 The Torrens legislation in New South Wales, Victoria, Western Australia and Tasmania expressly authorises the Registrar of Titles to enter notification of restrictive covenants on the certificate of title of the burdened land.18 The effect of such notification is that a purchaser of the burdened land is prevented from relying on the indefeasibility provisions of the Torrens legislation to defeat a restrictive covenant notified on her or his certificate of title. Where notification takes place, the covenant is not converted from an equitable into a legal or indefeasible interest. This is made clear by the wording of the relevant legislation. For example, s 88(3) of the Transfer of Land Act 1958 (Vic) states in part that “a recording in the Register of any such restrictive covenant charge easement or right shall not give it any greater operation than it has under the instrument or Act creating it”.19 Such a provision has been interpreted as preserving relevant equitable requirements for the running of the burden and benefit of restrictive covenants.20 In Queensland, South Australia, the Australian Capital Territory and the Northern Territory the Torrens legislation makes no mention of a power to notify restrictive covenants on the certificate of title of the burdened land. As a basic rule, it appears that the better view is that notification of restrictive covenants is not permitted in these jurisdictions.21 However, the issue arises whether restrictive covenants may be protected by any other means. [18.30]  One such possibility might be to register a restrictive covenant as an “encumbrance”.

This possibility is supported by Re Arcade Pty Ltd [1962] VR 274 (FC),22 where Sholl J held that the practice of the Victorian Registrar of Titles in registering covenants as encumbrances was justified. His Honour relied, inter alia, on the definition of “encumbrance” in s 4(1) of

15 16 17 18

19 20

21 22

For cases interpreting this provision, see Doe v Registrar-​General (1997) 96 LGERA 275; Cogente Pty Ltd v Doe (1998) 98 LGERA 162 (CA). Conveyancing Act 1919 (NSW), s 88BA(3); Land Administration Act 1997 (WA), s 195. For a detailed discussion of this issue, see Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [17.06]ff. Conveyancing Act 1919 (NSW), s 88(3)(a) (since 1930); Transfer of Land Act 1958 (Vic), s 88 (since 1954); Transfer of Land Act 1893 (WA), s 129A (since 1950); Land Titles Act 1980 (Tas), ss 102–​104 (since 1962). The Tasmanian provisions are considered and applied in Siemenski v Brooks Nominees [1990] Tas R 236. See also Conveyancing Act 1919 (NSW), s 88(3)(b); Transfer of Land Act 1893 (WA), s 129A; Land Titles Act 1980 (Tas), s 102(3). See Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598 at 639. Also see Prowse v Johnstone [2015] VSC 621 at [145]. For the requirements for the running of the benefit and burden of restrictive covenants, see [18.50]–​[18.190]. Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [17.06]ff. See also Re Cashmore’s Application [1967] Tas SR 217.

902 [18.25]

Land-Use Agreements: Restrictive and Positive Covenants  Chapter  18

the Transfer of Land Act 1958 (Vic) and on the analogy between restrictive covenants and negative easements. However, a contrary approach was taken in New South Wales in Re Martyn (1965) 65 SR (NSW) 387 and Re Pirie and the Real Property Act [1962] NSWR 1004, where the narrower definition of “encumbrance” in s 3 of the Real Property Act 1900 (NSW) was held to exclude restrictive covenants. Whether the Registrar in Queensland and South Australia is entitled to register a covenant as an encumbrance has not been finally resolved, although the conclusion reached elsewhere is that the answer to this question is no.23 [18.35] A further possibility is the use of a rentcharge. This possibility emerged from the

South Australian decision in Blacks Ltd v Rix [1962] SASR 161.24 In the case a nominal rentcharge was registered as an encumbrance as a means whereby the restrictive covenants contained in the encumbrance would be regarded as registered and thus protected against indefeasibility. This case concerned the sale of land in a scheme of development by the plaintiff company. Every purchaser of land in the scheme was required to accept a transfer subject to a nominal rentcharge created by an encumbrance. This encumbrance also included seven restrictive covenants. Napier CJ indicated that this device was legitimate. This decision was subject to trenchant academic criticism.25 Furthermore in Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 a similar device was used and although the legal principle was not conclusively resolved, Bray CJ questioned the wisdom of Blacks Ltd v Rix and denied validity to a covenant attached to a registered rent charge. Zelling J argued that a restrictive covenant contained in an encumberance was no more registered than would be a poem set out in the encumberance. Bray CJ further indicated the view that the attachment of a covenant to a rentcharge would infringe s 97 of the Real Property Act 1886 (SA).26 This section provides: In every instrument, transferring an interest In land under this Act, subject to mortgage or encumbrance, there shall be implied the following covenant by the transferee:  That the transferee will pay the interest, or annuity, or rent charge secured by the mortgage or encumbrance after the rate and at the time or times specified In the instrument creating the mortgage or encumbrance, and will indemnify and keep harmless the transferor from and against the principal sum secured by the instrument, and from and against all liability in respect of any of the covenants therein contained, or by this Act implied on the part of the transferor.

Little attention has subsequently been given to the significance of this section. Despite the strength of the decision in Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227, the decision in Blacks Ltd v Rix was unanimously approved by the Full Court of the Supreme Court of South Australia in Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382. The case again involved a similar fact situation. The court stated (at 389) that a person who deals with a registered proprietor is deemed to have notice of and will be bound by a restrictive covenant which runs with the land and which is contained in a registered encumbrance noted on the certificate of title. The court further stated that there was nothing in the operation of the Real Property Act 1886 (SA) which rendered such covenants unenforceable. In turn Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 was followed in Netherby Properties Pty

23 24 25 26

Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [17.10]. See also Mahony v Hosken (1912) 14 CLR 379. Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [17.10]. Section 97 is mirrored by s 117(1) of the Land Titles Act 1925 (ACT). [18.35]  903

PART 5 Relations between Neighbouring Landholders

Ltd v Tower Trust Ltd (1999) 76 SASR 9 and the attachment of a covenant to a rentcharge has remained the practice in South Australia.27 In Queensland, where rentcharges have been abolished,28 a device which has been employed is to register a bill of encumbrance. The bill binds the land for the payment of an annual sum which is reduced if certain covenants contained in the encumbrance are adhered to. There are dicta in Mahony v Hosken (1912) 14 CLR 379 and Perpetual Executors & Trustees Association (Australia) Ltd v Hosken (1912) 14 CLR 286 at 294 to the effect that this device might succeed, in that the Registrar may be bound to register the encumbrance even though it was clearly a device to achieve registration of a restrictive covenant. However, the validity of this device should still be regarded as unresolved. [18.40] The final possibility is that restrictive covenants may be protected in Queensland,

South Australia, the Australian Capital Territory and the Northern Territory by the use of a caveat. Section 191 of the Real Property Act 1886 (SA) permits a caveat to be lodged by “any person claiming to be interested at law or in equity, whether under an agreement, or under an unregistered instrument, or otherwise howsoever in any land”. Section 104 of the Land Titles Act 1925 (ACT) is in similar form. In Queensland, s 122 of the Land Title Act 1994 (Qld) permits a caveat to be lodged by any person claiming “an interest in a lot”. Section 138 of the Land Title Act (NT) is in similar form. It is submitted that this legislation would encompass restrictive covenants, in that such covenants constitute an equitable interest in land.29

Covenants in favour of public authorities [18.45]  In New South Wales, by virtue of the Conveyancing (Covenants) Amendment Act

1986 (NSW), positive covenants taken in favour of the Crown, statutory authorities and local councils (called “public positive covenants”) will henceforth bind successors-​in-​title of the covenantee.30 The legislation defines a “public positive covenant” in relation to land, to include a covenant which imposes obligations requiring the carrying out of development on or with respect to the land, within the meaning of the Environmental Planning and Assessment Act 1979 (NSW), or the provision of services on or to the land or other land in its vicinity, or the maintenance, repair or insurance of any structure or work on the land. Furthermore a positive covenant is one imposing any term or condition with respect to the performance of or failure to perform any such obligation.31 Section 88F of the Conveyancing Act 1919 (NSW) states that any positive covenant which is imposed pursuant to the Conveyancing (Covenants) Amendment Act 1986 affects the land and persons from time to time having any estate or

27 28 29

30

31

Deguisa v Lynn [2019] SASCFC 107 at [19], [192]. Property Law Act 1974 (Qld), s 176. See, for example, Woodbury v Gilbert (1907) 3 Tas LR 7; Wilkes v Spooner [1911] 2 KB 473; Re Nisbet and Potts’ Contract [1905] 1 Ch 391. Compare Staples & Co Ltd v Corby and District Land Registrar (1900) 19 NZLR 517 (CA); Miller v Minister of Mines and the Attorney-​General (New Zealand) [1963] AC 484. See also Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [17.24]ff. This legislation is discussed in Legislation to Permit Positive Covenants (December 1986) 24 Law Soc J 28. See also Local Government (Covenants) Amendment Act 1986 (NSW); Real Property (Covenants) Amendment Act 1986 (NSW); Strata Titles (Covenants) Amendment Act 1986 (NSW). Conveyancing Act 1919 (NSW), s 87A.

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interest in the land in the same way as if it were a covenant imposing a restriction on the use of the land. Any prescribed authority having the benefit of a positive covenant has certain specified rights of entry into the covenantor’s land ( Conveyancing Act 1919, s 88F(2)), and may apply to have a charge registered over the land under the provisions of the Real Property Act 1900 (NSW) where the authority obtains a judgment for an amount payable to it for a failure to comply with a positive covenant:  s  88F(4). The Supreme Court is empowered to grant an injunction restraining a person from engaging in conduct constituting a contravention of a positive covenant whenever the court considers it desirable to do so: s 88H(1). As a final resort, to ensure compliance with a positive covenant, the prescribed authority entitled to enforce the covenant may apply to the court for an order that the land be conveyed or transferred to the authority:  s  88I(1). Such an order may only be made where:  the continued holding of the land by the covenantor is reasonably likely to endanger the health or safety of the public; there is no reasonable likelihood of the person complying with the obligations imposed by the covenant; the person has previously committed frequent contraventions of restrictive or positive covenants imposed on the land; the person has persistently and unreasonably delayed complying with the obligations of any positive covenant imposed on the land; or the order should be made because of any other special circumstances: s 88I(3). When making such an order, the court may impose such conditions on the conveyance or transfer of the land as it thinks fit: s 88I(4).

PASSING OF BENEFIT AND BURDEN OF RESTRICTIVE COVENANTS General principles [18.50] With respect to the burden of restrictive covenants, the successor-​ in-​ title of the

covenantee must prove the existence of a mutual intention by the contracting parties that the burden of the covenant should run on a later disposition of the land. This matter is seldom in contention in Australia, as legislation in each jurisdiction (except South Australia) now provides that a covenant relating to land shall, unless a contrary intention is expressed,32 be deemed to be made by the covenantor on behalf of the covenantor, the covenantor’s successor in title and the persons deriving title under the covenantor or successor in title.33 [18.55]  Before the benefit of a restrictive covenant will pass to a successors in title it must

touch and concern the land of the covenantee.34 The High Court stated in Forestview v Perpetual Trustees WA (1998) 193 CLR 154 at 170 that the question whether the benefited land is touched and concerned is answered by asking whether there is the necessary benefit. Specific limitations imposed in a covenant upon the power of enforcement (such as restricting

32

33

34

See Re Royal Victoria Pavilion (Ramsgate) [1961] Ch 581 and Morrells of Oxford Ltd v Oxford United Football Club, The Times, 15 August 2000 (CA) for illustrations of cases where there was a lack of the necessary intention. Conveyancing Act 1919 (NSW), s 70A; Property Law Act 1958 (Vic), s 79; Property Law Act 1974 (Qld), s 53; Property Law Act 1969 (WA), s 48; Conveyancing and Law of Property Act 1884 (Tas), s 71A; Law of Property Act 2000 (NT), s 171. For examples of cases applying this legislation, see Morrells of Oxford Ltd v Oxford United Football Club, The Times, 15 August 2000 (CA); Inland Revenue Commissioners v Bernstein [1961] Ch 399. See, for example, Re Union of London and Smith’s Bank Ltd’s Conveyance [1933] Ch 611 (CA); Re Ballard’s Conveyance [1937] Ch 473. [18.55]  905

PART 5 Relations between Neighbouring Landholders

tenants from enforcing the covenant) do not necessarily affect the value of the benefited land and are not automatically repugnant to the doctrine in Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143. [18.60]  As well as touching and concerning the land, the benefit of the covenant must have

passed to the successor-​in-​title of the covenantee by one of the recognised methods. The clearly recognised doctrines are express annexation, express assignment and schemes of development. In addition, there is a possibility that the same result may be achieved by statutory annexation and by State legislation importing general words into conveyances.

Annexation [18.65] Annexation of a covenant occurs in two situations. Firstly where a covenant is

expressly made for the benefit of specified land it is regarded as annexed. Secondly a covenant is annexed where the covenant states that it is made for the benefit of the covenantee, the covenantee’s assigns and successors in the capacity as owner of the benefited land.35 A covenant taken for the benefit of the vendor, the vendor’s assigns and successors is not sufficiently connected to the land to be regarded as annexed.36 In the case of Torrens system land, the land to be benefited must be clearly identifiable by a search of the register and in respect of schemes of development, the memorandum of encumbrance must be in terms which identifies the land to be benefited by the covenants.37 If the instrument contains a clear intention to annex the covenant expressly to the benefited land, but the land is referred to in descriptive terms rather than specifically, it appears that the parties may need extrinsic evidence to identify the relevant land and, if the land is so identified, annexation will be held to exist.38 This rule applies in all jurisdictions except New South Wales, where s 88(1)(a) of the Conveyancing Act 1919 (NSW) states that a restrictive covenant shall not be enforceable against any person other than the original contracting parties unless it clearly indicates, inter alia, the land to which the benefit of the covenant is appurtenant. [18.70] In J Sainsbury Plc v Enfield London BC [1989] 2 All ER 817 Morritt  J accepted

the contention that the intention to annex must be manifested in the conveyance in which the covenant was contained rather than be implied from surrounding circumstances. The conveyance would be construed in the light of the surrounding circumstances, including any necessary implication in the conveyance from those surrounding circumstances. His Honour (at 822–​ 824) rejected the contention that the intention to annex may be inferred from surrounding circumstances which fall short of those which would necessitate an implication in the conveyance itself. In Australia the courts have taken a less restrictive view. The Federal Court held in Baramon Sales Pty Ltd v Goodman Fielder Mills [2001] FCA 1672 that extrinsic evidence is admissible to establish that there is an intention both to benefit land retained by the covenantee and to identify that land. The court specifically followed the decision in Newton Abbot Co-​operative

5 3 36 37 38

See, for example, Drake v Grey [1936] Ch 451 (CA); Rogers v Hosegood [1900] 2 Ch 388 at 395 (CA). Renals v Cowlishaw (1878) 9 Ch D 125; affd (1879) 11 Ch D 866 (CA). For a recent example, see Beman Pty Ltd v Boroondara City Council (2017) 224 LGERA 157. Netherby Properties Pty Ltd v Tower Trust Ltd (1999) 76 SASR 9 at 21–​22. See Rogers v Hosegood [1900] 2 Ch 388 at 395 (CA).

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Society Ltd v Williamson and Treadgold Ltd [1952] Ch 286 rather than J Sainsbury Plc v Enfield London BC.39 Once annexation has been held to exist, the benefit of the covenant will continue to run with the land automatically on future dispositions of the benefited land regardless of whether later purchasers of the burdened land are aware of the existence of the covenant.40 [18.75]  Annexation will not be accepted as existing where the benefited land is too large to

benefit from the covenant. The origin of this rule is Re Ballard’s Conveyance [1937] Ch 473. In this case a restrictive covenant was made for the benefit of the owners from time to time of the Childwickbury estate, a large estate of some 800 hectares. It was held that the covenant could not be said to benefit the whole of this large estate and, as severance of the covenant was not possible, the benefit of the covenant could not run. His Honour indicated that annexation would have occurred if the covenant had been expressed to benefit the whole of the estate, or each and every part of it. This approach was adopted by the majority of the Full Court of the Supreme Court of Victoria in Re Arcade Pty Ltd [1962] VR 274.41 The benefit of a covenant expressed to be made for the “owners for the time being of the land marked green” was held to be annexed to the whole of the land and would not run on a sale of certain parts of the land. This decision was affirmed by the Supreme Court of New South Wales in Doyle v Phillips (1997) NSW ConvR 56,427. [18.80] Statutory amendments enacted to overcome the rule in Re Ballard’s Conveyance

[1937] Ch 473 now exist in Victoria and Western Australia. This legislation was held in Vrakas v Mills [2006] VSC 463 to operate retrospectively. In both States the relevant legislation reads: It is hereby declared that when the benefit of a restriction as to the user of or the building on any land is or has been annexed or purports to be annexed by any instrument to other land the benefit shall unless it is expressly provided to the contrary be deemed to be and always to have been annexed to the whole and to each and every part of such other land capable of benefiting from such restriction.42 [18.82]  Annexation may be deemed to occur as a result of statute concerning the benefit of

covenants relating to land. Section 70(1) of the Conveyancing Act 1919 (NSW) states: A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and the covenantee’s successors in title and the persons deriving title under the covenantee or them, and shall have effect as if such successors and other persons were expressed. For the purposes of this subsection in connection with covenants restrictive of the user of land “successors in title” shall be deemed to include the owners and occupiers for the time being of the land of the covenantee intended to be benefited.

An identical provision exists in each Australian jurisdiction except South Australia.43

39 40 41 42 43

See also Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227. Rogers v Hosegood [1900] 2 Ch 388 at 395 (CA). See also Lane Cove MC v H & W Hurdis Pty Ltd (1955) 72 WN (NSW) 284; Re Roche and the Conveyancing Act (1960) 77 WN (NSW) 431. Property Law Act 1958 (Vic), s 79A; Property Law Act 1969 (WA), s 49. Conveyancing Act 1919 (NSW), s 70; Property Law Act 1958 (Vic), s 78; Property Law Act 1974 (Qld), s 53; Property Law Act 1969 (WA), s 47; Conveyancing and Law of Property Act 1884 (Tas), s 71; Land Titles Act 1925 (ACT), s 109; Law of Property Act 2000 (NT), s 171. [18.82]  907

PART 5 Relations between Neighbouring Landholders

[18.83] The conventional view of the effect of this legislation is that the section merely

obviates the need to expressly mention the successors-​in-​title of the covenantee in the wording of the covenant. This view, however, was rejected by the English Court of Appeal in Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 All ER 37144 in favour of a more wide-​ ranging interpretation. The case concerned an action by the successor-​in-​title of a covenantee to enforce a restrictive covenant against the covenantor. Despite clear evidence that the requirements of express annexation and express assignment had not been complied with, the Court of Appeal held that the benefit of the covenant passed by virtue of s 78 of the Law of Property Act 1925 (UK). The effect of this interpretation is quite revolutionary in that, provided that the covenant touches and concerns the land, it appears that the benefit will be presumed to run with the land regardless of whether the rules relating to express annexation and express assignment (see [18.65]–​[18.110]) are satisfied. The decision appears to achieve in one stroke a major simplification of a body of laws which has long been argued to be unnecessarily complex and legalistic.45 Roake v Chadha [1984] 1 WLR 4046 involved further consideration of Federated Homes Ltd v Mill Lodge Properties Ltd [1980] 1 All ER 371. In the case the restrictive covenant subject to dispute expressly stated that it would not enure for the benefit of any owner or subsequent purchaser unless the benefit of the covenant was expressly assigned. The plaintiffs, the successors-​in-​title of the covenantee, sought to enforce the covenant based on s 78 of the Law of Property Act 1925 (UK) in the absence of express assignment. Counsel for the plaintiff sought to rely on the Federated Homes case and argued that s  78 has a mandatory operation and is not subject to contrary intention. The first instance judge considered himself bound by the earlier Court of Appeal decision, but rejected (at 46) the mandatory operation which the plaintiff advanced for the section and held that it does not have the effect of annexing the benefit of the covenant in each and every case irrespective of the other express terms of the covenant. Where, as in the Federated Homes case, the covenant is not qualified in any way, annexation may be readily inferred, but any qualification must be given effect to. It remains to be seen whether the decision Federated Homes case will survive in England and whether it is later adopted in Australia. For several reasons its adoption appears to be doubtful:  first, the legislative history of s  78 indicates that it was designed to have only a narrow purpose; secondly, the narrower purpose has been accepted in relation to s 79, the corresponding provision relating to the passing of the burden of the covenant; and finally, in many earlier cases it was assumed tacitly that s 78 does not have the wider scope claimed for it in the Federated Homes case.47

44 45

46 47

Discussed in (1980) 43 Mod LR 445; [1980] Conv 216; (1981) 97 LQR 32; (1982) 98 LQR 202; [1985] Conv 177. Note, however, that on one analysis the decision in Federated Homes v Mill Lodge Properties Ltd [1980] 1 All ER 371 may have a narrower interpretation: see Todd, “Annexation after Federated Homes” [1985] Conv 177 on this point. Discussed in [1984] Conv 68. Other issues in respect of Federated Homes v Mill Lodge Properties Ltd [1980] 1 All ER 371 were considered in J Sainsbury Plc v Enfield London BC [1989] 1 WLR 590. See generally Newsom, “Universal Annexation?” (1981) 97 LQR 32. But see Midland Brick Company Pty Ltd v Welsh (2006) 32 WAR 287 at 282.

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Express assignment [18.85] If the wording of a covenant is insufficient to annex the benefit to the land, it is

possible for the covenantee to pass the benefit to his or her successor-​in-​title on the future disposition of the benefited land by express assignment. To be valid, an express assignment of a covenant must be made in writing pursuant to the requirements of State and Territory legislation dealing with the assignment of equitable interests in land.48 Romer LJ, delivering the judgment of the English Court of Appeal, stated in Re Union of London and Smith’s Bank Ltd’s Conveyance [1933] Ch 611 at 631–​632: If the restrictive covenant be taken not merely for some personal purpose or object of the vendor, but for the benefit of some other land of his in the sense that it would enable him to dispose of that land to greater advantage, the covenant, though not annexed to such land so as to run with any part of it, may be enforced against an assignee of the covenantor taking with notice, both by the covenantee and by persons to whom the benefit of such covenant has been assigned, subject however to certain conditions. In the first place, the “other land” must be land that is capable of being benefited by the covenant-​otherwise it would be impossible to infer that the object of the covenant was to enable the vendor to dispose of his land to greater advantage. In the next place, this land must be “ascertainable” or “certain” … For, although the court will readily infer the intention to benefit the other land of the vendor where the existence and situation of such land are indicated in the conveyance or have been otherwise shown with reasonable certainty, it is impossible to do so from vague references in the conveyance or in other documents laid before the court as to the existence of other lands of the vendor, the extent and situation of which are undefined. In the third place, the covenant cannot be enforced by the covenantee against an assign of the purchaser after the covenantee has parted with the whole of his land. [18.90]  The requirement that the land must be ascertainable will be satisfied where the land

can be identified by the assistance of evidence of surrounding circumstances. In Newton Abbot Co-​operative Society Ltd v Williamson and Treadgold Ltd [1952] Ch 28649 Upjohn J went further and held that the requirement is satisfied where the identity of the benefited land is based solely on surrounding circumstances. It is an unresolved issue whether this latter case is valid law in Australia. There are dicta by Zelling J in Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 at 255 that Newton Abbot was wrongly decided on this point, but the issue was left open by Bray CJ (at 236) in the same case and by Kitto and Taylor JJ in Pirie v Registrar-​General (1962) 109 CLR 619 at 629, 634. [18.95]  In New South Wales this issue is complicated by the requirements of s 88(1)(a) of

the Conveyancing Act 1919 (NSW). The nub of the issue is whether the words “the benefit of which is intended to be annexed to other land” in the section should be confined to express annexation or whether they extend to express assignment and other methods of passing the benefit. The matter is subject to considerable controversy. Baalman is of the opinion that s 88(1) applies to all methods of passing the benefit of a covenant,50 while the contrary view is taken by Helmore.51 Helmore’s view is supported by dicta of Jacobs JA in Re Louis and

48

9 4 50 51

Conveyancing Act 1919 (NSW), s 23C; Property Law Act 1958 (Vic), s 53; Property Law Act 1974 (Qld), s 11; Law of Property Act 1936 (SA), s 29; Property Law Act 1969 (WA), s 34; Conveyancing and Law of Property Act 1884 (Tas), s 60(2); Civil Law (Property) Act 2006 (ACT), s 201; Law of Property Act 2000 (NT), s 10. See Elphinstone, “Assignment of the Benefit of Covenants Affecting Land” (1952) 68 LQR 353. Baalman, “Common Building Schemes” (1948) 22 ALJ 71 at 72. Helmore, “The Common Building Scheme and Statutory Provisions” (1963) 37 ALJ 81. [18.95]  909

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the Conveyancing Act [1971] 1 NSWLR 164 at 180 (CA), who in the context of schemes of development in respect of general law land, stated that s 88(1) might not apply. [18.100]  Based on the third requirement of Romer LJ in Re Union of London and Smith’s

Bank Ltd’s Conveyance [1933] Ch 611, it is clear that the assignment of the covenant must be contemporaneous with the sale of the benefited land.52 The major justification for this rule is that the covenant was entered into to enable the covenantee to dispose of his or her property to advantage and this result will have been achieved when all that property has been sold; accordingly, there is no reason why a covenantee should be able to pass the benefit of the covenant at a later date. A further justification is that where, at the date of the purported assignment of the benefit of the covenant, the covenantee has disposed of the whole of her or his land, the covenant is no longer enforceable by the covenantee herself or himself and he or she cannot confer any greater rights upon the assignee than he or she possessed herself or himself. [18.105]  Whether the benefit of a covenant which has been expressly annexed to land can

be later expressly assigned to a third party who cannot rely on the annexation is also an issue yet to be resolved. Ungoed-​Thomas J held in the affirmative in Stilwell v Blackman [1968] Ch 50853 and rejected the argument that express annexation and express assignment are mutually-​exclusive categories. His Lordship stated that annexed covenants can in principle be expressly assigned to a third party, and it is a matter of construction of the wording of the covenant whether this is permissible in any given case. He added that express assignment can only be forbidden if it is positively excluded; thus, there is a presumption that assignability is permitted in the absence of clear words to the contrary. Preston and Newsom make the point that this means that the owner of burdened land subject to a covenant that is annexed to the whole of the benefited land only cannot be certain that no-​one can enforce the covenant on subdivision of the benefited land. This is because the benefit of the covenant might be expressly assigned on the sale of part of the benefited land, in the absence of clear words in the covenant excluding assignment of the benefit.54 The issue has not yet been determined in Australia or by the appellate courts in the United Kingdom. [18.110] Whether one express assignment of the benefit of a covenant will have the effect

of automatically annexing the covenant to the benefited land so that further assignments are unnecessary is also a matter of controversy. The alternative view is that there must be a separate express assignment each time the benefited land is sold before the benefit of the covenant will run. Despite earlier authorities and an article by Baker55 to the effect that an assignment will annex the covenant to the land, it was assumed without argument by Wynn-​ Parry J in Re Pinewood Estate, Farnborough [1958] Ch 28056 that a separate assignment of the benefit of the covenant is necessary on each sale of the land. Again, there are no Australian

52 3 5 54 5 5 56

Chambers v Randall [1923] 1 Ch 149; Re Union of London and Smith’s Bank Ltd’s Conveyance [1933] Ch 611 (CA) at 632 (CA); cf Lord Northbourne v Johnston [1922] 2 Ch 309. Discussed in (1968) 32 Conv 60 and (1970) 44 ALJ 40. Newsom, Preston & Newsom’s Restrictive Covenants Affecting Freehold Land (10th ed, Sweet and Maxwell, London, 2013), pp 92–​93. Baker, “The Benefit of Restrictive Covenants” (1968) 84 LQR 22. See also Sutton v Shoppee (1964) 80 WN (NSW) 1550 at 1554 (SC in banco).

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authorities on this issue. It thus appears that a complete chain of assignments must be shown before a covenant can be enforced in this situation.

Annexation and express assignment in the Torrens system [18.125]  In New South Wales, Victoria, Western Australia and Tasmania, where restrictive

covenants may be notified on the certificate of title, the issue arises whether the principles of express annexation and express assignment, under which the benefit of covenants may pass, apply equally to Torrens land as to general law land.57 The basic purpose of the Torrens system is to ensure that the certificate of title contains a full record of the state of the title and, with certain exceptions, to regard any interests in land not entered on the certificate of title as unenforceable. It should not be necessary for a prospective purchaser of land to look beyond the register to establish the nature of the title. This point was emphasised by the High Court in the context of easements in Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528; [2007] HCA 45 at [39], where the court stated: The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.

This quotation is cited in Miller v Evans [2010] WASC 127 at [15] by Hall J, who held that in the case of a registered restrictive covenant the court should be extremely reluctant to have regard to the subjective intentions of the parties. Reliance must be placed on the meaning of the words in the covenant if the court can discern a clear and unambiguous meaning.58 Consequently, express annexation presents no problem as the benefited land will, by the very nature of annexation, be clearly identified in the documentation. For this reason, express annexation applies equally to Torrens land as to general law land. Difficulties arise, however, with express assignment. If the passing of the benefit by assignment is effective, it would be necessary for a purchaser of land to look beyond the register to establish the nature of the title. In the Full Court of the Supreme Court in Clem Smith Nominees Pty Ltd v Farrelly (1978) 20 SASR 227 at 236 Bray CJ expressed the view that there can be no express assignment over Torrens land as the recognition of this doctrine would necessarily involve the purchaser making inquiries outside the Register. The refusal to recognise express assignments over Torrens land would also appear to follow from the reasoning of Hudson J in Re Dennerstein [1963] VR 688 and Jacobs JA in Re Louis and the Conveyancing Act [1971] 1 NSWLR 164, although the issue was not raised directly in either case. Although the matter has not been formally resolved, the more likely position is that express assignment is limited in its application to general law land.

Schemes of development [18.130]  At the time of the decision in Tulk v Moxhay (1848) 2 Ph 774; 41 ER 1143 (Ch),

large-​scale subdivisions of land by developers were virtually unknown. Schemes of development 57 58

See Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011) at [17.35]ff. Also see Anascot Pty Ltd v Alcoa of Australia Ltd [2017] WASCA 228 at [53]–​[55]. [18.130]  911

PART 5 Relations between Neighbouring Landholders

(sometimes referred to as “building schemes”) are a product of the 20th and 21st centuries. Under modern development schemes, it is common for a developer to include restrictions as to the future use which the purchasers of each of the blocks may make of the land. These restrictions are usually designed to enhance the value and amenities of the neighbourhood, and the intention behind the imposition of the restrictions is that they should bind and be capable of enforcement by all purchasers of all the blocks of land. The equitable rules as to the passing of the benefit and burden of restrictive covenants by express annexation or assignment were ill-​equipped to cope with the enforcement of restrictions contained in schemes of development. One problem was that of intention that the burden and the benefit should pass. Under normal equitable rules intention had to be proved in relation to each separate transaction. In the case of schemes of development it was argued that the intention to pass the burden and benefit of the covenant should be obvious from the very nature of the scheme. Technical difficulties also often prevented the enforceability of covenants in schemes of development. By ways of illustration assume that A owns a large tract of land which A subdivides. A sells three blocks to B, C and D in that chronological sequence. In each case the sale is subject to similar restrictive covenants entered into by the purchasers with A at the time of each sale. B later sells B’s block to E, C later sells C’s block to F, and D later sells D’s block to G. Consider whether E can enforce the benefit of one or more of the covenants entered into by C and D against F or G respectively. Without any special law applying to schemes of development, the answer to this question is that E will be unable to enforce the covenants against F or G as the benefit of those covenants did not exist at the time when B (E’s predecessor-​in-​title) purchased B’s land. An exception occurs where s 56 of the Property Law Act 1958 (Vic) or its equivalent in other Australian jurisdictions is applicable on the facts.59 It was in order to overcome these difficulties that the courts developed special rules concerning the enforceability of covenants contained in schemes of development. Where these rules apply, they operate as a “local law” for the estate subject to the scheme.60 [18.135]  Recognition of the existence of a scheme of development and its enforceability was

stated by Parker J in the seminal case of Elliston v Reacher [1908] 2 Ch 374 at 38461 to be subject to four conditions. Firstly both the plaintiffs and defendants must derive title under a common vendor. Secondly, prior to selling the lands to which the plaintiffs and defendants are respectively entitled the vendor must have laid out the estate, or a defined portion thereof (including the land purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots. Although these restrictions may vary in detail as to particular lots, they must be consistent with some general scheme of development. Thirdly the restrictions must have been intended by the common vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other land retained by the vendor. Fourthly, both the plaintiffs and the defendants, or their predecessors in title, must have purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general

59 60 61

See [18.270]–​[18.275]. Reid v Bickerstaff [1909] 2 Ch 305 at 319 (CA). See also Re Bromor Properties Ltd’s Application (1995) 70 P & CR 569.

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scheme whether or not they were also to enure for the benefit of other lands retained by the vendors. Parker J added (at 384–​385) that if all these four points were established, the plaintiff is entitled in equity to enforce the restrictive covenants entered into by the defendants or their predecessors with the common vendor irrespective of the dates of the respective purchases. [18.140]  The four requirements of Parker J in Elliston v Reacher [1908] 2 Ch 374 have been

cited with approval in numerous Australian cases.62 However, further discussion of each of the requirements is necessary in the light of subsequent court decisions. The doctrine both enables earlier purchasers of blocks of land in a scheme to enforce covenants against later purchasers and enables the benefit of covenants to pass without the need to prove either express annexation or express assignment. It is sometimes difficult to establish one or more of these essential elements. In this situation the missing elements may be inferred from the circumstances of the case. In Fitt v Luxury Developments Pty Ltd [2000] VSC 258, Gillard J stated that the court can draw the inference of missing elements from the documentation. The court readily do so where it is proven that there was a large subdivision of building blocks that were sold over a relatively short period. This decision was supported in Vrakas v Mills [2006] VSC 463. [18.145]  The first of the four requirements is that title be derived from a common vendor.

It must be considered of doubtful validity today in light of the decisions in Re Dolphin’s Conveyance [1970] Ch 654 and Re Mack and the Conveyancing Act [1975] 2 NSWLR 623.63 In both these cases a scheme of development was held to exist despite the lack of a common vendor. The former case held that a scheme can exist where the vendor sells some of the blocks of land and dies, and the remaining blocks are sold by the vendor’s successor-​in-​title subject to certain restrictive covenants. In the latter case, a scheme was held to exist over land subdivided into 115 lots where 27 had never been owned by the vendor and the remaining 88 lots were distributed throughout the whole subdivision. The latter case was decided on the basis that, despite the fact that there were several vendors, the vendors had intended to create a common scheme and had made an agreement to carry out this intention. Wootten J stated that it is unjust to require that there be a common vendor unless that term be understood in an artificial sense to include several vendors sharing a common intention. The “community of interest” between the purchasers was considered by the court to be as real in the one case as the other.64 The second requirement, concerning the laying out of the estate for sale in lots subject to common restrictions, has also been relaxed in certain respects. Although the area of land subject to the scheme must be defined by the vendor, the area need not be defined in the various instruments if it can be identified by the wording of the documents construed in the context of surrounding circumstances.65 It has also been held that it is not necessary to prove that the vendor laid out the land subject to the scheme for sale in lots, but merely to produce

62

63 64 65

See, for example, Hosking v Haas (No 2) [2009] NSWSC 1328; Vrakas v Mills [2006] VSC 463; Ferella v Otvosi [2005] NSWSC 962; Cousin v Grant (1991) 103 FLR 236; Cobbold v Abraham [1933] VLR 385; Langdale Pty Ltd v Sollas [1959] VR 637; Christie v Dalco Holdings Pty Ltd [1964] Tas SR 34; Re Hunt [2017] VSC 779; Deguisa v Lynn [2019] SASCFC 107. Note that Miles CJ held in Cousin v Grant that a scheme of development may exist over leasehold land. See also Jamaica Mutual Life Assurance Society v Hillsborough Ltd [1989] 1 WLR 1101 (PC). Re Mack and the Conveyancing Act [1975] 2 NSWLR 623 at 630. See, for example, Re Dolphin’s Conveyance; Birmingham Corporation v Boden [1970] Ch 654. [18.145]  913

PART 5 Relations between Neighbouring Landholders

evidence on the facts that the vendor intended to create a scheme.66 In Re Mack and the Conveyancing Act Wooten J held that the fact that the covenants imposed on the purchasers of all the lots were not identical or that some lots were sold free from the restrictions was not fatal to the existence of a scheme of development. What was required was an intention to create a scheme at the time of creation. In the particular case the fact that 9 of the 115 lots in the alleged scheme were sold free from restrictions was held not to vitiate the scheme. The third requirement that the restrictions be intended by the common vendor to be for the benefit of the lots sold may also be satisfied by an inference of intention. In Elliston v Reacher [1908] 2 Ch 374 Parker J stated (at 384) that the vendor’s object in imposing the restrictions must, in general, be gathered from all the circumstances of the case, including in particular the nature of the restrictions. If a general observance of the covenants is in fact calculated to enhance the value of the lots offered for sale, it may easily be inferred that the vendor intended the restriction to be for the benefit of all the lots. The effect of this amplification is that a scheme seldom fails by virtue of this third requirement. As a matter of practice, evidence of the intention of the vendor may be gleaned from a variety of sources, for example, the forms of contracts,67 conveyances68 or evidence of the vendor or her or his solicitor.69 The fourth requirement that the purchase from the common vendor be on the footing that the restriction would operate for the benefit of the other lots may similarly be readily inferred provided that the purchasers have notice of the facts involved in the first three points. The court can draw inferences although it cannot rely on mere conjecture.70 If the purchaser buys the land in ignorance of any material part of the facts involved in the first three points, it will be difficult to satisfy the fourth point. The fourth requirement was inferred in Re Dennerstein [1963] VR 688 and Re Mack and the Conveyancing Act. However, it was not inferred in Re Naish and the Conveyancing Act (1960) 77 WN (NSW) 892, where the only evidence of knowledge of the scheme by the purchasers was that all the lots sold over a preceding 16-​year period had been sold subject to similar covenants.71 [18.150]  In New South Wales, s 88(1) of the Conveyancing Act 1919 (NSW) may be relevant

to schemes of development. If the section applies to schemes of development, it would have the effect of rendering such schemes inoperable in New South Wales. The issue is whether the words “the benefit of which is intended to be annexed to other land” applies only to express annexation or extends to instances of annexation and to schemes of development. The view supported by Helmore72 and Re Louis and the Conveyancing Act [1971] 1 NSWLR 164,73

66 67 68 69 70 71

72 73

Baxter v Four Oaks Properties Ltd [1965] 1 Ch 816; Re Application of Poltava Pty Ltd [1982] 2 NSWLR 161. See, for example, Sutton v Shoppee (1964) 80 WN (NSW) 1550; Re Dennerstein [1963] VR 688. See, for example, Re Dolphin’s Conveyance; Birmingham Corporation v Boden [1970] Ch 654. See, for example, Eagling v Gardner [1970] 2 All ER 838. Re Application of Poltava Pty Ltd [1982] 2 NSWLR 161 at 168; Sutton v Shoppee (1964) 80 WN (NSW) 1550 at 863; Vrakas v Mills [2006] VSC 463 at [37]. Also see Re Hunt [2017] VSC 779 at [62], [67], where Lansdowne AsJ doubted that the fourth requirement could be met on the facts given “the absence of multiple sales at the same time, the period of over twenty years over which the sales took place, the lack of regular pattern of sales, and the fact that half of the sales were at the instance not of the original vendor but his executor …”. See Doyle v Phillips (No 1) (1997) 8 BPR 15,524 at [1399]. Discussed in (1972) 46 ALJ 91.

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appears to be that the section is inapplicable to covenants over general law land imposed under a scheme of development. However, the enactment of s 88B of the Conveyancing Act 1919 (NSW) has meant that from 1964 in New South Wales a statutory regime has been available that effectively replaces the need to rely on the equitable concept of schemes of development in either the Old System or Torrens title context. This provision allows the creation and annexation of covenants while all the relevant land is owned by the developer. Section 88B permits the registration of a plan of subdivision and accompanying instrument setting out the terms of the covenants and identifying the lots respectively benefited and burdened. These covenants will then be enforceable by and against subsequent purchasers of the lots created by the subdivision, irrespective of the order in which the lots are sold by the developer. The provision also allows for the creation of easements and profits á prendre in the same manner.74 [18.155]  Several cases have recognised the possibility of creating sub-​schemes of development, where the owners of certain lots in a valid scheme agree between themselves that different or additional covenants will bind their blocks of land.75 These different or additional covenants will be enforceable between the owners of the blocks affected by the sub-​scheme by application to these particular lots of the schemes of development principles. The rights of the owners of the blocks of land in the head scheme not subject to the sub-​scheme to enforce the original covenants are not affected. [18.160] Difficulties arise with the enforcement of schemes of development in relation to

Torrens system land. If the schemes are enforceable, it may be necessary for a purchaser of land to look beyond the register to establish the details of the restriction, particularly as to the identity of parties able to enforce restrictions. The issue has not been treated uniformly across the jurisdictions. In Victoria in Re Dennerstein [1963] VR 68876 Hudson J concluded that the notification of a restrictive covenant on the certificate of title would not be effective to bind a transferee of the burdened land unless not only the existence of the scheme and the nature of the restrictions imposed but the lands affected by the scheme were indicated in the notifications. Indication could be direct or by reference to some instrument or other document to which a person searching the register has access. Although the scheme of development doctrine therefore appears to be recognised as valid in Victoria in respect of Torrens land, it is subject to more stringent limitations than apply in respect of general law land. It must be shown that a purchaser of the burdened land could discover the existence of the scheme of development either from the notification on the certificate of title or from some other document (eg, a transfer) to which the notification directly refers. Re Dennerstein appears to still represent good law in Victoria, although in relation to the third requirement it was subject to some criticism by Gillard J in Fitt v Luxury Developments Pty Ltd [2000] VSC 258.

74 75 76

See Edgeworth, Butt’s Land Law (7th ed, Law Book Co, Sydney, 2017), pp 638–​639. See, for example, Knight v Simmonds [1896] 1 Ch 653; Brunner v Greenslade [1971] Ch 993; Lawrence v South County Freeholds Ltd [1939] Ch 656. The case is discussed in Sawyer v Starr [1985] 2 NZLR 540 at 550–​551; Vrakas v Mills [2006] VSC 463; Baramon Sales Pty Ltd v Goodman Fielder Mills Ltd [2001] FCA 1672; Re Hunt [2017] VSC 779. [18.160]  915

PART 5 Relations between Neighbouring Landholders

[18.165] Tasmania Re Dennerstein was followed in Re Cashmore’s Application [1967] Tas

SR 217. The issue, however, in that State is subject to an overriding requirement set out in s 102(2)(a)(iv) of the Land Titles Act 1980 (Tas). The subsection states that the burden of a covenant will only run with freehold registered land if the land intended to be benefited by the covenant is identified in the instrument containing the covenant. [18.170]  In Western Australia, there are no relevant statutory or case law authorities, but

there appears to be no reason why Re Dennerstein should not also apply in that State. [18.175] In New South Wales, s  88(3) of the Conveyancing Act 1919 (NSW) gives the

Registrar-​General the power to record a restrictive covenant referred to in s  88(1) on the certificate of title of the burdened land. In Re Louis and the Conveyancing Act [1971] 1 NSWLR 164 the New South Wales Court of Appeal held that schemes of development could exist over Torrens land in that State and covenants contained in the schemes would be enforceable if the statutory requirements in s 88(1) are satisfied and the covenants are created by an instrument.77 Since the decision in Re Louis was handed down, the New South Wales courts have assumed in several cases, most recently in Hosking v Haas (No 2) [2009] NSWSC 1328, that schemes of development may be created in respect of Torrens land in New South Wales.78 In Re Louis and the Conveyancing Act Jacobs JA emphasised that s 88(1) does not affect the substantive rules of equity and common law concerning the creation of restrictive covenants and the passing of the benefit and the burden, but merely adds conditions for the validity of the covenant. He added that the requisite intention to annex referred to in s 88(1) must be established, but this can be proved in the case of schemes of development by showing an intention to bind the whole and each part of the burdened land. One effect of this decision is to reverse an earlier restrictive interpretation of the wording of s  88(1), “intended to be annexed to other land”, under which this applied only to cases of express annexation at common law,79 and to extend the relevance of s 88(1) to covenants contained in schemes of development. [18.180]  In South Australia Napier CJ assumed in Blacks Ltd v Rix [1962] SASR 161, without

detailed analysis of the point, that schemes of development apply equally to Torrens land as to general law land. The matter was later considered by the Full Court of South Australia in Burke v Yurilla SA Pty Ltd (1991) 56 SASR 382.80 Debelle J, with whom King CJ and Cox J agreed, approved the decision in Blacks Ltd v Rix and referred to a long-​standing practice in the State of registering an encumbrance for the purpose of giving notice of a building scheme. His Honour added (at 396) that he had no wish to invalidate many building schemes in existence by outlawing the practice. The Full Court recently upheld the enforceability of a covenant created by a building scheme in Deguisa v Lynn [2019] SASCFC 107. The majority held (at [256]) that the searches of the register reasonably required of a purchaser would have revealed the existence of the scheme and the other lots benefited by it. In that case the registered Memorandum of Encumbrance recorded on the certificate of title of the putatively 7 7 78 79 80

The Court of Appeal partially overruled the Full Court decision in Re Martyn (1965) 65 SR (NSW) 387. See also Re Mack and the Conveyancing Act [1975] 2 NSWLR 623; Jones v Sherwood Hills Pty Ltd (unreported, NSWSC, 8 July 1975), discussed in (1978) 52 ALJ 223. Re Pirie and the Real Property Act (1961) 79 WN (NSW) 701; [1962] NSWR 1004. Followed in Netherby Properties Pty Ltd v Tower Trust Ltd (1999) 76 SASR 9.

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burdened land expressly stated that it formed a portion of a building scheme and thus would have put a prudent conveyancer on notice “that there was a high likelihood there would be a number of identifiable benefited properties on the Register, each with the same mutually enforceable covenants”. [18.185]  In Queensland, as a matter of practice, developers often impose restrictive covenants

on purchasers of newly created lots. However, the inability to register such covenants means that there is considerable doubt as to whether they can be enforced against successors in title under the scheme of development doctrine.81

General words legislation [18.190] The benefit of a covenant may also pass to successors in title by legislation

adopted every Australian jurisdiction82 shortening conveyances. The legislation provides that a conveyance of land shall be deemed to include certain specified rights. In the present context, the argument is that the words in the legislation “rights and advantages whatsoever appertaining or reputed to appertain to the land, or any part thereof” are sufficiently broad-​ ranging to pass the benefit of a covenant to successors-​in-​title of the covenantee. However in Australia while the matter is still unresolved, it appears doubtful whether the “general words” legislation can be said to pass the benefit of a restrictive covenant. These doubts arise particularly from Sutton v Shoppee (1963) 63 SR (NSW) 853 at 860 which is the only relevant Australian case on the point. Sugerman J stated that the legislation is inapplicable in the context of the passing of the benefit of restrictive covenants. The relevance of the “general words” legislation to the passing of the benefit of a restrictive covenant has been considered in England. In Rogers v Hosegood [1900] 2 Ch 388, Farwell J in the Court of Appeal did not decide the issue as he determined that express annexation existed on the facts, but he expressed doubts as to whether the right to sue on a covenant can be said to belong, or be reputed to belong, to the land. In Roake v Chadha [1984] 1 WLR 40, it was held that, as the wording of the covenant precluded the benefit from passing unless it was expressly assigned, it could not be said to be a right “appertaining or reputed to appertain” to land within the meaning of the section. The issue whether the benefit of a covenant not annexed can ever pass under the legislation importing general words into conveyances was left open, but the court indicated (at 47) that the rights referred to in the legislation may be confined to legal rights rather than equitable rights.

DISCHARGE AND MODIFICATION OF RESTRICTIVE COVENANTS By agreement [18.195]  The persons entitled to the benefit and burden of a covenant may if legally competent

agree to modify or discharge a covenant. In New South Wales, Victoria, Western Australia,

81 82

Wallace, Weir and McCrimmon, Real Property Law in Queensland (9th ed, Law Book Co, Sydney, 2015), pp 864, 875–​877. Conveyancing Act 1919 (NSW), s 67; Property Law Act 1958 (Vic), s 62; Property Law Act 1974 (Qld), s 239; Law of Property Act 1936 (SA), s 36; Property Law Act 1969 (WA), s 41; Conveyancing and Law of Property Act 1884 (Tas), s 6. [18.195]  917

PART 5 Relations between Neighbouring Landholders

Tasmania and the Northern Territory, where an agreement is made the Torrens legislation empowers the Registrar (or, in Tasmania, the Recorder of Titles) to cancel or amend any notification of a restrictive covenant on the register.83 In New South Wales, pursuant to s  88(1)(c) of the Conveyancing Act 1919 (NSW), no covenant is enforceable against any person other than the original contracting parties unless, inter alia, the covenant clearly indicates “the persons (if any) having the right to release, vary, or modify the restriction, other than the persons having, in the absence of agreement to the contrary, the right by law to release, vary, or modify the restriction”. Waddell J held in Jones v Sherwood Hills Pty Ltd (1975) 52 ALJ 223 that this section permits the parties to impose the power to discharge or modify a covenant upon a third party who has no interest in the benefited or burdened land. He also held that there is no requirement that such a power, if conferred, has to be exercised subject to the requirements of natural justice.84 In so deciding, Waddell J rejected the contrary arguments advanced by Baalman85 to the effect that the interest of a third party purportedly given a power of variation or discharge cannot amount to an interest in land.

By unity of ownership [18.200] Unity of ownership of the benefited and burdened land normally discharges

a restrictive covenant. If the same person acquires a fee simple estate in possession in the benefited and burdened land, any restrictive covenants binding the burdened land will be discharged. They will not revive if the burdened land is later sold.86 Where the owner of a large part of the land benefited acquires a small part of the burdened land, the covenant will be extinguished by merger, but only insofar as the parts in common ownership are concerned. This merger does not prevent the enforcement of a restrictive covenant in relation to another part of the property which is also burdened by the covenant.87 [18.205] The common law rule has been altered by statute in Tasmania and New South

Wales. Section 103 of the Land Titles Act 1980 (Tas) reads in part:

(1) A covenant which runs with freehold registered land is not affected by the same person being the registered proprietor at any time of the lands benefited and burdened by the covenants unless the covenant is expunged from the Register as provided in subsection (2).



(2) On the application of the registered proprietor of the lands benefited and burdened by a covenant, and proof to his satisfaction that the covenant would have been extinguished but for the operation of subsection (1), the Recorder shall expunge the covenant from the Register.88

83 84 85 86

87 88

Conveyancing Act 1919 (NSW), s 88(3)(a); Transfer of Land Act 1958 (Vic), s 88(1); Transfer of Land Act 1893 (WA), s 129B(2); Land Titles Act 1980 (Tas), s 104; Land Title Act (NT), s 112. Compare Clarke v Burnie City Council [2008] TasSC 75. Baalman, “Variation of Restrictive Covenants (NSW)” (1948) 21 ALJ 427 (Pt 1), 461 (Pt 2). Re Tiltwood, Sussex [1978] 1 Ch 269; Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598. This issue is discussed in Bates, “Extinguishment and Revival of Restrictive Covenants in Land” (1980) 54 ALJ 156; Preece, “The Effect of Unity of Ownership of Benefited and Burdened Land on Easements and Restrictive Covenants” (1982) 56 ALJ 587. Gyarfas v Bray (1989) 4 BPR 9736. See also Conveyancing and Law of Property Act 1884 (Tas), s 9A.

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Section 88B of the Conveyancing Act 1919 (NSW), permits restrictive covenants to be created by lodging a plan of subdivision with the Registrar-​General. Pursuant to s  88B(3)(c), the covenant will be created on the registration or the recording of the plan and will not be discharged if the owner of the benefited land holds or acquires an interest in the burdened land.89 More generally, under s 47(7) and (10) of the Real Property Act 1900 (NSW), restrictive covenants recorded on the Torrens register after 1 September 2006 are not extinguished simply because the benefited and burdened land have come into common ownership. [18.210] The rule that a restrictive covenant will be discharged on unity of seisin of the

benefited and burdened land appears not to apply to schemes of development. In Texaco Antilles Ltd v Kernochan [1973] AC 609 (PC),90 the owner of one block of land in a scheme sought to enforce a covenant against the owners of one of the other blocks. The argument made by the defendants that since both they and the plaintiff had a common predecessor-​in-​ title the covenants were discharged was rejected by the Privy Council. Lord Cross of Chelsea stated (at 626) that it does not follow from the general rule under discussion that if a number of people agree that the area covered by their properties shall be subject to a “local law” (the provisions of which shall be enforceable by any owner for the time being of any part against any other owner) and the whole area has never at any time come into common ownership, an action by one owner of a part against another owner of a part must fail if it can be shown that both parts were either at the inception of the scheme or at any time subsequently in common ownership. [18.215]  In all jurisdictions except South Australia, the State Supreme Court (in Tasmania,

the Recorder of Titles) has been granted the general power to discharge or modify restrictive covenants under certain specified circumstances. Except in Victoria, this legislation also authorises that court to extinguish or modify easements. The New South Wales, Victorian and Western Australian provisions are similar.91 Section 84(1) of the Property Law Act 1958 (Vic) states that the court shall have power by order wholly or partially to discharge or modify any such restriction (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the order). The power arises on the application of any person interested in any land affected by a restriction arising under covenant or otherwise as to the use of the land or any building on the land. The court must be that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the court deems material the restriction ought to be deemed obsolete or the continued existence of the restriction be deemed to impede the reasonable user of the land without securing practical benefits to other persons or unless modified would impede such user. Alternatively the court must be satisfied that the persons of full age and capacity entitled to the benefit of the restriction whether in respect of estates in fee simple or any lesser estates or interests in the property have agreed either expressly or by implication by their acts or omissions to

89 90 91

Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598. See also Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598. Conveyancing Act 1919 (NSW), s 89(1); Property Law Act 1958 (Vic), s 84(1); Transfer of Land Act 1893 (WA), s 129C. The Western Australian provision applies only to Torrens land. Additionally, in New South Wales, under Pt 8A of the Real Property Act 1900 (NSW) the Registrar-​General is authorised to extinguish restrictive covenants that are building materials covenants, fencing covenants or value of structures covenants that are at least 12 years old and are of a type that are likely to lose their practical benefit after 12 years of operation (s 81I), or are otherwise of no practical value or application (s 81J(1)(e)). [18.215]  919

PART 5 Relations between Neighbouring Landholders

the restriction being discharged or modified. Finally the court is empowered to discharge or modify a restriction where it is satisfied that the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction.92 [18.220]  The legislation in Queensland and Tasmania has been modified. Section 181(1) of

the Property Law Act 1974 (Qld) retains the grounds in s 84(1)(b) and (c) of the Property Law Act 1958 (Vic) but substitutes grounds for those in the Victorian legislation relating to obsolescence or lack of practical benefit. In Queensland and Tasmania the court may decide that the restriction ought to be deemed obsolete because of a change in the use of any land having the benefit of the restriction or because of change in the character of the neighbourhood or other material circumstances. The court may also act where the continued existence of the restriction would impede some reasonable user of the land subject to the restriction. It may also decide, that restriction93 does not secure to persons entitled to the benefit of it any practical benefits of substantial value, utility, or advantage to them. Finally a covenant may be discharged or modified if its continuation would be to the public interest. In the second and third instances, the court must be satisfied that money will be an adequate compensation for any loss or disadvantage which any such person will suffer from the extinguishment or modification.94 In Tasmania, s 84C(1) of the Conveyancing and Law of Property Act 1884 (Tas) and adds the ground that discharge or modification may be ordered where the continued existence of the restriction would impede a use of the land in accordance with an interim order or planning scheme, or would, unless modified, impede such a use.95 In addition, unlike s 84(1)(c) of the Victorian Act, which refers to substantial injury to the persons entitled to the benefit of the restriction,96 the equivalent Tasmanian provision (s  84C(1)(e)) does not include the word “substantial”. Thus, any injury, whether substantial or not, must be taken into account in Tasmania.97 [18.225]  In all the jurisdictions except South Australia where there is no equivalent legislation,

the scope of the legislation seems to be confined to restrictive rather than positive covenants. 92

93

94

For a detailed discussion of the various key words and phrases in s 84(1) of the Property Law Act 1958 (Vic), see Vrakas v Registrar of Titles [2008] VSC 281; Stanhill Pty Ltd v Jackson [2005] VSC 169; Fraser v Di Paolo [2008] VSC 117; Dissanayake v Hillman [2007] VSC 426. For a recent consideration of the s 129C(1) of the Transfer of Land Act 1893 (WA), see Anascot Pty Ltd v Alcoa of Australia Ltd [2017] WASCA 228. It has been held in Ex parte Melvin [1980] Qd R 391 and Ex parte Proprietors of “Averil Court” Building Units Plan No 2001 [1983] 1 Qd R 66 that the phrase “or that the … restriction” should be read as “and that the … restriction”. Section 181(2) of the Property Law Act 1974 (Qld) reads: In determining whether a case is one falling within subsection (1)(a) or (b), and in determining whether (in such a case or otherwise) a … restriction ought to be extinguished or modified, the court shall take into account the town plan and any declared or ascertainable pattern of the local authority for the grant or refusal of consent, permission or approval to use any land or to erect or use any building or other structure in the relevant area, as well as the period at which and context in which the … restriction was created or imposed, and any other material circumstance.

95 96 97

Compare Property Law Act 1974 (Qld), s 181(2). For the meaning of “substantially injure”, see, for example, Re Cook [1964] VR 808; Re RK Roseblade and VM Roseblade and the Conveyancing Act [1964–​65] NSWR 2044; Re Markin [1966] VR 494. Unlike in other jurisdictions, s 84C(1) of the Conveyancing and Law of Property Act 1884 (Tas) states that the power to modify or discharge restrictive covenants does not apply to covenants contained in plans of subdivision.

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It has been held by the English Lands Tribunal under similar legislation that there is no power to modify or discharge positive covenants or personal covenants.98 The legislation in Victoria, Queensland and Tasmania confers the power on the Supreme Court (in Tasmania, the Recorder also has this power) to make the modification or discharge of a restrictive covenant subject to the payment of compensation.99 This is a matter of discretion for the court on the facts of each case. No similar provision exists in the New South Wales and Western Australian legislation. There can be no modification or discharge unless one or more of the specified legislative grounds exists on the facts.100 Despite differing authorities, it appears that the court retains a discretion to refuse an application for modification or discharge even where one of the grounds is proved to exist.101 This interpretation is consistent with the word “may” in the legislation in each State. In exercising its discretion, the court may consider a range of factors, including the history of the relevant properties, the conduct of the present owners and the previous registered proprietors and the state of the register.102

Grounds for discharge or modification [18.230] As a general proposition it may be stated that the applicant for modification or

discharge of a covenant or easement has a heavy onus to overcome the application is to succeed.103 The attitude taken by the courts is typified by the comments of Negus J in Smith v Australian Real Estate & Investment Co Ltd [1964] WAR 163 at 167.104 Negus J indicated that court was being authorised to allow what was in effect the expropriation of private property, namely, the right of a land owner to the benefit of a restrictive covenant, without compensation. The court had to be completely satisfied that the benefit was valueless to the deprived such owner from a practical standpoint and did not secure him any practical benefit. Conversely, however, it is no defence to a claim otherwise falling within the section for the defendant to show that its ability to defend the statutory claim might be a possible source of money coming from a dominant tenant anxious to develop its own property.105 A similar approach was adopted by Powell J in Post Investments Pty Ltd v Wilson (1990) 26 NSWLR 598.106

98 99

Re Blyth Corporation’s Application (1962) 14 P & CR 56; Re Chatham BC’s Application (1970) 21 P & CR 661. Property Law Act 1958 (Vic), s 84(1); Property Law Act 1974 (Qld), s 181(4); Conveyancing and Law of Property Act 1884 (Tas), s 84C(7). For recent illustrations of cases where compensation was deemed appropriate, see Re Hextall’s Application (2000) 79 P & CR 382; Re Davies Application [2001] 03 EG 134. 100 Re Application of Poltava Pty Ltd [1982] 2 NSWLR 161; Pieper v Edwards [1982] 1 NSWLR 336 at 341; Kort Pty Ltd v Shaw [1983] WAR 113. 101 Lolakis v Konistas [2002] NSWSC 889; Ferella v Otvosi [2005] NSWSC 962; Kort Pty Ltd v Shaw [1983] WAR 113; Pieper v Edwards [1982] 1 NSWLR 336; Re Cook [1964] VR 808; Re Ghey and Galton’s Application [1957] 2 QB 650 (CA). Compare Re Rose Bay Bowling and Recreation Club Ltd (1935) 52 WN (NSW) 77. 102 Owners Corporation –​Strata Plan No 8450 v Owners Corporation –​Strata Plan No 54547 [2002] NSWSC 780; Pieper v Edwards [1982] 1 NSWLR 336. 103 Owners of Corinne Court 290 Stirling Street Perth Strata Plan 12821 v Shean Pty Ltd [2000] WASC 181; Owners Corporation –​Strata Plan No 8450 v Owners Corporation –​Strata Plan No 54547 [2002] NSWSC 780. 104 See also Clubley v Bochrinis [2005] WASC 24; Long v Michie [2003] NSWSC 233; Oleander Nominees Pty Ltd v Owners of Lakeside Villas Strata Plan 14025 [2002] WASC 255; Castagna v Great Wall Resources Pty Ltd [2005] NSWSC 942; Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd [2000] NSWCA 28; Ashoil Holdings Pty Ltd v Fassoulas [2005] NSWCA 80. 105 Durian (Holdings) Pty Ltd v Cavacourt Pty Ltd [2000] NSWCA 28 at [6]‌. 106 This case is discussed in (1993) 67 ALJ 296. See also Eucalypt Group Pty Ltd v Robin [2003] QSC 63. [18.230]  921

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The appropriateness of the conservative approach has recently been questioned by Morris J in Stanhill Pty Ltd v Jackson [2005] VSC 169. Morris J examined the history and policy of the legislation in Victoria and concluded (at [42]) that it was always intended to operate in a “robust manner”, vesting a broad discretion in the courts. To date, however, this appears to be an isolated decision. [18.235] There is nothing in the legislation to prevent an application for modification or

discharge being brought by the original covenantor.107 However, in this situation, the court will be slow to exercise its discretion in favour of the applicant especially if the covenant was only entered into in recent times. As stated by Gillard J in Re Markin [1966] VR 494 at 498, the court should entertain a strong bias against the original covenantor seeking to modify or discharge a restriction on his or her title brought about by their own voluntary act in entering into a contract with the covenantor. In this case Gillard J discharged the covenants but stated that the applicants would still be liable for contractual damages at common law. This latter issue has not been finally resolved in Australia, but it is submitted with respect that Gillard J was incorrect. As stated earlier by the English Court of Appeal in Ridley v Taylor [1965] 2 All ER 51 at 55–​57, it would be an extraordinary result if the covenantee could still sue the original covenantor for contractual damages when he or she had parted with all interest in the property. [18.240] Town planning considerations have been held to be irrelevant in establishing

whether a ground exists for modification or discharge of a covenant. In Re Robinson [1972] VR 278,108 the local planning scheme prohibited the use of certain land for residential purposes. An application was brought to modify a covenant that only private dwellings could be erected upon certain land covered by this planning scheme. As none of the specific grounds in s  84(1) of the Property Law Act 1958 (Vic) applied on the facts, Adam  J dismissed the application even though the continued existence of the covenants effectively prevented any development on the land. His Honour stated that town planning considerations were quite beside the point. However it is possible, though unresolved in Australia, that if an applicant can fit her or his case within one of the grounds for modification or discharge, the court may in the exercise of its residual legislative discretion refuse the application based on town planning considerations.109 In Queensland and Tasmania, by virtue of legislative amendment the courts are directed to take into account the local town plan. In Queensland and Tasmania the courts are statutorily empowered to impose conditions in an order modifying or discharging a covenant if it appears reasonable to do so.110 In Queensland the power is confined to negative covenants, while in Tasmania the legislation appears to be sufficiently broad to encompass positive covenants. In the remaining jurisdictions the issue depends on common law. The power to impose conditions was assumed without discussion in Re RK Roseblade and VM Roseblade and the Conveyancing Act [1964-​5] NSWR 2044, where

107 108 109 110

Re Markin is discussed in (1967) 40 ALJ 357; Ridley v Taylor [1965] 2 All ER 51 (CA). Re Robinson is discussed in (1972) 45 ALJ 533. See also Bevilacqua v Merakovsky [2005] VSC 235; Perth Construction Pty Ltd v Mount Lawley Pty Ltd (1955) 57 WALR 41; Re Pivotal Pty Ltd [2000] VSC 264. Contrast Re St Albans Investment Ltd’s Application (1958) 9 P & CR 536 with Re Luton Trade Unionist Club and Institute Ltd’s Application (1969) 20 P & CR 1131. See also Bevilacqua v Merakovsky [2005] VSC 235. Property Law Act 1974 (Qld), s 181(3); Conveyancing and Law of Property Act 1884 (Tas), s 84C(4).

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Else-​Mitchell  J modified a covenant restricting future subdivision of the land, but imposed conditions limiting the size of the houses erected on the subdivided blocks and requiring that existing trees should not be removed. In Manly Properties Pty Ltd v Castrisos [1973] 2 NSWLR 420, a case involving easements, the court held that it had the power to extinguish an easement upon specified conditions, including the grant of a new easement.

REMEDIES FOR BREACH OF RESTRICTIVE COVENANTS Damages [18.245]  The normal contractual remedy of damages is available for breach of a covenant.111

Damages may be recovered at law for breach by the covenantee or the covenantee’s personal representative, assignee or successor-​in-​title to whom the benefit of the covenant has run at law against the covenantor or the covenantor’s personal representative.112 The normal contractual principles will apply to the assessment of damages at common law.113 Any costs incurred in alleviating the adverse effects of the breach of covenant and any reduction in the value of the benefited land would be included. The basic principle is that the injured party should be restored to the same position as that person would have been in if the covenant had not been breached. A major difficulty arises where the breach of covenant does not reduce the value of the benefited land and where there is no cost incurred in alleviating the adverse effects of the breach. In this situation, Brightman J stated in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 2 All ER 321 at 339–​341 that damages should not be restricted to nominal damages and should extend to the sum of money which might reasonably have been demanded by the covenantee as the price for waiving the covenant.114 This issue was considered by the English Court of Appeal in Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361.115 In this case the plaintiffs sold certain land to the defendant, subject to a covenant by the defendant to develop the land in accordance with planning permission already obtained by the defendant. This planning permission authorised the construction of 72 houses on the land. The defendant later obtained planning permission to construct 77 houses. The plaintiffs sought damages for breach of covenant. The court (at 1364 per Dillon LJ) unanimously affirmed the decision at first instance awarding the plaintiffs only nominal damages. Common law damages are intended to compensate the victim for her or his loss, not to transfer to the victim who has suffered no loss the benefit which the wrongdoer has obtained by a breach of contract. Steyn LJ stated that the courts, when awarding damages, have to consider three separate interests:  first, that the aggrieved party ought to be compensated for loss of her or his positive or expectation interests; secondly, that the aggrieved party should be compensated for expenses incurred and losses suffered in

111 For a detailed discussion of this issue, see Bradbrook and MacCallum, Bradbrook and Neave’s Easements and Restrictive Covenants (3rd ed, LexisNexis, Sydney, 2011), Ch 18; Draper, “Restrictive Covenants and Remedies” (1998) 142 Sol J 618. 112 Rogers v Hosegood [1900] 2 Ch 388 at 395 (CA); Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500 (CA). 113 See Seddon and Bigwood, Cheshire and Fifoot’s Law of Contract (11th ed, LexisNexis, Sydney, 2017), Ch 23. 114 This principle was applied in Jaggard v Sawyer [1995] 1 WLR 269 and, in the context of easements, in Bracewell v Appleby [1975] Ch 408. Compare Tito v Waddell (No 2) [1977] Ch 106. 115 This decision is criticised in Birks, “Profits of Breach of Contract” (1993) 109 LQR 518. [18.245]  923

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reliance on the contract; and thirdly, the need to deprive the defendant of the benefit he or she might have gained by the breach of contract. The Wrotham Park decision was distinguished on the basis of the different conduct of the respective plaintiffs in response to the breach of contract. In Wrotham Park the plaintiffs objected to the building works undertaken in breach of the covenant as soon as they realised what was happening, and sought an injunction with all due haste. They would not have consented to relaxation of the covenant even if it had been sought. In the Surrey case, by contrast, the plaintiffs never objected to the actions of the defendant, but merely wished to share in the profits. The court also noted that the case involved a claim for equitable damages under the Chancery Amendment Act 1858 (UK) (commonly known as Lord Cairns’ Act).116 Both the Wrotham Park and Surrey cases were later considered in Jaggard v Sawyer [1995] 1 WLR 269. In this case the general approach of Brightman J in Wrotham Park was followed by the English Court of Appeal and substantial damages were awarded to the plaintiff for breach of covenant. The court considered the Surrey case and distinguished it on the basis that the plaintiffs had sought common law damages, rather than damages in equity, under Lord Cairns’ Act. Sir  Thomas Bingham  MR added (at 281), however, that the decision in Surrey may not survive further judicial scrutiny. The Court of Appeal reaffirmed its approach in Jaggard v Sawyer in Gafford v Graham and Grandco Securities Ltd (1999) 77 P & CR 73. Jaggerd v Sawyer has been applied in recent Australian decisions.117 The United Kingdom Supreme Court in One Step Support Ltd v Morris-​Garner [2018] 3 All RR 659 has recently rejected the availability of damages assessed on the Wrotham Park basis for breaches of contracts generally. However, the Court indicated that such damages continue to be appropriate where awarded in lieu of an injunction for a breach of a restrictive covenant (at 676–​680, 686–​687 [49]–​[63], [91]–​[92]).

Equitable remedies [18.250]  In most circumstances the covenant will be enforceable only in equity. The normal

rules governing equitable remedies will be applicable here. Thus, the court may grant prohibitory, mandatory, quia timet and interlocutory injunctions to restrain breaches of restrictive covenants.118 Based on a controversial dictum by Lord Cairns in Doherty v Allman (1878) 3 AC 709 at 719, it is arguable that, in relation to prohibitory injunctions, the court has no discretion to take into account the various discretionary circumstances such as hardship to one or more of the parties, the conduct of the plaintiff, laches, acquiescence, unfairness and the balance of convenience to which the grant of equitable remedies is normally subject and will enforce the remedy as of right. The justification for this approach is that, in this context, the injunction merely gives the sanction of the process of the court to that which already is the contract between the parties. The better view today, however, appears to be that the grant of equitable relief to protect restrictive covenants is subject to a consideration of the circumstances generally disentitling

116

Supreme Court Act 1970 (NSW), s 68; Supreme Court Act 1986 (Vic), s 38; Supreme Court Act 1935 (WA), s 25(10); Supreme Court Act 1935 (SA), s 30; Supreme Court Civil Procedure Act 1932 (Tas), s 11(13); Supreme Court Act 1995 (Qld), s 244. 117 See, for example, Miller v Evans [2010] WASC 127. 18 See generally, Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies 1 (5th ed, LexisNexis, Sydney, 2015), Ch 21. 924 [18.250]

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the plaintiff to relief in equity.119 This conclusion is based on the logic of the situation, in that it would be very strange if restrictive covenants were to be the only area of equitable jurisdiction where the court is unable to exercise its discretion, and on dicta by Wilberforce J in Marten v Flight Refuelling Ltd [1962] Ch 115 at 151 indicating the existence of a discretion in this matter. In addition to or in lieu of an injunction, where a breach of a restrictive covenant occurs, the court may award equitable damages under legislation enacted in all Australian jurisdictions based on s 2 of Lord Cairns’ Act.120 Despite earlier doubts, the House of Lords has held in Johnson v Agnew [1980] AC 367 (HL)121 that equitable damages are assessed in the same manner as damages at common law. [18.255] The circumstances in which equitable damages will be awarded instead of an

injunction were reviewed by AL Smith LJ in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 at 322. AL Smith LJ concluded that (a) if the injury to the plaintiff’s legal rights is small; and (b) is one which is capable of being estimated in money; and (c) is one which can be adequately compensated by a small money payment; and (d) the case is one in which it would be appropriate to the defendant to grant an injunction, then damages may be given in substitution of an injunction. AL Smith LJ stated that these considerations should be regarded as a “good working rule”. This dictum has been cited with approval on numerous occasions by Australian courts.122

STATUTORY PLANNING IMPACTS [18.260] In all jurisdictions piecemeal legislation exists which authorises certain public

authorities to discharge or modify restrictive covenants in a variety of specified circumstances. The most significant of these is the power contained in the Subdivision Act 1988 (Vic) and the Planning and Environment Act 1987 (Vic) to override a covenant by issuing a planning permit or by approving an amendment to a planning scheme. This power is in addition to that possessed by the Supreme Court pursuant to s  84 of the Property Law Act 1958 (Vic).123 The purpose of the provisions in the subdivision legislation is to give local councils the power, in certain circumstances, to override restrictive covenants in circumstances where the covenants inhibit the goal of urban consolidation. Pursuant to s 60(2) of the Planning and Environment Act 1987, a council should not grant a planning permit which overrides a restrictive covenant unless it is satisfied that any landowner benefited by the covenant will 119 See Heydon, Leeming and Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis, Sydney, 2015), pp 738–​739. The issue is discussed in Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552; Broken Hill Proprietary Co Ltd v Hapag Lloyd Aktiengesellschaft [1980] 2 NSWLR 572; R v Windridge; Ex parte Pacific Coal Pty Ltd [1992] 2 Qd R 180. 120 Supreme Court Act 1970 (NSW), s 68; Supreme Court Act 1986 (Vic), s 38; Supreme Court Act 1935 (WA), s 25(10); Supreme Court Act 1935 (SA), s 30; Supreme Court Civil Procedure Act 1932 (Tas), s 11(13); Supreme Court Act 1995 (Qld), s 244. See Jolowicz, “Damages in Equity –​A Study of Lord Cairns’ Act” (1975) 34 Cambridge LJ 224; Finn, “A Road Not Taken” (1983) 57 ALJ 571; Ingman and Wakefield, “Equitable Damages under Lord Cairns’ Act” (1981) 45 Conv 286. 121 Discussed in (1980) 96 LQR 403. See also Domb v Isoz [1980] 1 All ER 942 (CA); Ansett Transport Industries (Operations) Pty Ltd v Halton (1979) 25 ALR 639 at 655 (HC). 122 See, for example, Miller v Evans [2010] WASC 127; Owen v O’Connor [1964] NSWR 1312. 123 See also Environmental Planning and Assessment Act 1979 (NSW), s 3.16; Planning and Environment Act 1987 (Vic), s 60(2); Building Act 1975 (Qld), 246L–​246U. [18.260]  925

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be unlikely to suffer financial loss, loss of amenity, loss arising from change to the character of the neighbourhood or any other material detriment as a consequence of the removal or variation of the restriction.124 The overriding of land-​use agreements by planning legislation is illustrated by the High Court decision in Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd [2011] HCA 27. A landowner operated a private hospital on one lot and proposed to extend the activity onto another lot. However the use of that lot for hospital or medical purposes was prevented by a restrictive covenant registered on the title. The planning legislation allowed restrictive covenants to be rendered unenforceable by provisions of planning instruments. Such an effect could only occur if the Governor approved the provision before the planning instrument was made. No such approval was granted. The High Court held that was needed wherever the effect of the planning instrument was that the restrictive covenant be rendered unenforceable. The need for approval was not confined to cases of express specifications of the consequence of the planning instrument. The case illustrates the potential conflict between planning instruments and private covenants and the courts’ approach of strict compliance with prescribed planning procedures before private agreements will be overridden. It has been emphasised that the enforcement of covenants was developed by the courts to address problems of living standards in urban areas. Restrictive covenants set out private agreements expressing individual views of what amounts to desirable development. In the case of schemes of development the view is that of the developer. Equitable remedies for the enforcement of restrictive covenants have been developed alongside the expansion of statutory controls for building standards, zoning and later planning statements for the future development of large areas. In all Australian jurisdictions planning controls today require permission from public authorities for any land development. Planning schemes allow a landowner and the relevant planning authority to make agreements for the development of the land. Often inducements such as rate reductions are offered for entry into an agreement. These agreements are given effect beyond the contracting parties by recording on the title to the land and regulation providing for successors in title to be bound in much the manner of registering restrictive covenants. In Sames v District Council of Mount Barker [2004] SASC 374 a memorial of such an agreement was entered on the certificate of title of the landowner who entered the agreement. Under the agreement adjoining parcels of land were to be developed with car parking on one lot for the benefit of commercial uses on the other lot. The proposed development constituted a change of use of both parcels of land and so required planning permission for the development of both parcels. Therefore the agreement satisfied the statutory requirement that the proposed development constituted development of the car park land in a planning sense and was valid under the planning legislation. Furthermore although the landowner was not the applicant for planning permission, the legislation required only that the private party to the agreement be the owner of the land at the time of the agreement.

124

See Overell and Easton, “Restrictive Covenant v Urban Consolidation” (1992) 66 LIJ 282; Tooher, “Restrictive Covenants and Public Planning Legislation –​Should the Landowner Feel ‘Touched and Concerned’ ” (1992) 9 EPLJ 63; Tooher, “ ‘Double Trouble’ in Discharging Restrictive Covenants: Dual Occupancy and the Duality of Forums” (1993) 10 EPLJ 365.

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POSITIVE COVENANTS Privity of contract [18.265]  Covenants may be enforced by the original contracting parties based on the doctrine

of privity of contract. Covenants may also be enforced in certain circumstances between an assignee or other successor in title of the covenantee and an assignee or other successor-​in-​ title of the covenantor. Thus, if A covenants with B, and A later sells A’s property to C and B later sells B’s property to D, the law of restrictive covenants in certain circumstances allows D to enforce the covenant against C, even though neither of them was a party to the covenant. The detailed rules previously discussed will determine the exact circumstances where D can successfully enforce the covenant against C. However the law of restrictive covenants allows only the enforcement of covenants which are negative in nature. Enforcement between the original parties extends to positive covenants. In addition there are some circumstances where positive covenants can be enforced beyond the original parties, particularly where a successor in title to the original covenantee seeks to enforce the covenant against the original covenantor. [18.270]  In New South Wales, Victoria, South Australia and Tasmania in certain circumstances

by legislation covenants may also be enforced by third parties who are neither parties to the covenant nor assignees or other successors-​in-​title to the parties to the covenant. The legislation in New South Wales, Victoria, South Australia and Tasmania125 states: A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although that person is not named as a party to the conveyance or other instrument.

Lord Denning MR in Beswick v Beswick [1966] Ch 538 argued that the section completely abrogated the principle of privity of contract.126 This wide-​ranging interpretation has been rejected by the House of Lords on appeal in Beswick v Beswick [1968] AC 58 and by Australian courts in Bird v Trustees Executors & Agency Co Ltd [1957] VR 619, Doyle v Phillips (1997) NSW ConvR 56,427 and Re Estate of Bristow [2005] NSWSC 1252.127 The authorities indicate that the legislation should be construed as merely repealing the common law rule that only a person who is expressly named as a party to a covenant may enforce the covenant. The legislation thus has only a very narrow application.128 Consider the following three illustrations. First, if X covenants with Y to grant a benefit to Z, under the rule in Beswick v Beswick [1968] AC 58, Z cannot sue to enforce the covenant despite the existence of the legislation. Secondly, where X covenants with Y and Z to grant a benefit to Z, Z may enforce the agreement at common law. Finally, where X covenants with Y and the owners of adjoining land, the owners of the adjoining land may sue to enforce the covenant by virtue of the State legislation. It is only in the last-​mentioned illustration that the legislation

125 126 127 128

Conveyancing Act 1919 (NSW), s 36C; Property Law Act 1958 (Vic), s 56(1); Law of Property Act 1936 (SA), s 34; Conveyancing and Law of Property Act 1884 (Tas), s 61. See also Drive Yourself Hire Co (London) Ltd v Strutt [1954] 1 QB 250 at 274 (CA). See also Australian Mortgage & Properties Pty Ltd v Balcon Pty Ltd (2001) BPR 19,227; Doyle v Phillips (No 1) (1997) 8 BPR 15,524; Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5. See Re Ecclesiastical Commissioners for England’s Conveyance [1936] Ch 430 and Re Shaw’s Application (1995) 68 P & CR 591 for illustrations of the operation of the legislation. Compare White v Bijou Mansions Ltd [1938] Ch 351 (CA). [18.270]  927

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has any relevance. An important limitation on the legislation is that it will only operate in favour of persons who are in existence and identifiable at the date the covenant was entered into.129 Thus, for example, any covenant purporting to grant a benefit to the future owners of adjoining land cannot be enforced by any future owner. [18.275] In Queensland, Western Australia and the Northern Territory the equivalent

legislation is phrased more broadly and does impact upon the principle of privity of contract. Section 55(1) of the Property Law Act 1974 (Qld) states that a promisor who, for a valuable consideration moving from the premises, promises to do or to refrain from doing an act or acts for the benefit of a beneficiary shall, upon acceptance by the beneficiary, be subject to a duty enforceable by the beneficiary to perform that promise. By s 55(5), the section operates with respect to an interest in land. Pursuant to s 55(6), “beneficiary” includes a person who at the time of acceptance is identified or in existence, although that person may not have been identified or in existence at the time when the covenant was made. Although the section has a wide application, it appears to have no effect on the passing of the burden of the covenant to the successor-​in-​title of the covenantor, and in this case the equitable and common law rules have to be satisfied.130 Note, finally, that the common law rule, that the legislation will not operate in favour of persons who are not in existence and identifiable on the date the covenant was entered into, has been overturned in Queensland by s  13(1) of the Property Law Act 1974. In the Northern Territory, ss 56 and 12 of the Law of Property Act, are in nearly identical form to ss 55 and 13 of the Queensland Act, respectively. In Western Australia s 11(1) of the Property Law Act 1969 is to similar effect as the Queensland legislation except that it appears not to permit a person who was not identified or in existence at the date of the covenant to enforce the covenant against the covenantor.

Passing of the benefit at common law [18.280] At common law, a covenant is enforceable by a successor in title regardless of

whether it relates to any land owned by the covenantor and regardless of whether the covenant is positive or negative in nature. Both points are illustrated by The Prior’s Case (1368) YB 42 Ed III, pl 14; Co Litt 384a, where a Prior covenanted that he and his convent would sing every Sunday in the chapel owned by the covenantee. It was held that the covenantee’s successor in title could enforce the covenant at common law. A modern illustration is Smith and Snipes Hall Farm Ltd v River Douglas Catchment Board [1949] 2 KB 500 (CA), where the defendant had covenanted with certain landowners whose land was prone to flooding The defendant undertook to keep the banks of a certain river in good repair. The covenant was held to be enforceable by an assignee of the covenantee, even though the covenant imposed a positive duty on the defendant and despite the fact that the covenant was unrelated to land in that the defendant owned no land in the district. [18.285] Before the benefit of a covenant will pass to an assignee of the covenantee, at

common law, the legal requirements which must be satisfied are that the covenant must touch

129 130

Bohn v Miller Bros Pty Ltd [1953] VLR 354 at 358; Bird v Trustees Executors & Agency Co Ltd; Doyle v Phillips (No 1) (1997) 8 BPR 15,524. Rural View Developments Pty Ltd v Fastfort Pty Ltd [2009] QSC 244 at [17]; Rufa Pty Ltd v Cross [1981] Qd R 365.

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and concern the benefited land; the estate of the assignee of the covenantee must be legal; and in South Australia only, an assignee of the covenantee must have the same legal estate as the covenantee and the benefit of the covenant must be intended to run. [18.290]  The first requirement that the covenant must touch and concern the benefited land

means in essence the covenant must not be intended for the personal benefit of the covenantee, but rather for the benefit of the land owned by the covenantee.131 Generally speaking, the test applied by the courts will be the same for freehold as for leasehold covenants. If the covenant fails the “touching and concerning” test, its benefit may still run to an assignee of the covenantee under legislation in all Australian jurisdictions permitting the express assignment of a covenant as a chose in action.132 The legislation requires the assignment to be written and for express written notice to be given to the covenantor. [18.295] The second requirement is that the estate of the assignee of the covenantee must

be legal. It is an ancient rule of common law. Its continued application was reaffirmed by the English Court of Appeal in Rogers v Hosegood [1900] 2 Ch 388 (CA), which held that the benefit of a covenant could only run at equity, not common law, where the covenantee had merely an equity of redemption. [18.300]  In South Australia an assignee of the covenantee must have the same legal estate as

the covenantee. The effect of this rule is, for example, that a tenant cannot take the benefit of a covenant made by the owner of the fee simple estate.133 This rule was of dubious validity and except in South Australia appears to have been abolished by legislation. For example, s 78(1) of the Property Law Act 1